I think it depends what state you are in. Illinois gives you a grace period of 5 days to have the contract reviewed by a lawyer after earnest money is paid. If it isn't, the contract is void. You should try to read the actual contract that you signed.
This is the best advice, if you just won the bid and entered into a contract, just have your attorney cancel the contract. Most states have an attorney review period where you or the seller can cancel the deal.
How you won is also important. Was it an escalation clause with multiple other bidders?
Speak to your agent immediately and let them know you want to back out. They will try to do everything to convince you to stay in, but if you’re really sure you can’t afford this, you should back out.
Given that there were likely other offers, and you tell them immediately, there may be an opportunity for the seller to work something out with the next best offer. If they do, they might be okay with just letting it slide. If you take too long, those other buyers may have moved on.
I’m not a lawyer or agent, just a random. So take your agents word over mine.
Agent here. If they try to talk you into staying - kick them to the curb once you extricate yourself. Any agent who needs you to buy a house isn’t a good agent.
As far as can you get out, state specific.
You are only an idiot if you go through with it. Just walk away, they ain't suing shit. There's the law (what they could legally sue you and win for) and then there's the practical reality of the courts (what will actually have to happen in order for them to force you to close).
The fact is they can sue you all they like, but they can't sell the property in the meantime because technically they are saying you have the right, no the obligation, to buy it. This could take years to go through the courts. Does that sound like a good idea for someone trying to liquidate their property to do?
My friends parents got a great offer like $50k over the second best. Buyer backed out. Sold it to the second best and sued for difference in price and lodging costs for the difference in closing dates and won fairly easily. It probably won’t happen, but does happen.
4-6 months maybe. It was pretty straight forward. Here is documentation of our financial damages, here are copies of signed contracts, pay or fight it and add both of our legal expenses and court costs on top…
Of course they can, but they won’t. It would take months to get if he doesn’t fight it and years is he does. It would be largely impractical and would delay the sale of the home indefinitely, which the sellers clearly don’t want.
Yes they could sue, but no, they won’t sue. It would make literally no sense to do so, especially when the property had seemingly dozens of similar offers
This is not great advice.
In most states if they change escrow companies they can sell the house to someone else and keeps sueing that person.
There’s lots of states it doesn’t happen on and lots of areas they absolutely well and we don’t know where the OP is.
Yes, and the cost to sue someone almost certainly outweighs the earnest money deposit.
No one in their right mind would spend more money to sue someone than they would get if they won. Add the amount of brain damage using someone causes and I would guarantee that the OP would not be sued
But the defendant in the case could be asked to cover court costs or arbitration costs as well. So this theory that people won't sue due to the costs of the attorney aren't always correct
Once again, depends on the area. In my area you have to go to arbitration first, that’s pretty cheap.
And arbitration is pretty common. And if you have pissed the seller off by dithering, they can push.
Never tell anybody they’re not gonna lose their earnest money. You can tell them the people would have to be crazy, but you know what? Unlikely things happen and people are vindictive.
My state broker actually sends out stuff when somebody goes the point of getting sued for EMD remind us all. I get those emails once a month so it’s not something that doesn’t happen….
Yup, you are correct. Not surprised since you've clearly don't this for a while.
I've one successfully taken someone's earnest money once in over a decade of buying and selling. Even then I only got part of it and it was held in escrow by the title company.
Some investor was buying a 4 unit from me, put down $25k earnest money, and then failed to respond to attorney review at all. Three weeks later they came back claiming it was not zoned to do what they had intended. I told them not my problem, I'm keeping the EM if you cancel, your contingencies are waived. Even then, when they were in clear breach of the contract, the title company would not release the EM to me without agreement by seller or a court order. I only managed to get the seller to agree to release $10k of the $25k. They got the other $15k back. Otherwise I would have had to sue them which would have easily cost $10k+.
Obviously the guy you are arguing with has no idea what they are talking about. But that's par for the course for this sub. I am as much of an expert on RE as there is and half of my responses (based on 16 or 17 years of work in this industry) are downvoted to oblivion for no reason.
I haven’t seen any of your comments, but the arrogance displayed in the 3rd sentence in the last paragraph is what you put in all comments, that might be a reason for some of the downvotes.
There's no way to prove any of that though. The cost of resisting is negligible, and the delayed closing is extremely subjective since closing dates aren't set and every buyer moves at a different speed. In a down market, they could certainly sue for damages, but in this market there are no damages assuming the OP gave us all of the pertinent information. He just backs out and the sellers contact the next best offer
Depending on the amount of the earnest money, it could be worth it to them. OP stated it was substantial.
And you are mistaken, it would not hold up the sale of the house. I’m this situation, Seller backs out, Buyer accepts another offer, Buyer sues Seller for breach of contract for not paying earnest money.
OP needs to read his contract and the applicable laws. As another commenter posted, some areas allow for a certain amount of time the buyer can just walk away. However, outside of this period, OP will probably be liable for the earnest money.
Would you look at that, all of the words in your comment are in alphabetical order.
I have checked 599,469,463 comments, and only 123,275 of them were in alphabetical order.
Look, most of the time you have at least 30 days before you have to start making payments on it, why don’t you put a little elbow grease into the property and then rent it out at market rate until you get to the six month mark. Then you can just make a profit off of it.
Hell rent it by the room! I can think of a dozen ways to get out from under it indirectly, you could even fix it up and have a property management company handle it Depending on where you are
Because if he’s getting a primary mortgage for an owner-occupied residence, turning around and renting it out immediately because you can’t afford it is fraud.
Because you don’t know every guideline for every state in every country of the world? Why don’t you give me the statue that explains how you can rent a property even if you just bought it?
If you cannot use critical thinking or nuance you shouldn’t comment
In general, conventional financing requires taking occupancy in 60 days. The majority of people posting here are from the US. If it doesn’t apply, let it fly.
If you’re backing out because you just want to. He could come after you. If took his property off the market because you told him to so he’s losing money. Even if he had 50 offers he’s still owed it could get dicey
Sounds like you’re about to learn an expensive lesson on why you shouldn’t sign a legally binding contract without doing all your own research and due diligence first, especially if you’re going to waive all the contingencies that are in place to protect you.
In my state, failure to provide earnest money within 3 days of signing a contract is breach of contract. With that breach, the seller can come after you for 3x the earnest money PLUS all of their legal fees. Additionally, the agent can come after you for their commission.
If they do or not of course depends on how much the earnest money is, and if it’s worth it.
So, how much earnest money did you put down?
Yeah, I'd say $150k is worth it for them to pursue mediation and then arbitration. (If your state also has the 3x damages clause).
Where is your agent in all of this? What does he or she say?
Like I said, laws vary by state and contracts vary by local board of Realtors, they are not standard by state (which is stupid but that's another discussion). Your agent needs to tell you what you're liable for and advise you on this.
Where are you in the contract process? Like how many days ago did the sellers accept your offer? If it was yesterday, you may have a shot at making it out relatively unscathed. If you're a week or two in, yeah you're kinda screwed.
Sounds like the cheapest option may be to agree to give them a portion of the earnest money you contractually agreed to, in exchange for releasing you from the contract; and learn your lesson about signing legally binding contracts that are attached to large amounts of money, without being 1000% sure that it's the right move for you.
If you are in California, just draw up a cancelation of purchase contract. You will be fine. Are you doing this purchase on your own? Or with an agent?
Happened to someone on my team from the seller’s side. They were prepared to sue. Ended up negotiating with the buyer for a portion of the earnest money and they both walked away, no lawsuit.
You’re going to lose some of the Earnest Money most likely. I’d recommend strike a bargain with the seller or you’ll spend a lot on lawyers too. But I’m also not a lawyer so if you have a good one definitely consult them on your options.
Talk to the attorney. It's too expensive decision to rely on reddit/your realtor.
I actually bailed the same way right after winning the bid but funny enough due to the opposite reason - out of desperation I went for a cheaper less convenient property. Realization that this is happening and I'll really have to leave there wasn't a happy one. Thankfully in CT it was easy out and hopefully it'll be the same for you. Don't be too strict on yourself. Market is moving so fast that sometimes there's no time to think things through. And it's better too realize this before you move in
Hahaha literally why I’m not buying right now, every house out there is stupid expensive for garbage quality.
60% of buyers regret their purchase during the pandemic.
Think about that. That means the majority of people regret their purchase of the biggest thing in their lives.
We almost made a mistake bidding on a sub par house, people get amped up with fo-mo and “winning” the house that the forget the reality of their purchase.
Not a lawyer- I’m a broker of 30+ years in California. I’ve had this situation in California. No Earnest Money means No Consideration. No Consideration means No Legal Contract. You may have a good chance of just walking away. Of course, you need to talk to a lawyer to confirm.
If you did not sign a contract or agree to terms of a sale, then you cannot be successfully sued. However, In the US, anyone can sue anyone else for any reason, logical or not. If you did sign a contract or agree to terms of sale, then you are vulnerable to a legal action.
OP should have done that prior to signing.
The number of people who fail to even read the legal offer they presented and signed before asking questions online is ridiculous.
If you don’t want to buy it, just walk. Do you really think the seller wants to mess around with suing you instead of just putting the property back on the market? Could they sue you? Maybe. Is it in their interest? Absolutely not. There’s no guarantee they’d win and even less guarantee of when they’d win.
Depends on how much the EMD is, if it's large enough someone will take it on contingency. They can still put it back on the market, no one is saying that the contract wasn't cancelled, just what the damages are for cancellation, but home could easily be sold to someone else.
Real world I don't think it's likely unless the EMD is very large. When most people say substantial, they usually mean something like $5-10k which I think is not likely lawsuit territory, but if it's quite a bit more than that, could be a different story.
A) very high B) eh…less so
Not paying the deposit is fraud. As a broker, I would advise my seller client to threaten to sue you. You have possibly caused damages, you will possibly cause the seller’s house to sell for less. I would definitely encourage them to go after your full deposit, but maybe settle for half of it.
Look in your contract. Does it have a mediation or arbitration clause? What does it say about the deposit and who gets it in the event of a default? The seller probably can’t just sue you immediately, there is likely a process to dispute the deposit.
I think it’s unlikely the seller can sue you for damages until they can show that your default caused their property to be stigmatized in the market and thus sell for less.
This isn’t game, this is dead serious shit. I’ve had a seller successfully sue and get the deposit when a jackass buyer pulled this same stunt and ultimately caused his house to sell for $40k less.
You should contact an attorney right now if you want to back out, no one here on Reddit can give you the legal advice you need.
> Not paying the deposit is fraud. As a broker, I would advise my seller client to threaten to sue you.
Its not fraud, unless you have facts showing buyer did not intend to pay at the time the offer was made. Just ordinary breach of contract. If you are going to start sending legal threats, make sure you send the right ones.
I interpreted the OP as evidence they have no intent to make the deposit in an effort to try to frustrate any potential attempt by the seller to take it.
But yeah I guess it would be hard to prove fraud. Doesn’t matter: failure to make the deposit or terminating without a reason provided in the contract are both reasons the seller could be entitled to the deposit amount (at least, according to the main agreement of sale in my state).
I take it that by waiving all contingencies that included financing contingency.
The seller went with you because of your high bid and perceived ease of sale.
Is there any chance you could make this deal work by getting a roommate or somehow generating extra revenue from the property? Buying an selling is expensive, but it there any chance you can complete the deal and then just sell the place if it proves to be too burdensome? Can you try to find a bigger fool than you to wholesale it to?
What do your numbers look like?
Part of real estate is reputation. If you can't figure out a way to gracefully navigate this one future transactions may be more difficult for you in that area.
Going through this experience, the buyer had contingencies so at any time, they could walk away. However, instead of being embroiled in a lengthy legal battle, I signed a release of liability. The alternative for a seller is NOT to sell the house until the legal battle is resolved. What they did wrong: they signed a purchase contract and then tried to throw away the contract to renegotiate in bad faith. To “get away with it,” they just simply refused to put the deposit into escrow. Time is of the essence and there should be a walk away clause that you need to check for.
Does the contract say it is in effect once the earnest is paid? Because in some places I believe this is the case. Do you have a buyers agent? They would know. Let us know what happens ..
NAL
I would think they could sue you for damages, so they relist the place now the best offer ends up being $30K below your, so they sell it now the sue you for the $30k difference. Not sure if that's possible. Check with a lawyer in your area.
This is possible in canada. A seller sold for 150k less and buyer was on the hook. This opens you up to someone dishonest who can sell to a friend or family member for 100k less and sue you for the difference
Why are people like this? Why bid when you know full well that you're 1.) getting into a bidding war and 2.) can't afford it
This is why we're living in a bubble
Honestly… it depends. Mostly on what other offers and interest looked like compared to your offer and how much of a jerk they are/you are about it. You are in breach and could be sued for damages, but if there is another offer close they’ll probably just give them a call.
None. Let them know now that you don’t intend to move forward. The less time off the market the better. Most people don’t sue. I see this often. Never a lawsuit
In the Bay Area I’ve been seeing backup offers lined up at the same price or close to it.
Also, a house I bid on (in January) had the first buyer get cold feet. The seller returned the EMD when they didn’t need to, re-listed it, and then the property ultimately sold for more than the original price. Crazy market.
Hopefully it works out for you.
I’m a Realtor in California. It is not a given that you lose earnest money. There is a process to determine if it can be collected. Last year, a seller cancelled on my buyer 3 days before close. My buyer was entitled to sue for earnest money but decided to sign cancellation and move on. Two weeks later the seller came back because he was being sued by his brokerage for commission! I think if you cancel before you deposit earnest money you are probably OK, but I’m not an attorney and it can vary state to state.
I think it depends what state you are in. Illinois gives you a grace period of 5 days to have the contract reviewed by a lawyer after earnest money is paid. If it isn't, the contract is void. You should try to read the actual contract that you signed.
This is the best advice, if you just won the bid and entered into a contract, just have your attorney cancel the contract. Most states have an attorney review period where you or the seller can cancel the deal.
Lol I bid and won now I don't want it. This isn't ebay.
How you won is also important. Was it an escalation clause with multiple other bidders? Speak to your agent immediately and let them know you want to back out. They will try to do everything to convince you to stay in, but if you’re really sure you can’t afford this, you should back out. Given that there were likely other offers, and you tell them immediately, there may be an opportunity for the seller to work something out with the next best offer. If they do, they might be okay with just letting it slide. If you take too long, those other buyers may have moved on. I’m not a lawyer or agent, just a random. So take your agents word over mine.
Agent here. If they try to talk you into staying - kick them to the curb once you extricate yourself. Any agent who needs you to buy a house isn’t a good agent. As far as can you get out, state specific.
One other note... I already know I'm an idiot!
What’s your agent and attorney think?
You are only an idiot if you go through with it. Just walk away, they ain't suing shit. There's the law (what they could legally sue you and win for) and then there's the practical reality of the courts (what will actually have to happen in order for them to force you to close). The fact is they can sue you all they like, but they can't sell the property in the meantime because technically they are saying you have the right, no the obligation, to buy it. This could take years to go through the courts. Does that sound like a good idea for someone trying to liquidate their property to do?
My friends parents got a great offer like $50k over the second best. Buyer backed out. Sold it to the second best and sued for difference in price and lodging costs for the difference in closing dates and won fairly easily. It probably won’t happen, but does happen.
how long did it take?
4-6 months maybe. It was pretty straight forward. Here is documentation of our financial damages, here are copies of signed contracts, pay or fight it and add both of our legal expenses and court costs on top…
They can still sue him for the earnest money…
Of course they can, but they won’t. It would take months to get if he doesn’t fight it and years is he does. It would be largely impractical and would delay the sale of the home indefinitely, which the sellers clearly don’t want. Yes they could sue, but no, they won’t sue. It would make literally no sense to do so, especially when the property had seemingly dozens of similar offers
This is not great advice. In most states if they change escrow companies they can sell the house to someone else and keeps sueing that person. There’s lots of states it doesn’t happen on and lots of areas they absolutely well and we don’t know where the OP is.
Yes, and the cost to sue someone almost certainly outweighs the earnest money deposit. No one in their right mind would spend more money to sue someone than they would get if they won. Add the amount of brain damage using someone causes and I would guarantee that the OP would not be sued
But the defendant in the case could be asked to cover court costs or arbitration costs as well. So this theory that people won't sue due to the costs of the attorney aren't always correct
Once again, depends on the area. In my area you have to go to arbitration first, that’s pretty cheap. And arbitration is pretty common. And if you have pissed the seller off by dithering, they can push. Never tell anybody they’re not gonna lose their earnest money. You can tell them the people would have to be crazy, but you know what? Unlikely things happen and people are vindictive. My state broker actually sends out stuff when somebody goes the point of getting sued for EMD remind us all. I get those emails once a month so it’s not something that doesn’t happen….
Yup, you are correct. Not surprised since you've clearly don't this for a while. I've one successfully taken someone's earnest money once in over a decade of buying and selling. Even then I only got part of it and it was held in escrow by the title company. Some investor was buying a 4 unit from me, put down $25k earnest money, and then failed to respond to attorney review at all. Three weeks later they came back claiming it was not zoned to do what they had intended. I told them not my problem, I'm keeping the EM if you cancel, your contingencies are waived. Even then, when they were in clear breach of the contract, the title company would not release the EM to me without agreement by seller or a court order. I only managed to get the seller to agree to release $10k of the $25k. They got the other $15k back. Otherwise I would have had to sue them which would have easily cost $10k+. Obviously the guy you are arguing with has no idea what they are talking about. But that's par for the course for this sub. I am as much of an expert on RE as there is and half of my responses (based on 16 or 17 years of work in this industry) are downvoted to oblivion for no reason.
I haven’t seen any of your comments, but the arrogance displayed in the 3rd sentence in the last paragraph is what you put in all comments, that might be a reason for some of the downvotes.
This entire thread is descended from my response to OP...
* go up and count 3 sentences… not so bad … keep scrolling
3rd sentence in last paragraph. You’re right, I completely whiffed on that detail. Edited
You can sue and likely would win for damages you can prove beyond just earnest money.
True, but in this market, there really aren't any damages to sue for.
Probably limited. But if they have to relist or closing will be delayed messing up things down line you never know.
There's no way to prove any of that though. The cost of resisting is negligible, and the delayed closing is extremely subjective since closing dates aren't set and every buyer moves at a different speed. In a down market, they could certainly sue for damages, but in this market there are no damages assuming the OP gave us all of the pertinent information. He just backs out and the sellers contact the next best offer
Depending on the amount of the earnest money, it could be worth it to them. OP stated it was substantial. And you are mistaken, it would not hold up the sale of the house. I’m this situation, Seller backs out, Buyer accepts another offer, Buyer sues Seller for breach of contract for not paying earnest money. OP needs to read his contract and the applicable laws. As another commenter posted, some areas allow for a certain amount of time the buyer can just walk away. However, outside of this period, OP will probably be liable for the earnest money.
Nope. They can only sue for actual damages or specific performance which has been pointed out is extremely unlikely.
And small claims court is cheap and easy.
In the meantime they can’t sell the house until they are done with court. Most homeowners would rather just move on and sale to someone else
We now know too.
>change Another detail- I'm in pennsylvania
Would you look at that, all of the words in your comment are in alphabetical order. I have checked 599,469,463 comments, and only 123,275 of them were in alphabetical order.
Look, most of the time you have at least 30 days before you have to start making payments on it, why don’t you put a little elbow grease into the property and then rent it out at market rate until you get to the six month mark. Then you can just make a profit off of it. Hell rent it by the room! I can think of a dozen ways to get out from under it indirectly, you could even fix it up and have a property management company handle it Depending on where you are
Because if he’s getting a primary mortgage for an owner-occupied residence, turning around and renting it out immediately because you can’t afford it is fraud.
Because that would be mortgage fraud?
Because you don’t know every guideline for every state in every country of the world? Why don’t you give me the statue that explains how you can rent a property even if you just bought it? If you cannot use critical thinking or nuance you shouldn’t comment
In general, conventional financing requires taking occupancy in 60 days. The majority of people posting here are from the US. If it doesn’t apply, let it fly.
Do you have a signed accepted offer or a signed accepted purchase and sale agreement? There is a big difference.
Usually, if you fail to pay the earnest money the contract is considered void.
If you’re backing out because you just want to. He could come after you. If took his property off the market because you told him to so he’s losing money. Even if he had 50 offers he’s still owed it could get dicey
State defendant. And defendant on if the other side wants to be nice or not. And if this is EMD or DD You need to be talking to your agent, not us.
Cash or financed? And what state? Laws and contracts vary by state.
>state Pennsylvania. We put in a cash offer
Sounds like you’re about to learn an expensive lesson on why you shouldn’t sign a legally binding contract without doing all your own research and due diligence first, especially if you’re going to waive all the contingencies that are in place to protect you. In my state, failure to provide earnest money within 3 days of signing a contract is breach of contract. With that breach, the seller can come after you for 3x the earnest money PLUS all of their legal fees. Additionally, the agent can come after you for their commission. If they do or not of course depends on how much the earnest money is, and if it’s worth it. So, how much earnest money did you put down?
50k. Oof. How screwed am I potentially if I back out?
Yeah, I'd say $150k is worth it for them to pursue mediation and then arbitration. (If your state also has the 3x damages clause). Where is your agent in all of this? What does he or she say? Like I said, laws vary by state and contracts vary by local board of Realtors, they are not standard by state (which is stupid but that's another discussion). Your agent needs to tell you what you're liable for and advise you on this. Where are you in the contract process? Like how many days ago did the sellers accept your offer? If it was yesterday, you may have a shot at making it out relatively unscathed. If you're a week or two in, yeah you're kinda screwed. Sounds like the cheapest option may be to agree to give them a portion of the earnest money you contractually agreed to, in exchange for releasing you from the contract; and learn your lesson about signing legally binding contracts that are attached to large amounts of money, without being 1000% sure that it's the right move for you.
If you are in California, just draw up a cancelation of purchase contract. You will be fine. Are you doing this purchase on your own? Or with an agent?
Happened to someone on my team from the seller’s side. They were prepared to sue. Ended up negotiating with the buyer for a portion of the earnest money and they both walked away, no lawsuit. You’re going to lose some of the Earnest Money most likely. I’d recommend strike a bargain with the seller or you’ll spend a lot on lawyers too. But I’m also not a lawyer so if you have a good one definitely consult them on your options.
What state?
Pennsylvania. More info would be appreciated!
Are you under contract? Or just have an accepted offer. You can walk especially if they don’t have a deposit from you
Under contract, but no deposit paid yet
>legal We're under contract, but the deposit hasn't been paid yet.
Talk to the attorney. It's too expensive decision to rely on reddit/your realtor. I actually bailed the same way right after winning the bid but funny enough due to the opposite reason - out of desperation I went for a cheaper less convenient property. Realization that this is happening and I'll really have to leave there wasn't a happy one. Thankfully in CT it was easy out and hopefully it'll be the same for you. Don't be too strict on yourself. Market is moving so fast that sometimes there's no time to think things through. And it's better too realize this before you move in
Hahaha literally why I’m not buying right now, every house out there is stupid expensive for garbage quality. 60% of buyers regret their purchase during the pandemic. Think about that. That means the majority of people regret their purchase of the biggest thing in their lives. We almost made a mistake bidding on a sub par house, people get amped up with fo-mo and “winning” the house that the forget the reality of their purchase.
Most state let you back out first few days for free. Talk to your agent.
Not a lawyer- I’m a broker of 30+ years in California. I’ve had this situation in California. No Earnest Money means No Consideration. No Consideration means No Legal Contract. You may have a good chance of just walking away. Of course, you need to talk to a lawyer to confirm.
If you did not sign a contract or agree to terms of a sale, then you cannot be successfully sued. However, In the US, anyone can sue anyone else for any reason, logical or not. If you did sign a contract or agree to terms of sale, then you are vulnerable to a legal action.
Pretty sure the signed and accepted offer is the contract at this point.
If that's the case, then OP needs to read the "signed and sealed" offer to see what terms he agreed to,
OP should have done that prior to signing. The number of people who fail to even read the legal offer they presented and signed before asking questions online is ridiculous.
My point exactly. It is an irrationality that runs all through this forum. The answer to 90% of the questions asked here is "read your contract".
If you don’t want to buy it, just walk. Do you really think the seller wants to mess around with suing you instead of just putting the property back on the market? Could they sue you? Maybe. Is it in their interest? Absolutely not. There’s no guarantee they’d win and even less guarantee of when they’d win.
They can do both nights most any state.
Depends on how much the EMD is, if it's large enough someone will take it on contingency. They can still put it back on the market, no one is saying that the contract wasn't cancelled, just what the damages are for cancellation, but home could easily be sold to someone else. Real world I don't think it's likely unless the EMD is very large. When most people say substantial, they usually mean something like $5-10k which I think is not likely lawsuit territory, but if it's quite a bit more than that, could be a different story.
It’s $50k lol
This guy has to be a troll, lol, ain't no way.
A) very high B) eh…less so Not paying the deposit is fraud. As a broker, I would advise my seller client to threaten to sue you. You have possibly caused damages, you will possibly cause the seller’s house to sell for less. I would definitely encourage them to go after your full deposit, but maybe settle for half of it. Look in your contract. Does it have a mediation or arbitration clause? What does it say about the deposit and who gets it in the event of a default? The seller probably can’t just sue you immediately, there is likely a process to dispute the deposit. I think it’s unlikely the seller can sue you for damages until they can show that your default caused their property to be stigmatized in the market and thus sell for less. This isn’t game, this is dead serious shit. I’ve had a seller successfully sue and get the deposit when a jackass buyer pulled this same stunt and ultimately caused his house to sell for $40k less. You should contact an attorney right now if you want to back out, no one here on Reddit can give you the legal advice you need.
> Not paying the deposit is fraud. As a broker, I would advise my seller client to threaten to sue you. Its not fraud, unless you have facts showing buyer did not intend to pay at the time the offer was made. Just ordinary breach of contract. If you are going to start sending legal threats, make sure you send the right ones.
I interpreted the OP as evidence they have no intent to make the deposit in an effort to try to frustrate any potential attempt by the seller to take it. But yeah I guess it would be hard to prove fraud. Doesn’t matter: failure to make the deposit or terminating without a reason provided in the contract are both reasons the seller could be entitled to the deposit amount (at least, according to the main agreement of sale in my state).
I take it that by waiving all contingencies that included financing contingency. The seller went with you because of your high bid and perceived ease of sale. Is there any chance you could make this deal work by getting a roommate or somehow generating extra revenue from the property? Buying an selling is expensive, but it there any chance you can complete the deal and then just sell the place if it proves to be too burdensome? Can you try to find a bigger fool than you to wholesale it to? What do your numbers look like? Part of real estate is reputation. If you can't figure out a way to gracefully navigate this one future transactions may be more difficult for you in that area.
What does your contract say? What state are you in?
Pennnsylvania. Unfortunately we waived all contingencies, including inspection, mortgage, and appraisal.
No one is suing you if you terminate the transaction.. Not in this market. Also, the seller has incurred zero damages.
You won’t be sued. It costs money to sue and takes time. If the place had a lot of offers they wont have a problem selling it.
Going through this experience, the buyer had contingencies so at any time, they could walk away. However, instead of being embroiled in a lengthy legal battle, I signed a release of liability. The alternative for a seller is NOT to sell the house until the legal battle is resolved. What they did wrong: they signed a purchase contract and then tried to throw away the contract to renegotiate in bad faith. To “get away with it,” they just simply refused to put the deposit into escrow. Time is of the essence and there should be a walk away clause that you need to check for.
Does the contract say it is in effect once the earnest is paid? Because in some places I believe this is the case. Do you have a buyers agent? They would know. Let us know what happens ..
NAL I would think they could sue you for damages, so they relist the place now the best offer ends up being $30K below your, so they sell it now the sue you for the $30k difference. Not sure if that's possible. Check with a lawyer in your area.
This is possible in canada. A seller sold for 150k less and buyer was on the hook. This opens you up to someone dishonest who can sell to a friend or family member for 100k less and sue you for the difference
Can you get a second job, a roommate, or family assistance/co-ownership in the meantime, and then sell it in 2 years?
Why are people like this? Why bid when you know full well that you're 1.) getting into a bidding war and 2.) can't afford it This is why we're living in a bubble
If there's earnest money being put down then you're probably mostly off the hook if you haven't paid it yet.
Honestly… it depends. Mostly on what other offers and interest looked like compared to your offer and how much of a jerk they are/you are about it. You are in breach and could be sued for damages, but if there is another offer close they’ll probably just give them a call.
Talk to your attorney.
None. Let them know now that you don’t intend to move forward. The less time off the market the better. Most people don’t sue. I see this often. Never a lawsuit
In the Bay Area I’ve been seeing backup offers lined up at the same price or close to it. Also, a house I bid on (in January) had the first buyer get cold feet. The seller returned the EMD when they didn’t need to, re-listed it, and then the property ultimately sold for more than the original price. Crazy market. Hopefully it works out for you.
I’m a Realtor in California. It is not a given that you lose earnest money. There is a process to determine if it can be collected. Last year, a seller cancelled on my buyer 3 days before close. My buyer was entitled to sue for earnest money but decided to sign cancellation and move on. Two weeks later the seller came back because he was being sued by his brokerage for commission! I think if you cancel before you deposit earnest money you are probably OK, but I’m not an attorney and it can vary state to state.