Does Indiana require realtors to inform sellers if buyer wants out of a contract? Can I expect the earnest $ if reason isn't covered in?

Asked by Toni Rose, Nashville, IN Wed Aug 24, 2011

contract? I am one day from closing and suddenly the Buyer has cold feet. They are under contract with the only reason to walk away is problems with financing. They are approved for financing and I am willing to sell the house at the price appraised by their lender. I feel that the earnest money should come to me since they have kept my home off the market for almost 2 months. I was not informed up front of them wanting out; I was just asked to sign paperwork releasing them from the purchase agreement which also returned their earnest money. When I questioned this with the Broker I was informed they have no obligation to inform me that the buyer wants out. This seems ethically ambiguous.

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John Walin, Agent, Libertyville, IL
Thu Nov 17, 2011
Sometimes buyers sabotage their chances intentionally to use the mortgage contingency to get out of a deal. Usually the mortgage contingemcy is the last to be waived. Maybe buyer got cold feet and using the mortgage was the only clean way to get earnest money back. DONT SIGN THE CANCELLATION QUICKLY...The buyer cannot buy another house contractually until freed from your house, so you can stall, no reason to be quick about doing the buyer the favor. I had that happen as a listing agent and the buyer found a house they liked better for cheaper and wife was pulled off the loan application so the husband couldnt get the mortgage on his own. Usually the buyer agent has every incentive to keep a deal togther and the buyer kept their agent in the dark too, I doubt the agent saw this coming a month ago.

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Rob Campbell…, Agent, Greenwood, IN
Thu Nov 10, 2011
I have a serious buyer for you if you are still interested in selling and you are not under contract with any realtor at the current time. We tried to set a showing on your home on October 26, 2011 and the showing was declined.
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Jenny Hellman, Agent, New Albany, IN
Thu Aug 25, 2011
The inability to get financing is the one exception of getting out of a real estate deal with the return of the earnest money.
I would ask that the lender confirm that the buyers finanicing fell through and the reason that it fell through.

I represented a seller once, where the buyer backed out the week before closing, stating financing fell though. Once we investigated further it fell through because the buyer quit his job. We requested that the seller get to keep the earnest money since it fell through as a result of a voluntary action of the buyer....and we did.

And as Jody suggested, talk to a real estate attorney also.
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Jody Jones, Agent, Elkhart, IN
Wed Aug 24, 2011

So sorry for your loss of a buyer, but you need to consult with a real estate attorney. The agency may not have known until now that the buyer was going to walk, but at the very least in my mind you should have the right to keep the earnest money.

I had a situation like this a year or so ago. I had the buyer and we were 1 week away from closing when he was arrested for DUI. We were unsure of his job outcome and whether he would have to spend time in jail, so we cancelled the sale. However, the seller did keep the earnest money and he paid for all the tests done on the house. Unfortunately for me and the other agent, we got nothing in return for 6mos of work and time..but thats the way the real estate game plays out sometime!

Good luck on this and I hope you find a buyer soon, you live in a beautiful part of Indiana for sure!
Jody Jones
Realty Group Resources
Elkhart, IN
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