Home Selling in 60160>Question Details

Tracy, Home Buyer in 60160

Can buyer back out of a signed contract because the homeowner's insurance is higher than they thought?

Asked by Tracy, 60160 Wed May 14, 2008

I have a signed contract on my mobile home. we are supposed to close tomorrow, however that has been delayed due to my buyer's financing. He was having issues getting approved, but now is approved. Now he is stalling because the homeowners insurance for him will be $474/year. I offered another $500 off selling price if he closes quickly. I have a contract on a house that I am supposed to close on contingent upon the closing of my mobile home. Do I have any recourse if he backs out of the contract? Can he just back out of a contract? My realtor is a flake and doesn't have a straight answer about whether or not she collected the $1000 escrow. WHAT ARE MY OPTIONS? I don't want to lose my new house, because I will be out money for appraisal and inspection. ALL answers are appreciated. Thank you.

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I had a situation once where the monthly cost of the home owners insurance was putting the total monthly mortgage payment higher than what the buyer was qualified for a total monthly payment by the mortgage company. We had to do some serious insurance shopping in order to get the deal closed. Since your buyer was having issues getting approved in the first place, perhaps this is the reason he wants to back out. Have your attorney and or Realtor look into the matter further.
Web Reference: http://www.VassiSaviano.com
0 votes Thank Flag Link Sun May 18, 2008
That sounds very reasonable to me ($474) so I think your next bet is to call your attorney & have them contact the buyer. That is not excessive for a home with a reasonable amount of internal coverage for personal items. If the buyer wants out though, there is really no way to force him to buy. You can sue him for damages but by the time the attorneys fees are paid, what will you have? Your realtor can't remember whether you have earnest money or not? Flake is an understatement! Your earnest money is the only amount really available for damages. At least you did the smart thing & made your new purchase subject to the mobile home closing. At least you won't have 2 homes! It could be worse being out the $$ for the inspection & loan application. What's your attorney doing?
Web Reference: http://www.LynSims.net
0 votes Thank Flag Link Wed May 14, 2008
Thank you for your answers. No, I am not using a realtor. My buyer is insurable, he is just balking at paying for the insurance. $474 a year is not that much.
0 votes Thank Flag Link Wed May 14, 2008
Tracy,
It sounds like you are not using an attorney to represent you in this transaction. Although it is a Realtor's job to help you through every step of the home selling/buying process, issues like the one you are having are best handled by an attorney. I hope everything works out for you.
0 votes Thank Flag Link Wed May 14, 2008
I have not hear the problem of "cost of the insurance" as being a situation. I have heard that some insurance companies will not insure some homes based on updates, etc. Older homes not having updated electric, etc. some carriers will not insure under those circumstances. They also do a CLUE report which makes you insurable or not. Hope that helps!
Web Reference: http://www.LynSims.net
0 votes Thank Flag Link Wed May 14, 2008
Tracy
Read the purchase agreement. In most cases it states that the homeowner needs to fulfill certain obligations. The insurance portion is normally tied to the underwriting of the loan. There is a significant difference between not being able to obtain insurance and the relative cost of a policy.

I agree, check with a real estate attorney, however on the face of your question I can tell you that insurance is the LAST thing that some people take into account, and sometimes it only occurs at the time of funding the loan if the underwriter has a question.
0 votes Thank Flag Link Wed May 14, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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Tracy,
You need to discuss this with your real estate attorney who is handling the sale of your mobile home. If you do not have one, the Illinois State Bar should be able to point you in the right direction. Sorry to be so vague, but as a Realtor I can't offer legal advice.
Best Luck,
Tim
Web Reference: http://www.SoperTeam.com
0 votes Thank Flag Link Wed May 14, 2008
It all depends what your contract says and what the conditions of the financing are. Normally that would not be a reason to terminate the contract unless there is a clause which allows the buyer to terminate the agreement if he or she is not satisfied with the cost of the insurance. This is, of course, a legal question that should be fully answered by an attorney.
0 votes Thank Flag Link Wed May 14, 2008
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