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Do I have to provide any explanation for cancelling a real-estate contract by not removing loan contingency?
I signed a contract to buy a house ten days ago, with a clause to remove loan contingency today. After seeing all the numbers provided by the lenders and concerning that the market might fall further, I have decided to cancel this contract. I told the seller's agent, in writing of course, that I'd not remove the loan contingency and cancel the contract instead. Now the sellers and their agent are asking me again and again with more "explanations"; otherwise, they would not release my deposit check. Who is right?
Just to clarify a few things here:
* yes I have a realtor representing me. She told me that my deposit would be safe and not to worry. I'm using this as an opportunity to learn more about all these things, using the collective almighty know-all knowledge of Yahoo Answers.
* I do qualify for a loan. However, with the current rate, looking at the mortgage payment & property tax, and also with all the reports indicating that the price might fall further, I now get a case of cold feet. My agent told me that just for "concern about the monthly payment" would be enough to cancel the contract, as we have never removed this loan contingency (specified in the contract as to be removed or buyer can cancel the contract - today.)
So for those recommending me to get a letter turning down my loan application, that is not really the case. This is a typical case of "cold feet during cooling down" period, which per my agent would not be possible in the case of buying a car.
BTW, this is in the state of California.
7 Answers
- teran_realtorLv 71 decade agoFavorite Answer
If you followed the guidelines of the contract, and it allows you to cancel, then you are correct. An explanation would be nice.
Make sure you followed the guidelines though. Is there any requirement to "prove" that you could not obtain the financing described in the contract?
In the state of Texas, where I believe we have a very good contract, there is no stated requirement to "prove" the inability to obtain the financing described in the contract. I find this a problem, so as a listing agent, I try to get the number of days for financing the same as the number of days in the option period. This way, if the buyer backs out during that time - no questions asked and no hard feelings.
You mention the sellers' agent, but not your own. Are you represented in this matter? You should have been. If you do get out of this one, DO NOT enter into another contract with out proper buyer's representation.
Source(s): 14 yrs San Antonio Realtor - linkus86Lv 71 decade ago
It depends on how the loan contingency was originally written. If the contingency was written based upon terms of the loan vs if a loan was possible to purchase the property. In any case it is a lot easier to get your mortgage broker to write them a letter explaining that a loan couldn't be provided at this time which should settle the seller down. It is a much better idea than the whole truth. You must not have wanted this house very much if you are merely trying to save a quarter point on your mortgage. Next time I suggest you get a buyer's representative Realtor so you won't fall under this potential litigious situation in your future. It doesn't cost you anymore to have a Realtor represent you as a buyer.
Source(s): I am a Realtor - boston857Lv 51 decade ago
Monies deposited with the seller as earnest money towards the ourchase are typically non refundable since these are the only damages a seller can get from a prospective buyer in the event a deal falls through. However, if the deal falls through for a reason not of the buyer or seller's making, the depoit MAY be refunded. Hence the need for the seller to understand your recssion of the contract.....
In the future, get the loan part going before you leap into signing a purchase contract..........
- KLLv 51 decade ago
You'll have to provide documentation that you were denied for financing.
Before making this type of commitment, you should have done your research into the financing. Deciding not to buy a house you've signed a contract on isn't like deciding not to buy that new pair of shoes...
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- Anonymous1 decade ago
You have to show you applied for the loan and was turned down.
Get a better lawyer he should be explaining what these things mean to you.
- papabear098Lv 41 decade ago
It would be nice if you told them what you have just said and leave it at that. Have your deposit check canceled ASAP. and call it day. If they cant understand its a soft market then they need their heads examined. Good Luck
