Not sure what you are talking about here. You have a contract to sell the house at $300,000. Buyer defaults. You sell the house 3 weeks later at $250,000. The original buyer caused damages in the amount of at least $50,000 by defaulting.
Depends on the reason… did they just change their mind or find something they liked better?.. that’s bad faith.
Or did they lose their job?.. Did their kid get leukemia?.. it depends on the reason for their failure to perform.
They can usually come up with something, and it’ll be hard to prove that they acted in bad faith.
I’m not saying it’s impossible for you to win, I’m saying it’s a long shot and probably not worth the effort. Ask a good RE lawyer.
No it isn’t. Bad faith is if a party knows at the time of signing that they will not perform the contract.
But there are reasons other than preplanned bad faith…contingencies in the contract such as financing or sale of the purchasers previous home came into play, house did not pass inspection/the cost to repair was unreasonable…
Sure. I’m just saying that one party changing its mind after the contract is signed isn’t bad faith.
Which is exactly why contracts have liquidated damages clauses. There is no way we can answer the OP’s question because we haven’t seen the contract. Damages are limited to whatever the contract states. If is a fairly typical real estate sales contract, damages to seller are usually limited to deposited or escrowed amounts.
Right. I should be surprised this thread has 26 comments, but I’m not.
Only 26. We need to get more people here
Requiring more earnest $$$ or a partial appraisal waiver especially if it’s a cash offer can help with a buyer who offers too much or is indecisive
Let’s say a CMA says your house is worth $284k. As a seller, you need to consider the risk that the price the buyer offered i.e. $300k will not appraise.
Think of it this way: if the buyer backs out of the deal, what have you lost compared to if they didn’t put in an offer or had you rejected their offer? How many offers did you consider? How was you days on market effected? A short closing also minimizes the length of time your home remains on the market
One thing I’ve seen in my neighborhood over the last several years is that homes remain on the market, taking backup offers, up until closing. Sometimes that is reflected on the for sale sign, sometimes not, but it has definitely been disclosed in the listing.
A contract is a promise. If you sign a contract and deposit earnest money, you have made a promise to buy and backed up that promise with money. That is why it is called “earnest money.” It means you have made the offer in earnest.
If the Buyer could just change his mind and walk, why have a contract at all?
Do you think you disagree with me? I don’t think you do. Bad faith would be a cause for voiding a contract (and potentially seeking damages greater than the earnest money because the contract was never valid). A buyer changing his mind is not necessarily bad faith, and so the loss of earnest money should be the proper remedy if that’s what the contract stipulates.
Nah. OP lost interest in the topic days ago, and everyone left is just speculating on what the contract says. That’s not all that useful.
The buyer submitted a cash offer. But recently decided to apply for financing. This is when I started
getting worried about the buyer having buyers remorse. Let that be a stern lesson to any real estate buyer, you are better off submitting an offer subject to a financing contingency and appraisal contingency. That way you as a buyer will be better able to cancel the contract if you have buyer’s remorse.
The contract says that if the buyer does not close — they will forfeit the escrow deposit. If the seller is not satisfied with this. Buyer & seller agree to go to mediation. If this does not result in a agreement. The seller can take legal action against the buyer.
I assume that if the seller is awarded the escrow deposit, this money is fully taxable–correct?
It’s a good idea to ask for additional EM$ if the initial offer is weakened by things like “Oh… BTW, we’ll have to get a loan.” Their actions are modifying the original deal, to be fair to you, the concessions shouldn’t be all in their favor.
You could condition your acceptance of the offer modification by stipulating that you will entertain additional offers from new Buyers and specify that should you receive an acceptable offer that the first Buyer shall have X days to close or the original offer shall become null & void…
If we’re talking about history, this will be wudda, cudda shudda advice. But your Selling agent should have been on top of this.
If the buyer defaults, the selling agent will get a hefty percentage of the escrow money. The buyer never mentioned anything about a loan. The offer was a cash offer. Next time I sell a house, I would not consider buying another house or renting until the actual close happens.
That’s a bit of advice that I gave to most of my Sellers when I was a real estate broker.
Looking for a house before closing your present home has some inherent disadvantages:
1.) It makes you a motivated Seller, and, to an educated Buyer, a motivated Seller usually equals a lower selling price.
2.) It makes you a compromised negotiator as a Buyer. You’re more apt to make concessions resulting in an advantage to the Seller of the home you are buying.
3.) Things often go awry in real estate transactions. You double you chance of something bad happening with two simultaneous and interlocked transactions. If the person buying your house hasn’t closed their home either, the chances are very good all three deals will go south.
My advice to my Seller/Buyers regarding this scenario was followed maybe half the time.