Is there a way to get out of buying a home just before closing?

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Rx Wizard
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Here is the scoop:

I have just got involved in 2 homes (one rental and one primary residence). I am real close to closing on both but some other oppurtunites have come up that I need the money. I have put a deposit on one for 3k and the other for 1k. Not really worried about losing the deposit.

I feel real bad and would still do 1 of them but doing both just takes too much money out of the game of life for me (close to 30k). I surely don't want to screw anyone and plan on keeping one of them but haven't decided which one.

Is this normal? Do people pull this, this late? What do I do/say?

I am losing sleep over this but I have to do what is best for me. I have bought 2 other rentals the past month and they have went thru flawlessly.

Some different things have popped up the past 2 weeks and better oppurtunites have arrived. I may actually move and do some other things outside of RE.

I know I had purchases contingent on inspection and apprasials but have'nt signed anything after I had these done. I feel pretty shitty about this.

Someone fill me in if people ever do this? One of the women took her home off the market. Worse case scenairo I buy both and live with it but really want to do some other things that I looked into and will be handcuffed if I pull this off. Though some of the RX'ers may be able to help.

If I do back out what excuse do I use to loan officer and seller? I assume be honest but how or what to people say in this situation? Is there a professional term (no jokes please).
 
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Yeah, you just may lose your earnest money.

Perople will probably threaten to sue you, but they won't get away with it. Don't be intimidated by any realtors. They are just pissed because they are out comission.
 

Rx Senior
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Ice, in the end you are the buyer and you are the one that signs over the money. If you decide not to do it, you just don't do it. You will lose your deposit and any money spent on inspections, lawyer fees, and any other things that were done to sell the house.

I understand why you would feel bad, but you have to do what is best for you.
 

Rx Wizard
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Yeah I am beating myself up over this and still not sure what I am going to do. If I back out of either one than what do I tell them without looking like a complete idiot?

I have came across 2-3 other decent oppurtuinites and even though I will be buying these homes with equity in them I will be taking alot of money out of "play" and to me that is death in my life.
 

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Are you putting a price on what your word means to you? Your integrity???
 

Rx Wizard
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Are you putting a price on what your word means to you? Your integrity???

and that is the problem but things happen.

I over estimated some things and this isn't everything it orginally is cracked up to be. You live and learn and I am willing to accept that part (with deposit lost) but this may not be as good a deal of others I have found.
 

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You should be able to back out. Worst case scenario is losing the deposit money you put up. In the end, I feel it's up to the seller and their agent to evaluate a buyer's credentials and ask for a larger deposit if they want more confidence that the buy will go through.
 

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and that is the problem but things happen.

I over estimated some things and this isn't everything it orginally is cracked up to be. You live and learn and I am willing to accept that part (with deposit lost) but this may not be as good a deal of others I have found.

So you are backing out because you could make more money somewhere else. Your integrity, I see, does have a price.
 

Rx. Senior
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People back out all of the time right around closing. All you lose is your earnest money which is usually $1000 or so.


I have sold 3 houses in the past 2 years and buyers backed out about 7 times in that time period. They did lose their $1000 earnest money. In one case, the house sold for $4000 more to the second buyer.

After the first house was finally sold, I wouldnt sell the second or third house to anyone who had a contingency.
 
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If you wanted to try to keep your "integrity" which I always felt was overated anyway. You could talk to the mortgage company and try to get them to tell everyone involved that you got a recent debt and no longer qualify or there is too much wrong with the inspection and something came back that doesn't sit right with you or some conditions of the appraisal don't dit well with you.

You get the point and then if all else fails, just don't show up. If you have a pre approval letter from as mortgage company it is most likely contingent on you not incurring anymore debts than you had at pre-approval so you could just go put a few dollars on a credit card that you can pay off easily next month and you can claim you broke your agreement on the pre-approval.

Bottom line, worst case scenario, you lose your earnest money and a couple people get pissed off at you. I rather have that happen, then get into a financially struglling situation/investment and start losing sleep and everything else that goes into it.
 

Rx. Senior
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The people wont be that pissed at you. TRUST ME, if happens all of the time that deals fall through. It happened to me 7 times in 3 years for 3 houses as I said above. How much was your earnest money??

In Texas, it is generally $1000. In one case, my house sold for more money the second time around. They may get more for their house than you offered anyway
 

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Integrity has nothing to do with this matter...

This is a business deal that has not closed. A better business deal came up. What's the big deal? That's exactly what the deposit money is for. If you know you're gonna lose the deposit and you don't care, I really don't see what's the big deal..

The deposit doesn't close the deal, the deposit opens up the oportunity to do the business deal. Your integrity isn't compromised unless you back out of a business deal you already put your signature to.
 

Rx Wizard
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Appreciate the thoughts and opinions from everyone.

Without going into further details here is where I stand. I may start a family but I know if and when I do that I want to be settled into a home that I will be for 10-15 years or so. I am not 100% sure this town is going in the right direction for a guy who is planning on delving into the RE market and the more I look at it the more other areas and relocating to them seem smarter. Like said someone this is business. RE is where I have new found passion but location means almost everything and the more I look aroun the more bleak things look here. Just seems to be better oppurtunites in other areas of the country.

Combine this with 1 of the houses not appraising as high as we both orginally thought so these may not be the "sweet" deals I thought they would be. The market a little softer than I estimated. Still decent but not top notch like we thought. I do know apparsial can be a little decieving and are not etched in stone.

Throw in the fact the girlfriend and I have put together a deatiled plan on how to make more money by starting a side business or 2 and the money needed maybe tied up into a home.

No reason to get in over my head and this is where this could lead is my fear as the numbers don't quite add up as well as we (the loan officer and myself) put down on paper at the beginning.
 

WVU

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you will feel even worse if this deal does not turn out as well as another that you could have bought. You are not breaking any laws and are free to back out of the deal right up until closing. Integrity is not even in play here.
 

Woah, woah, Daddy's wrong, Mommy's right.
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Ice,

It depends what the contract says and depends on state law. You may or may not still have a chance to exercise a contingency termination that would get your money back. Depends whether the contingencies are closing conditions to just due diligence/inspection type contingencies that have to be waived say 10 days after you sign the contract.

If all of your contingencies are waived, you can probably just walk away from the deposit and that should be the end of the story. In California that is the case. In Michigan, I don't know. Your contract may have a liquidated damages provision which probably says if you walk after contingencies are waived you lose your deposit and that is the end of the story. Like I said, without seeing the contract or knowing Michigan law, I can't really confirm that is the case.

As far as what to tell people, f*k the realtor, mortgage broker and seller. You don't owe them an explanation unless the contract requires one (generally they don't). You can walk away for any reason or no reason if you are willing to suffer the consequences. Just tell them things have changed financially for you and you no longer can/want the deal.

If you still have contingencies to use and get the deposit back, use those as your excuse (i.e., you don't like the condition or can't get a loan). If you have a loan contingency as a closing condition you may need your mortgage broker to confirm you can't get a loan.

If you have any specific questions or want me to look at the contract, email me at

fhmesq
at
yahoo
dot
com
 

" Thanks for tip Bricktop "
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You're deposit is only $1000 ? Holy shit, I wouldn't take my house off the market for $1000. The industry standard around here is 5 % of sales price. If you walk, other than within what your contingencies allow, you lose your deposit. However the seller can sue you for failure to comply, and if so inclined could force the sale of the property.
 

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However the seller can sue you for failure to comply, and if so inclined could force the sale of the property.

Generally that isn't true. Like I said, most contracts have liquidated damages provisions that preclude this and limit the seller's remedies and buyer's damages to retention of the deposit by seller.

HOWEVER, I am not licensed in Michigan and haven't seen your contract so what Joey says may, however unlikely, be true.

BTW, another option is just to talk to the seller and see if they will let you out for half of the deposit. They will likely need you to sign cancelation instructions once you blow out and you could hang them up from selling if you fail to sign the instructions.
 

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The requirements for a real estate salesperson license in Michigan include being at least 18 years of age when applying. Applicants are required to successfully complete 40 hours of approved prelicense courses before taking the examination. Once licensed, the salesperson needs to complete 6 hours of continuing education each year. During the three year license renewal period this will equal 18 hours of continuing education. No previous experience is required to apply for the salesperson license. Applicants must successfully pass the real estate exams, be of good moral character, and provide a letter of good standing from any other state that they have held a real estate license in.

The requirements for a real estate broker license in Michigan include being at lest 18 years of age and having at least three years full time experience as a real estate salesperson, or the equivalent experience, and must be of good moral character.

Applicants for a real estate broker license need to complete at least 90 hours of approved real estate education courses within 36 months of applying for their license. Once licensed, the licensee needs to complete at least 6 hours of continuing education each year. Thus, during the regular three-year renewal period the licensee will need 18 hours of courses. Individuals may be licensed as an individual broker, which denotes operating as a sole proprietorship, or as an associate broker who qualifies as a broker but is licensed to work under another broker.

There is no reciprocity between Michigan and any other states. All applicants must meet the full Michigan requirements.

Approved prelicensure real estate course locations and the courses they offer can be viewed online. Approved continuing education classroom schools are located throughout the state, and you can also view approved online continuing education schools online.

The real estate examinations are administered electronically by Applied Measurement Professionals, Inc. (AMP) of Lenexa, Kansas. Applicants receive their score reports within two weeks of taking the exams.

The license application forms for all agents can be printed online.

The 3-year license fee for a new broker or associate broker is $143.00 and for a salesperson is $88.00. The renewal fee for a broker or associate broker is $108.00 and for a salesperson the fee is $78.00.

Both real estate broker licenses and salesperson licenses expire on October 31st. They are valid for a three-year period. An agent may renew an agent license between November 1 and December 30 by paying a late penalty in addition to the regular renewal fee. They may not legally practice until the fees are paid and continuing education courses are completed.
 

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Generally that isn't true. Like I said, most contracts have liquidated damages provisions that preclude this and limit the seller's remedies and buyer's damages to retention of the deposit by seller.

HOWEVER, I am not licensed in Michigan and haven't seen your contract so what Joey says may, however unlikely, be true.

BTW, another option is just to talk to the seller and see if they will let you out for half of the deposit. They will likely need you to sign cancelation instructions once you blow out and you could hang them up from selling if you fail to sign the instructions.


"Specific performance is form of equitable relief in which a court orders one party to a definite and certain contract to perform what the party has promised to perform."

You will find this clause if you read your P & S agreement.
 

Woah, woah, Daddy's wrong, Mommy's right.
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"Specific performance is form of equitable relief in which a court orders one party to a definite and certain contract to perform what the party has promised to perform."

You will find this clause if you read your P & S agreement.

Maybe, maybe not. I'm not looking for an argument as we are both trying to interpret a contract we haven't seen. However, specific performance is rarely (like almost never. I have literally never seen it in a purchase agreement as a seller's remedy) a seller's remedy. I would be stunned if a custom form residential purchase agreement provides for specific performance as a seller remedy.

You are more likely to see something like this, which specifically references that the seller's sole and absolute remedy is retention of the deposit

[FONT=&quot]In the event that Buyer fails to timely perform all of Buyer’s obligations under this Agreement, including, but not limited to, closing Escrow as and when required by this Agreement and/or timely depositing the Initial Deposit and/or Additional Deposit with Escrow Holder, then Seller shall have the exclusive right to (i) waive such default, or (ii) be released from all obligations in law or equity to convey the Property to Buyer and as Seller’s sole and exclusive remedy for a default hereunder, by written notice to Buyer and Title Company, Seller shall be entitled to terminate this Agreement and be entitled to receive the Deposit plus accrued interest thereon, not as a forfeiture or penalty pursuant to California Civil Code Sections 3275 or 3369, but as full liquidated damages pursuant to California Civil Code Sections 1671, 1676 and 1677. Buyer and Seller acknowledge and agree that actual damages will be extremely difficult and impractical to ascertain. Therefore, the sum represented by the Deposit plus any accrued interest thereon shall be deemed to constitute a reasonable estimate and agreed stipulation of Seller’s damages and shall constitute Seller’s sole and exclusive remedy in the event of Buyer’s default in the performance of its obligations hereunder.[/FONT]


BTW, from what purchase agreement did you get that? BTW, that language doesn't reference that anyone has the right to specific performance, only explains what it is.
 

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