Jason, Both Buyer and Seller in 30097

It is really so easy for a buyer to withdraw from a contract?

Asked by Jason, 30097 Tue Aug 12, 2008

Recently my house went under contract. There was a stipulation in the contract that there would be a 10 day due dilligence period, where the buyer could obtain the inspection & appraisal results. After a week of not hearing anything from the buyer, I had my agency contact the buyers agent & they told me that they were withdrawing the offer because the client wasn't sure they could afford the mortgage.

Because of this my house was off the market for 10 days (and two others who had the house on their short list went under contract elsewhere), so I basically got hosed by the counterparty....and they got to keep their earnest money since they withdrew the offer within the 10 day due dilligence period. Is this really allowed? I can understand a buyer withdrawing from a contract (& keeping the earnest money) if they pay for an inspection which uncoveres problems they don't want to deal with, but I don't see the fairness of them being able to withdraw w/o even having an inspection done

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Alan May, Agent, Evanston, IL
Tue Aug 12, 2008
Typically "due diligence" isn't used to decide whether or not they are comfortable with their payment. There must have been some other clause that they're using to exit the contract.

I'm sorry that you're stuck in this position... at least you were only off market for 7 days instead of 10. Sorry... I know that's not much of a silver lining... maybe more of an "aluminum lining"?
2 votes
Jason, Both Buyer And Seller, 30097
Tue Aug 12, 2008
Actually they were pre-approved, I made sure to receive the letter prior to accepting the contract. The buyer just basically decided that they didn't WANT to spend that much on a mortgage payment, at least that's my understanding after speaking with my agency. The part that is most frustrating to me is that they are allowed to walk away with the earnest money, even though they hadn't really thought through the purchase prior to signing the contract. It's as if they just wanted to be sure that nobody else could buy the house while they were considering it.
2 votes
Alan May, Agent, Evanston, IL
Tue Aug 12, 2008
Unfortunately, you have learned the hard way, how important it is to "qualify" your potential buyer before accepting a contract.

Yes, in many real estate contracts, they have contingencies that allow the buyer to escape from the contract unscathed, for almost any valid reason. Not being able to obtain a mortgage (as opposed to not being able to "afford" a mortgage) is a valid reason. Your buyer should have given you a preapproval showing their ability to obtain the mortgage, prior to your signing a contract, and effectively taking your home off-market for seven days.
2 votes
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