When you say bad credit, as someone else suggested, what used to be considered good, is now in the fair to bad category. What your buyer might need is someone who really knows what they are talking about to analyze his income and credit to see if it is something that will work with other lenders who may not be credit score driven, or will work with lower scores.
There is also one other issue that could be coming into play here. If this person is a real estate agent or broker, it could cause problems as some lenders do not want to do loans for people who are agents or brokers.
Now this brings up another issue for all the agents who think that the best place to refer someone is Wells Fargo. Even though these loan officers only work for one company, they don't always know guidelines. Just because they don't think they have to. Or think they will talk their company into doing an exception. The most important thing about these loan officers is that they do not have to take, and pass, the SAFE test, or any state test, that is required for any loan officers working for brokers or mortgage banking companies.
a) the buyer notified you on day 42 (vs a 45 day deadline).
b) you granted a 2 wk extension.
c) the buy notified you on day 10 (vs a 14 day deadline).
the mortgage market has changed dramatically and it doesn't appear the buyer breached the contract. i believe you're wasting your time holding onto to his deposit. I suggest you work with the buyer as suggested by some of the other responders or cut the cord and return the deposit.
Perhaps I wasn't clear. I was saddened by the other advice, the only good advice offered was to speak with her attorney. The other advice that was offered was best kept to themselves. Especially in New York, one of the most litigious states.
Allen - I am a little perplexed as to why you are "saddened" by Realtors advising someone to seek legal advice.................for a legal issue??????
As Realtors, we cannot give legal dvice, and that is precisely what Minnie needs.
No one here can tell her whether she may keep the deposit or not....unless they have Esq after their name.
In what way did he "assure you"?
Did he simply tell you it would be fine? Did he tell you what his credit score was?
Did he show you a pre approval letter from Wells Fargo?
Did you have anything in writing, or did you just go by his verbal assurance?
Are there Realtors involved in this sale, or are you buying on your own?
What exactly is his "major credit problem?
It doesn't take much these days to be turned down for a mortgage, as credit is tighter than ever......as it should be.
The answers to the above questions might help shed some light on this.
It seems as though he applied for a mortgage in good faith - twice......whether he should have known he'd be approved or not, remains to be seen.
Speak to an attorney.
As a Realtor it saddens me to say that the only good advice the other Realtors have given you is to speak with your attorney. The only intelligent advice is from Dp2 from Virginia---not a Realtor! You have a technical contractual question which must be addressed by your attorney. He can also speak with the buyers attorney to try and find out what is really going on. Even if the buyer did try to get a mortgage in good faith he obviously has problems obtaining a one and if there are no other options stop wasting your time and find another buyer.
Century21 Yve R. E.
Licensed R. E. Agent.
NYS Certified Residential Appraiser
be that as it may, - consult your attorney but i'll over my 2 sense.
1. do you want to sell your home or keep a persons money?
important question. work with the buyer you have and work this out.
i highly doubt that your buyer WHO PUT DOWN 10% ON CONTRACT went into this in "bad faith". that's ridiculous. makes no sense. if he/she put down 1%, well then maybe they'd be playing games...for what reason i don't know.
it sounds like your buyer got pre qualified and was told by mortgage "professionals" that - "sure no problem, i can get you a mortgage".
even for someone who's closely connected to the business as you say your buyer is, most buyers will make that the end all be all of their due diligence in making sure they're pre approved. That's THE BUYERS MISTAKE.
your contract of sale almost certainly has a mortgage contingency in it. sounds like the buyer has tried in good faith, to get a mortgage and has been denied and has not exceeded the mortgage contingency extension you say you granted him.
your attorney will probably tell you that they can keep the money IN THEIR ESCROW ACCOUNT and you can litgiate this. but you won't be selling your property anytime soon because i'm sure there's things the buyers attorney can do to tie your property up. attorneys make a 1000 on a straight sale...they make a lot more when they litigate. :) good luck.
If he had spoken to a lender and gotten pre-appoved and the loan officer lied, you may have a case against the lender, but it is your agent's responsibility to make sure that you are represented and that the buyer was qualified.
I would approach your agent first looking for damages. Then, your agent should figure out if the buyer did what they are supposed to do in the contract.
Best of luck!
Another option, instead of rejecting the sale, is for you to offer to sell your property with seller financing, and for you to increase the amount for the required down-payment (to 15% or 20%). This way you'll sell your property, you'll not get tied up in court (requiring you to lose more money/time from this sale), and you'll close sooner.
One of the conditions that allows buyers to cancel their contract and get their deposit back is due to not being approved for mortgage. Checking the prospective buyer is one of the most important parts of the selling home puzzle.
If I can further assist you, feel free to call me at (516) 652-2658.
Licence Associate Broker
Depends on what the legal language is in the original Agreement and subsequent extension. He has until the extension date you granted to notify you (usually in writing) that he is terminating and then you must return his deposit. Consult a local Realtor in your area as they will no more about the specifics on MA law.