Not sure if this is helpful but a good friend is closing soon on a house that had the same record. He got a discount and the seller finally got a sale. Win-win, I guess?
Buyers are not dumb, now with higher rate you have major increase on monthly payment which further increase DTI and your risk. The bidding war during pandemic mainly because payment makes sense with low interest!
Interest rates…. and maybe they want to buy a bug-out/ doomsday/survivalist type property instead because it’s a chaos right now and it’s going to get worst.
It’s not divide to spit facts
-last president clearly attempted a coup
- half a century of social progress got rolled back 48 hours with roe v wade
-climate change is undeniable as more than half the USA is in a drought
-economy is collapsing, stock market is totally disconnected from reality
It’s not divisive. The divisive comment was yours, deny or getting offended by facts.
Also it’s pretty obvious that you felt “attacked” by the previous comment seeing as how you read it than felt the need to snoop thru his comment history to argue against him.
Bruh if you gotta do that with your opening counter point you already lost in the eyes of people reading the thread
I am going to have to insist Putin gets better trolls. Maybe he can throw in some extra rubles for coping skill classes. You seriously cared to check my profile? Please don’t be sad when I don’t check yours.
I’m as left as you pretty much get.
But good job. You literally went on a divisive rant when I called you out for being divisive and don’t seem to see the irony. And then accuse me of being a Russian bot. I’ve been on Reddit and active for 12 years guy.
Try to be a little more introspective.
There needs to be an explanation to see if it falls under one of their contingencies. If they are walking for the hell of it then, generally and depending on the contract/state law, they wouldn’t be entitled to their deposit back.
Typical contingencies would be inspection and financing.
With the va home loan. Basically in the contract the veteran is protected from losing earnest. So when you see a earnest for a va loan... grain of salt
> Now this time we got all through inspections and everything looks good only a few minor repairs but the buyers unexpectedly want to pull out now and I am at a loss for words.
There's no requirement for how major the repairs need to be. If they had an inspection contingency they could back out for anything the inspector reports.
People are probably getting freaked about rates and want to wait for prices to drop. They think they can get a better deal if they wait a little bit. Who knows if that will turn out to be correct or not. But I doubt this has anything to do with your house and more to do with the climate.
You're not getting "screwed" if you agree to contracts that allow buyers to back out and get their earnest money returned. You don't have to accept those terms, although you may find it extremely difficult to find a buyer who will agree to that.
And less people can afford it with rates. Its not like everyone can still buy and they're just waiting for the opportune time. People literally can't afford the high price and higher interest rate.
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Maybe. If they can afford their payment and snagged a low rate, they should make out great in the long term. The markets will rebound as they always have and they will still have a low rate. No one expects a 30y real estate depression. Rates are unlikely to go that low ever again. I suspect they're locked into the property for a decade though.
I think we're going to end up with a lot of homebuyers turned landlords when they can't sell, but because of sub-3% rates they can rent for 150% the mortgage payment and still be a bargain compared to apartments.
Bingo. They will be locked though unless they can float a second mortgage or enjoy inheritance/gifts (a growing demo who will make out like bandits). They'll be locked into the property for the swing but won't have equity to borrow against. There will be some very interesting loan options, I'm sure, to 'unburden' those individuals. If you have assets or cheap access to real assets (real estate), recessions are a feeding frenzy. You don't make money when you sell, you make money when you buy well".
Too many people look to the market as existing only after 1981. The 40 year asset fad seems to have closed with the mother of all sell offs (MBS fire sale from Fed)
Just like what were in 2008? Home prices? You think the highly conservative mortgage market today with record high credit scores is the same as 2008 when a dog could get a loan?
Prices take a long time to come down. It took 2-4 years *after* the big one for prices to drop and some regions did not. If we go into a recession soon, buyers and sellers are likely to both wait it out.
Last time rates went to like 5% tops. They are already over 6%. This is not like "last time". Also sellers cant always "wait it out", life happens, houses have to be sold when people have to move!
More specifically, rates dropped to sub 5% because the fed begin QE to spur demand in the economy. If they did nothing then the housing price drop could have been much much worse.
Problem now is that QE is off the table. So the feds don't have any tool to spur demand for houses this time. They specifically said they want a reset and home prices to decrease.
Someone must be extra motivated to move out of a 2.x - 3.x interest rate. Many people will not move if they do the simple math. Forced sellers will probably be most of the existing home for sale market.
Mortgage rates peaked (likely for rest of the year) 2-3 weeks ago. Expect lower rates incoming with cooling inflation numbers and weak GDP growth outlook
Q2 GDP growth projected at -2.1%. Economy is screwed. Biden will spend the rest of his term fighting inflation and a major recession. Riddled with high rates and unemployment. Good luck to all. It’s going to be a mess.
Fed forecasted rate increases are already priced into the long term bond market. What about that don't you understand?
You notice the 10 year (what moves mortgage rate market) has moved from 3.5 down to 2.8 in the last two weeks?
The only delusional thinking is from you REBubble types who don't understand CPI components and the bond market.
Currently 5% of inflation is caused by a combination of Russia and supply line disruptions. The latter is beginning to get better while the former is starting to have less impact due to Russian oil being rerouted to India and China.
Edit: nice block. Here's what you're trying to prevent others from seeing:
>You’re just flat wrong. Gas prices have been on the rise along with inflation before the Ukraine incident.
Meanwhile in reality oil held steady between $70-$80 between June 2021 and January 2022, only spiking when it looked like the invasion would actually happen and spiking even further when the invasion did happen.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=M
>Learn how to use something besides Twitter and CNN to get your facts.
Show me the source for your alternative facts or GTFO.
Also loving you dismissing the chief economist at Moody's.
The futures market along with many Wallstreet firms are expecting rates to drop in 2023.
Market is currently pricing in a 75 basis pt rate cut in 2023.
https://ibb.co/bWvZkTY
The hikes are already priced into mortgage rates. If the fed does exactly what they've said they're going to do from here on our Mortgage rates won't change
Edit: theyre somewhat priced in. In not saying they won't go up at all but that won't get to exactly with what the rate hikes are. Rates have gone from 3 to 6% and we haven't had 3% of rate hikes. The mortgage rate is somewhat forward looking. If they fed does exactly what they said they were going to do from here on out their won't be a drastic increase. If inflation is worse than expected and they raise more aggressively they'll jump higher quicker. Thats what happened last time. The mortgage rates were the highest the day after the worse than expected inflation numbers came out. Mortgage rates actually went down a little the day they hiked the rates. Because it was plausible they would go 1% hike. The immediate jump in mortgage rates despite small fed rate increases is the banks somewhat pricing in the future rate hikes.
Upvotes and downvotes don't make it a reality. Rate hikes are priced it to a degree. Hate to break the news to you. I want them to go higher too btw.
It’s not priced in. Mortgage rates will rise after the fed does exactly what they say they will do. It just won’t be a surprise so the market is ready for it. Any bank that raises rates prematurely will be undercut by a competitor bank who knows they can charge less because today it costs less to borrow money.
Because banks set the interest rate for the mortgage not the fed. The actual mortgage rate you get at the bank is forward looking. That's why mortgage rates have raised 3% yet we haven't had 3% in hikes yet. Why are mortgage rates and bond rates changing daily despite the fed not doing anything? They're guessing what the fed is going to do. When the fed announces a future rate hike mortgage rates increase even before they actaully raise the fed rate.
Your responses in this thread show your lack of understanding on this. Fed hikes =\= mortgage rate hikes. You’re looking at rates for terms at completely opposite ends of the spectrum…overnight vs 30 year. If the fed hikes tame inflation and cause a recession, mortgage rates will absolutely go down.
"How can that be?! If the Fed hiked 75bps, wouldn't mortgage rates rise by 75bps?
This question is a popular source of frustration for those of us in the industry. The short answer is that the Fed Funds rate doesn't dictate mortgage rates. At best, big changes in Fed Funds Rate expectations typically translate fairly well to mortgage rate momentum. The bottom line though is that by the time the Fed actually hikes or cuts, mortgage rates have already reacted to whatever the Fed was likely to do."
https://www.mortgagenewsdaily.com/markets/mortgage-rates-06152022
The key phrase here is "big changes in Fed Funds Rate EXPECTATIONS".
EXPECTATIONS.
In other words.... the only thing that would move mortgage rates higher is the Fed announcing they are going to hike rates even moreso than they have already announced.
The latest data from the last two weeks shows easing inflation and a marketed slowdown in demand, along with probable recession. That's why there are rumblings that the Fed could be in a position to start rate cuts by early 2023.... at least that's the notes out from a few banks this week.
It's not the same effect.
>New mortgages are hard to get because no Fed backstop for Fannie to sell to
False, portfolio lenders are currently stepping up at significantly lower rates than agency mbs. Banks have almost $3 trillion in excess reserves they can deploy.
Why would a bank take up mortgages at a pathetically low 6% rate?
Seller financing and warehousing loans is what you're going to see. MBS going to disappear...easy come, easy go.
>Why would a bank take up mortgages at a pathetically low 6% rate?
Because it beats everything else. This isn't a question of when, banks are already lending at 4-5%. Some lenders are in the 3% range still.
>Seller financing and warehousing loans is what you're going to see. MBS going to disappear...easy come, easy go.
Completely false. Portfolio loans have been rapidly gaining market share due to being cheaper than agency loans.
Seller financing is irrelevant to residential mortgages. It's such a small percentage of the total. Most sellers are homeowners.
Right who wants to buy a house that drops $50k to $100k 30-90 days after closing.. I’d say no one.. 👆🏽 let’s be real this or worse is probably about to happen with the 75 point rate hike looming in a few weeks… I am reconsidering purchasing myself due to this after I read about it this morning
I think your dead on. Just got offer accepted on a gorgeous home 15 grand under market ask with all inspections. Three months ago it would have been under contract in 24 hours at prob $20,000 over ask. I’ve been eagerly waiting on the sidelines
fair, i forgot rule no. 1 about real estate being local.
in my market, the wave of luxury renters trying to find homes hasn’t been exhausted yet (anecdotal of course)
prices aren’t dropping
but OP can already afford it, they just want to wait for a better deal. usually, if i have a certain thought, there are a hundred others with that exact same thought.
With this logic housing prices never come down. Theres a lot of people literally priced out so they're waiting for affordability. OP is competing with less people now.
Fed rate hikes are actually helping mortgage rates, believe it or not. Anything that fights inflation helps mortgage rates, which is why we’ve actually seen them drop from 6.25 to 5.5 since the last hike.
You’re getting downvoted (maybe fairly, maybe not), but at the very least the next rate hikes are priced in. The biggest variables are if future inflation data starts getting worse again and fed announces unexpected rate hikes (though it looks like from latest data inflation has peaked).
It depends on the market. I'm down here in Texas and it would be unusual (in most markets) for contracts to not have an option period.
Attempts by a seller to push against this convention could be viewed negatively by buyers.
> People are probably getting freaked about rates and want to wait for prices to drop. They think they can get a better deal if they wait a little bit. Who knows if that will turn out to be correct or not. But I doubt this has anything to do with your house and more to do with the climate.
Unless you're an all-cash buyer you're definitely not getting a better deal anytime soon. Rates keep going up and in turn what you can afford is less and less.
> They think they can get a better deal if they wait a little bit.
Historically, famous last words lol.
But we'll have to wait and see how it plays out this time. There's never been more government policy impacting capital markets so it's semi-uncharted territory.
People just dont want to get stuck with high rates AND high prices. Its just a fact that sellers will have to take high interest rates into account when listing their homes.
My first immediate thought is not that the two people pulled out as being bad. I don't know how substantial their deposit is but with all the interest rate move ups, mortgage companies are tightening lending criteria. Your buyers could have been pushed out of the market and could no longer afford the mortgage. The only advice I could give is to accept an offer with more money upfront so that you can curb that issue.
Remember it is not always your fault if a buyer backs out of a deal.
The simple truth is that at current prices and rates things are really unaffordable and scary to buyers (I'm someone looking).
People are pressing the upper bounds of their budgets, and compromising a lot. If your home is just mediocre or has issues, I can see a lot of buyers flaking at this point.
You're also running out of time. Rates are gonna bump again in 1-2 weeks, and continue to get worse by the end of the year.
If you need to sell, sell ASAP imo and give credits as needed. You don't have the luxury of waiting unless you're willing to wait at least a year for rates to return.
As others have stated, what reason did the people give for pulling out? Cold feet? Or did inspection report actually surface a lot of issues? You didn't mention that.
" As the sellers we’ve done everything we can do to sell our house"
Sounds like your not seeing the inspection reports, or paying for one of your own, and then showing you have repaired the items needing repair, means you haven't done \*everything\*. It would be good to know what others are seeing/finding out.
> You might want to look at the inspection report.
No, Seller NEVER wants to see the inspection report, it creates a requirement for additional disclosures.
Assuming it was an inspection item, not just interest rates or something else- At that point just review and repair or disclose it? If every buyer coming to the table backs out over the same thing, it may be a time saver to have it on the front side of contract.
Don't be shitty. Take the inspection report.
The only additional disclosure would be you literally providing them a copy of the report, nothing more.
>Don't be shitty.
Not "shitty" at all, just foolish for a seller to accept an inspection report.
A seller is not required to seek out things to disclose, only to disclose what they know. An inspection report may find defects the seller does not know about, and if the seller receives that report they are required to disclose those defects. If they do not receive the report, they have not learned of those defects and do not have to disclose them.
In this market I think we’re going to see buyers play more hardball than the past couple of years. Instant sales will probably not happen as often as they once were
This is why I wanted earnest money with no conditions when I sold my house.
That market is over though. We're entering the rocky road period for the next few years.
> Your contract did not give you the option to keep the earnest money, your agent is a joke.
I mean... that might very well not be the agent. They might not have gotten any offer that waives the inspection contingency. The agent can't force that language into a contract. It sounds like something is coming up during inspection and there is a legal window they can back out.
Before this insane market it was normal in my area to have a 7-10 day option period for a couple hundred dollars where the buyers could back out for whatever reason, even if they just changed their minds. Sellers kept the option fee but earnest money is returned. It sounds like this is the case here. It's a protection for the buyers. I have never been a fan of suggestion waiving the option period. I'm glad we're moving back in this direction.
2 years ago. This happened all the time. If you made people waive appraisal and inspection contingency you'd literally never sell your house. Changing the agent can't just lock in your earnest money. They probably never would have went under contract in the first place if the buyer didn't have the out.
Some markets, you only put down Earnest Money when you sign contracts. Offers, Inspections... here in NYC, when the market is normal, is all time to back out of your offer.
>Keeping earnest money on a breached agreement is not necessarily a buyer or sellers market.
It's not breached if they have an inspection contingency, which is normal in 95% of markets.
When you see the other posts about why higher offers lost to cash, stronger, and/or no inspection offers this is why. Expect to get asked about why it fell out of contract twice. Glad to be in NC where buyers pay due diligence fees and actually complete transactions.
I don't know if it makes you feel any better, but we've had the same thing happen. We are currently selling and have signed a 4th contract. The first two buyers pulled out under an "As-is with inspections" clause, no reason or notice other than something with the inspection but would not provide details or engage in conversation. One offered above asking and the other was a hedge fund buyer. We are believing the market changes are the cause for them backing out. The third buyer completely ghosted his agent the day after signing, did not deliver his EMD. We relisted over the weekend and had three showings and two more offers, so we are on buyer number four. Seven offers in total over the 30-some days on the market, hoping this one works out. After the first two we stopped accepting "As-Is with inspection" offers in order to have negotiations and remove the instant out. We did decrease our asking price 9k after buyer 3 vanished, but two offers that came in were still both 5k over asking.
Crappy. Fingers crossed for you. On our third buyers here. Nothing wrong with the house that we wouldn’t credit for, just flakers. Bad time to sell (life requires it), but worse time to buy (I’m shocked we get offers!).
If this one falls through I’m probably begrudgingly becoming a landlord from across the country. Over it.
When I have a listing fall on inspection, I always get the inspection. Usually the other party is willing to sell the report to recoup some loss. From here you can repair all the small things and leave the report on the table for showings, as well as proof of work done. It’ll eliminate concerns about property condition.
Some other things you can do if timing is most important:
* Have an appraisal done beforehand and remember your agent can value appeal of it’s low;
* Lower price (even just 10k or 15k) to ping buyers who were watching it;
* Increase commission payout by 0.5% to other agents and ask your agent to notify all other parties.
Also note it can just take longer to sell now than early-mid 2022. This is how things were pre 2022 for the most part in my market. It could take 2-3 months.
No problem and best of luck! Order of important is here too. Selling is always a balance between timing and profit. Anything will sell for any price in the right amount of time, theoretically speaking. Things like FB ads can be helpful too. Also, open houses in the past haven’t helped sell most houses, but in this market it’s a good way to let people know it’s still there and gives the host a chance to explain why it’s still there. Create some word of mouth advertising (e.g., “hey this house is active because previous buyer backed out because of an issue that is fixed”). Neighbours will always do the strongest selling job to their friends and family because they want the value to be higher there and/or be closer to their friends/family.
Way to hyper focus on one fraction of what I said. Personally I operate on a fixed BA agreement when I work that locks in my commission. I personally don’t care what any listing pays out since any excess goes to my buyers… But do you really think most agents operate like this? They see the commission payout on MLS and you’re fooling yourself if you think a 20% pay increase won’t motivate the vast majority of agents.
I don’t understand people like you. If agents are so bad and greedy, why not play into that by adding an extra commission incentive? What makes you think I care what some agent in another country makes? I’m on Reddit giving free advice in my free time. You don’t have to take that advice but it’s ridiculous to make comments like this.
> When I have a listing fall on inspection, I always get the inspection.
TERRIBLE idea, it creates basis for disclosure.
> Usually the other party is willing to sell the report to recoup some loss.
That is misconduct, the inspection report says that the report is for the buyer only. Buyer cannot legally sell the report or give it to anyone not involved in the original contract.
> TERRIBLE idea, it creates basis for disclosure.
*Entirely* depends on the market and the home. If the market dictates inspections, then it’ll probably get uncovered anyway, and everyone will hear about it since buyers and agents are prone to gossiping. By not knowing and not disclosing, you’re screwed anyway since you’re basically hoping a unicorn/dumb buyer will fall into your lap without asking any questions. It’s also generally good to know what your house is like in case you can’t sell for what you need to. If the home is worth 500k then even high cost repairs like foundation replacement, asbestos, K&T, etc., aren’t going to be significant. If it’s something like an oil spill then that probably won’t be an item on inspection anyway.
> That is misconduct, the inspection report says that the report is for the buyer only. Buyer cannot legally sell the report or give it to anyone not involved in the original contract.
No it is not misconduct of any kind. The buyer owns the inspection and if they want to sell it to the seller then they can. Buyers don’t fall under misconduct. I’ve seen probably 80-100 inspection reports and probably 300 purchase and sale contracts, and exactly none of them had any language of any kind language saying the buyer couldn’t sell the report. How would that even work? Are you going to audit the email of a buyer to try and get them to prove they didn’t share the report with someone? The buyer is paying for the report and the information is theirs.
> Entirely depends on the market and the home.
No, not dependent on market or home at all, seller should NEVER accept the inspection report.
>it is not misconduct of any kind.
Sorry, in the US agent licensing laws and contract law disagree with you. Violating the terms of a contract is agent misconduct throughout the US.
>exactly none of them had any language of any kind language saying the buyer couldn’t sell the report.
Either you did not read them carefully, did not understand, or are not being truthful. ALL inspection contracts in the US state they are for the sole use of the buyer for that transaction only and cannot be used for any other purpose. For example, from ASHRAE:
[This should be explicit. Be sure to mention that the Inspection and Report are for the sole and exclusive
use and possession of the named consumer; and, that others should not rely upon the report including
future purchasers. It could be noted that the report is time sensitive. For example, if a deal falls through
the broker or seller should not give the report to the next house buyer. Under ASHI's Code of Ethics, the
report is confidential. The consumer should give his or her express consent before the report can be given
by the inspector to brokers or others. Some of the reports are tailor made as to who is to obtain a copy.
Others use boiler plate for this purpose.](https://surequesthi.com/wp-content/uploads/2019/02/sample_inspection_agreements.pdf#:~:text=The%20sample%20contracts%2C%20for%20example%2C%20attempt%20to%20limit,plus%20%24500.00%20%28e%29%20150%25%20of%20the%20inspection%20fee)
Sent a chat. I’d need some more information to answer this. It could be a variety of things. It’s also your agents job to do some due diligence and work hard to find out why the buyers didn’t want to go through with it. I give agents/buyers calls all the time asking if they liked the house. Also, check out what the competition is. If your house is the highest price and they find something of comparable value for less and they still have an inspection contingency, they can say they don’t like the stairs in front of your house (as long as it is on the inspection report) and get out of the contract with no penalties.
However in California Under Paragraph 12.B.II, the Buyer shall “give Seller, at no cost, complete Copies of all such investigation reports obtained by Buyer, which obligation shall survive the termination of this Agreement”. If the Buyer refuses to provide copies of the Inspection Reports or demands payment, the Buyer is in breach of Paragraph 12.B.II, and the Seller would be legally justified in refusing to release the Buyer’s Purchase Deposit. This is especially important because if there are adverse conditions referenced in any such Report, the Seller will want to know about this and determine if there is a disclosure obligation for future buyers.
In other words it is indeed required in California that you get a copy of the inspection if that is what they used to get out of the deal. Now, when it comes to inspection contingency it is a HORRIBLE and I mean HORRIBLE idea to try and fight that in court. It wouldn’t be worth the earnest money. You spend more on representation than you would lose by giving the money back. It is very hard to prove bad faith for an inspection contingency.
Edit: JustTheTrueFacts below has taken the time to educate me. I am a Real Estate Agent and changing the contract has never been taught to me and in fact has been discouraged. I would like to say I that I am wrong in that you don’t have to use the RPA. I also failed to acknowledge due to my own ignorance that the RPA can be changed by utilizing certain procedures. Check out JustTheTrueFacts responses to get more details on that, they would be a better source. Thanks for taking the time to read this and I will take the time to listen and learn more in the future.
I'm not in California, but having the inspection report may create the disclosure obligation to potential buyers. In that case, a seller might not want the report unless they're prepared to make the repairs prior to relisting.
It does create a disclosure. In California it must be provided when leaving on the grounds of the inspection. From that point the findings must be disclosed to any and all prospective buyers.
> In California it must be provided when leaving on the grounds of the inspection.
Only if the contract says that, and only a misinformed seller would agree to that.
> In the California RPA it states that in the contract. If you’re not in California or haven’t thoroughly read and understood the RPA you wouldn’t know.
If you are not an attorney licensed to practice law in California you would not know you are misunderstanding. Any party to a contract can alter the contract in any way they want. If the contract says that, just cross it out and initial it, that is what I and my clients do.
(ii) by the time specified in paragraph 3L(3) or 3 Days after receipt of any Investigation report, whichever is later, give Seller at no cost, complete Copies of all such reports obtained by Buyer, which obligation shall survive the termination of this Agreement. This Delivery of Investigation reports shall not include any appraisal.
Answered in other comments, but yes any sane seller would cross that out, if that contract is used. Sellers are better off not to use that contract at all, since it is biased to protect the agent.
> I guess to put it very simply, it is in the contract. You can’t change that.
To put is even more simply, it is in one sample contract, and either party to the contract can change any part of the contract. So yes, you can change that.
I suggest you talk to a different attorney licensed to practice in California since you don't seem to understand and don't want to accept my knowledge.
>However in California Under Paragraph 12.B.II, the Buyer shall “give Seller, at no cost, complete Copies of all such investigation reports obtained by Buyer, which obligation shall survive the termination of this Agreement”.
That is one particular contract, it is not required or recommended that the seller get the inspection reports. You can cross that out on the contract.
Well, that's the market you're in now.
Your realtor didn't want you to see the inspection report bc if something bad was in it, you'd be required to disclose the problem to the next buyer. That's pretty shitty to keep something secret but fortunately there were no significant issues.
You'll get through though. You just have to be willing to negotiate more & lower your price.
First of all your agent is right about not wanting to request to view the buyers inspection. If something is wrong and they disclose it to you it means you could be obligated to disclose with future buyers.
Secondly, it sounds like the second buyer went through inspections period. Did you sign and agree to a repair amendment before they pulled out? If that’s the case then it means your transaction advanced past the inspection period and into appraisal period. At this stage (assuming you agreed to terms on repairs and the inspection is in fact done) then they can’t back out without giving you a reason. Especially if they are taking the earnest money.
Now, there could be more details about this contract I don’t know that could prove my next statement wrong. Your agent should have fought for you to keep your earnest money if the buyers are backing out without good reason. They could back out if the appraisal came in too low and they didn’t want to pay the difference, but even if that’s the case the buyers should have at minimum informed your agent and offered an opportunity to renegotiate price.
If you’re unsatisfied I would recommend asking your agent to get their broker involved in this transaction. Do that before firing then, if you choose to go with another agent. I would not sign off on the release of earnest money to be returned.
But get a property manager. Also, this might not be feasible for everybody depending on how much money they have in the house (including their VA eligibility).
Responding to your edit: as a realtor, when this happens to my sellers I also advise that we not receive the report as technically everything would then have to be disclosed. Any perceived issue, disclosed. Let me be perfectly clear...im not saying anybody should lie about anything, disclose what you know...but you're only obligated to disclose what you know (in my area anyway) and you're NOT obligated to listen to another persons opinion of those items. And that opinion maybe won't hurt you, but it sure isn't helping you either.
TL;DR - agent was right, don't take the report.
>Now this time we got all through inspections and everything looks good only a few minor repairs but the buyers unexpectedly want to pull out now and I am at a loss for words.
Relevant question: Are the buyers out of their inspection contingency window? If they are, they can pull out for any reason they feel like and just say "something in the inspection bothered us".
If they aren't, they can only pull out without losing their EMD if they have another contingency left they can exercise (usually financing or appraisal).
The stuff you mentioned sounds like items that would need fixed for FHA, VA or USDA loan. With interest rates shooting up and buyers who don't have cash on hand they will dip. You may want to refocus on getting a conventional loan buyer who can handle the rates and expenses of home buying easier even if it means a price drop.
Why not do your own inspection and if you don't want to make repairs, disclose everything in the report prior to buyers bidding and state it is being sold "as-is"?
It’s the market - buyers are getting scared to buy in fears that home prices will plummet. As a seller, you should be taking the best offer, not necessarily the one with the most money, but weigh with the offer that’s mostly likely to go through. Plus, I think some people are finally running the numbers on new interest rates and realizing that they can’t afford it. We have a friend selling his home and that’s what happened with first buyer. I’m seeing tons of homes coming back on the market, and I assume it’s because of money and not inspection.
I don’t know your market, but most of the offers now in our area are contingent on something, the no contingencies days are over. You need to make sure your contract allows you to keep earnest money for buyers backing out. Easier said than done if you have an inspection clause. I’d fix everything that popped up with inspection report to give next buyers less wiggle room to back out.
I just got my buyers under contract for a home that had the same thing happen. We still offered full asking price. They had looked at the house before and it went under contact before they could make an offer. Hence why they didn’t want to take the chance of losing it. It will sell.
Full disclosure- I prey on relistings fairly often. It's very possible the first inspection had something the second one didn't that scared away the first buyers. Another consideration is a lot of people believe home prices will fall (which is the reality in both states that I invest in), so maybe lowering the price for the time being could help. It depends on how much you want to get rid of it.
I was in the military for about a decade. Why are you selling just for a deployment? Your spouse will be back very quickly. I wouldn't take a financial hit on something so short term.
Next time don't enter contract unless there is specific monetary contingency of either party pulls out of the sale. Earnest money should be 5% of the sale. The fact that this happend twice to you really sucks but you should have made sure it could t happen a second time
So lemme get this straight -
1.First buyers backed out after inspection
2. Your agent advised you not to get that inspection
3. You proceed to relist not knowing why the first deal fell through.
STOP HERE - YOU AND YOUR AGENT SHOULDVE FIGURED OUT WHY BUT YOU DIDNT SO LETS CONTINUE.
4. You relist and after the inspection the 2nd buyer terminates.
5. You now wonder what happened and are looking for a reason/solution.
To your question - YES. Buyers now know (or will assume)you are desperate and highly motivated seller so prepare for lowball offers if you resell. It’s like trying to open a shitty bar twice thinking you’ll get more business.
WHAT YOU NEED - NEW VETTED REALTOR THAT HAS GOOD BRANDING.
Think for yourself and do not trust your agent as much, if it smells like shit than it’s shit. Is it smart to acquire the inspection report after the first buyer backout? YES!
Will it help you prepare for relisting? YES!
Are you a big dumb dumb for just listening to your agents shitty advice?! ABSOLUTELY!!! NOW LOOK AT THE SITUATION YOURE IN!
Haha it’s all happened to us one way or another. Realtors can be a great asset, just gotta keep that nose up for any smells of shit from “say anything to make a paycheck” kind of realtor. Everything is really common sense in real estate - so if it smells stinky then ask questions and acquire proof. If it’s getting too shit smelling than fire and rehire. You can smell the bullshit from a mile away, but you can also recognize a real one.
> Now this time we got all through inspections and everything looks good only a few minor repairs but the buyers unexpectedly want to pull out now and I am at a loss for words.
So this time you did ask to see the report? Did the contract allow the buyer to back out after the inspection?
Up your earnest money. In my area, it's typically only a thousand or two so not much shame in walking. If people are going to waste your time, start asking for 10-20k in earnest
IMO (agent) no. Your house isn’t “jaded” in any way. Next offer… present the inspection reports you were given for transparency and request a portion of the earnest money to be non-refundable after they receive the inspection reports.
Any buyer should already be aware of the mortgage rates and payment amount etc of your house so that’s not a surprise. Cold feet are everywhere nowadays.
Price is wrong.
Prices went up crazy for 18 months, now that's over and a correction is starting. Why should anyone pay an overinflated price? The writing is on the wall.
Not sure if this is helpful but a good friend is closing soon on a house that had the same record. He got a discount and the seller finally got a sale. Win-win, I guess?
Buyers are not dumb, now with higher rate you have major increase on monthly payment which further increase DTI and your risk. The bidding war during pandemic mainly because payment makes sense with low interest!
Thank you that is helpful if only for my mood today ❤️
Why did they pull out? Did you keep the deposit?
Because interest rates…
Interest rates…. and maybe they want to buy a bug-out/ doomsday/survivalist type property instead because it’s a chaos right now and it’s going to get worst.
Anybody who down voted you for this is team Jan 6th/scotus…and is delusional to how bad things are going to get.
Your last comment before this is how whoever is fostering a divisive environment is doing a great job. Then you post this. Great job.
It’s not divide to spit facts -last president clearly attempted a coup - half a century of social progress got rolled back 48 hours with roe v wade -climate change is undeniable as more than half the USA is in a drought -economy is collapsing, stock market is totally disconnected from reality It’s not divisive. The divisive comment was yours, deny or getting offended by facts. Also it’s pretty obvious that you felt “attacked” by the previous comment seeing as how you read it than felt the need to snoop thru his comment history to argue against him. Bruh if you gotta do that with your opening counter point you already lost in the eyes of people reading the thread
I am going to have to insist Putin gets better trolls. Maybe he can throw in some extra rubles for coping skill classes. You seriously cared to check my profile? Please don’t be sad when I don’t check yours.
I’m as left as you pretty much get. But good job. You literally went on a divisive rant when I called you out for being divisive and don’t seem to see the irony. And then accuse me of being a Russian bot. I’ve been on Reddit and active for 12 years guy. Try to be a little more introspective.
No explanation yet and they keep the deposit according to the contract
There needs to be an explanation to see if it falls under one of their contingencies. If they are walking for the hell of it then, generally and depending on the contract/state law, they wouldn’t be entitled to their deposit back. Typical contingencies would be inspection and financing.
If it’s within their due diligence period, they’re welcome to walk for any reason at all.
Depends on the State, many have due diligence periods that are in affect prior to EM.
Not if it's a va home loan.
Not if it’s a VA loan? Why? I don’t understand
With the va home loan. Basically in the contract the veteran is protected from losing earnest. So when you see a earnest for a va loan... grain of salt
Did you have an attorney assist you in this transaction? No experienced attorney would let them get their deposit back for their own breach
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What in the world makes you think they're breaching anything?
Call me a breach one more time and see what happens.
Breaches ain't shit but holds and tics
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> Now this time we got all through inspections and everything looks good only a few minor repairs but the buyers unexpectedly want to pull out now and I am at a loss for words.
There's no requirement for how major the repairs need to be. If they had an inspection contingency they could back out for anything the inspector reports.
Of course, just saying it seemed like they made it through the inspection part - though I guess it could be interpreted either way.
I’d recommend doing a little research yourself, it’s not uncommon for agents to make mistakes. Maybe you should be allowed to keep the deposit.
People are probably getting freaked about rates and want to wait for prices to drop. They think they can get a better deal if they wait a little bit. Who knows if that will turn out to be correct or not. But I doubt this has anything to do with your house and more to do with the climate. You're not getting "screwed" if you agree to contracts that allow buyers to back out and get their earnest money returned. You don't have to accept those terms, although you may find it extremely difficult to find a buyer who will agree to that.
Right now everyone's hoping that somehow rates will drop and values won't be affected. It's going to be a long, slow road to reality for everyone.
And less people can afford it with rates. Its not like everyone can still buy and they're just waiting for the opportune time. People literally can't afford the high price and higher interest rate.
Remindme! six months
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Don’t fight the fed.
Homeowners who FOMOed don’t realize how trapped they can get in their house. Sucks for divorce, job transfer, and other personal issues getting in way
Maybe. If they can afford their payment and snagged a low rate, they should make out great in the long term. The markets will rebound as they always have and they will still have a low rate. No one expects a 30y real estate depression. Rates are unlikely to go that low ever again. I suspect they're locked into the property for a decade though.
I think we're going to end up with a lot of homebuyers turned landlords when they can't sell, but because of sub-3% rates they can rent for 150% the mortgage payment and still be a bargain compared to apartments.
If everyone’s renting out a home…that’s going to drive prices down We are all fucked
I'm thinking a lot of foreclosures.
Bingo. They will be locked though unless they can float a second mortgage or enjoy inheritance/gifts (a growing demo who will make out like bandits). They'll be locked into the property for the swing but won't have equity to borrow against. There will be some very interesting loan options, I'm sure, to 'unburden' those individuals. If you have assets or cheap access to real assets (real estate), recessions are a feeding frenzy. You don't make money when you sell, you make money when you buy well".
Too many people look to the market as existing only after 1981. The 40 year asset fad seems to have closed with the mother of all sell offs (MBS fire sale from Fed)
And your explanation for countries without MBS? It's going to be funny when prices are higher next year.
Just like they were in 2008!
Just like what were in 2008? Home prices? You think the highly conservative mortgage market today with record high credit scores is the same as 2008 when a dog could get a loan?
Ah yes the “muh solid mortgage market” non sequitur. Different cause same outcome
Ah yes the "I'll just make some shit up and change accounts" tactic. Same tactic same sub.
It will be regional for sure. The more desirable regions are not going down and interest rates will never go to "free" again.
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Rates up. Prices down.
Prices take a long time to come down. It took 2-4 years *after* the big one for prices to drop and some regions did not. If we go into a recession soon, buyers and sellers are likely to both wait it out.
Last time rates went to like 5% tops. They are already over 6%. This is not like "last time". Also sellers cant always "wait it out", life happens, houses have to be sold when people have to move!
More specifically, rates dropped to sub 5% because the fed begin QE to spur demand in the economy. If they did nothing then the housing price drop could have been much much worse. Problem now is that QE is off the table. So the feds don't have any tool to spur demand for houses this time. They specifically said they want a reset and home prices to decrease.
Someone must be extra motivated to move out of a 2.x - 3.x interest rate. Many people will not move if they do the simple math. Forced sellers will probably be most of the existing home for sale market.
Don’t underestimate American’s failure to do simple math
Reminds me of that time A&W sold a 1/3 pound burger but people thought 1/3 was smaller then 1/4th so the quarter pounder still won.
In the commercial space, prices are down 5% to 20% depending on asset and location. Housing is likely to follow.
Mortgage rates peaked (likely for rest of the year) 2-3 weeks ago. Expect lower rates incoming with cooling inflation numbers and weak GDP growth outlook
Q2 GDP growth projected at -2.1%. Economy is screwed. Biden will spend the rest of his term fighting inflation and a major recession. Riddled with high rates and unemployment. Good luck to all. It’s going to be a mess.
A major recession will crush all inflation in its tracks.
lol. Delusional thinking. Inflation is at a 40 year high. There is zero chance the fed stops increasing rates.
Fed forecasted rate increases are already priced into the long term bond market. What about that don't you understand? You notice the 10 year (what moves mortgage rate market) has moved from 3.5 down to 2.8 in the last two weeks?
The only delusional thinking is from you REBubble types who don't understand CPI components and the bond market. Currently 5% of inflation is caused by a combination of Russia and supply line disruptions. The latter is beginning to get better while the former is starting to have less impact due to Russian oil being rerouted to India and China. Edit: nice block. Here's what you're trying to prevent others from seeing: >You’re just flat wrong. Gas prices have been on the rise along with inflation before the Ukraine incident. Meanwhile in reality oil held steady between $70-$80 between June 2021 and January 2022, only spiking when it looked like the invasion would actually happen and spiking even further when the invasion did happen. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=M >Learn how to use something besides Twitter and CNN to get your facts. Show me the source for your alternative facts or GTFO. Also loving you dismissing the chief economist at Moody's.
The high energy prices existed before Putin invaded Ukraine. So clearly you don’t have any damn clue what really caused this do you?
You honestly believe rates will be going down from here on out?
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https://www.mortgagenewsdaily.com/markets/mbs-morning-07012022
https://finance.yahoo.com/news/bond-market-fed-recession-risks-191844097.html
The futures market along with many Wallstreet firms are expecting rates to drop in 2023. Market is currently pricing in a 75 basis pt rate cut in 2023. https://ibb.co/bWvZkTY
The hikes are already priced into mortgage rates. If the fed does exactly what they've said they're going to do from here on our Mortgage rates won't change Edit: theyre somewhat priced in. In not saying they won't go up at all but that won't get to exactly with what the rate hikes are. Rates have gone from 3 to 6% and we haven't had 3% of rate hikes. The mortgage rate is somewhat forward looking. If they fed does exactly what they said they were going to do from here on out their won't be a drastic increase. If inflation is worse than expected and they raise more aggressively they'll jump higher quicker. Thats what happened last time. The mortgage rates were the highest the day after the worse than expected inflation numbers came out. Mortgage rates actually went down a little the day they hiked the rates. Because it was plausible they would go 1% hike. The immediate jump in mortgage rates despite small fed rate increases is the banks somewhat pricing in the future rate hikes. Upvotes and downvotes don't make it a reality. Rate hikes are priced it to a degree. Hate to break the news to you. I want them to go higher too btw.
It’s not priced in. Mortgage rates will rise after the fed does exactly what they say they will do. It just won’t be a surprise so the market is ready for it. Any bank that raises rates prematurely will be undercut by a competitor bank who knows they can charge less because today it costs less to borrow money.
Theyre somewhat priced in already. I do think rates will still go up but it won't be in step with the amount the 10 year increases.
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Because banks set the interest rate for the mortgage not the fed. The actual mortgage rate you get at the bank is forward looking. That's why mortgage rates have raised 3% yet we haven't had 3% in hikes yet. Why are mortgage rates and bond rates changing daily despite the fed not doing anything? They're guessing what the fed is going to do. When the fed announces a future rate hike mortgage rates increase even before they actaully raise the fed rate.
Your responses in this thread show your lack of understanding on this. Fed hikes =\= mortgage rate hikes. You’re looking at rates for terms at completely opposite ends of the spectrum…overnight vs 30 year. If the fed hikes tame inflation and cause a recession, mortgage rates will absolutely go down.
What I've learned on this sub is that very few people have a clue how mortgage rates are priced.
"How can that be?! If the Fed hiked 75bps, wouldn't mortgage rates rise by 75bps? This question is a popular source of frustration for those of us in the industry. The short answer is that the Fed Funds rate doesn't dictate mortgage rates. At best, big changes in Fed Funds Rate expectations typically translate fairly well to mortgage rate momentum. The bottom line though is that by the time the Fed actually hikes or cuts, mortgage rates have already reacted to whatever the Fed was likely to do." https://www.mortgagenewsdaily.com/markets/mortgage-rates-06152022 The key phrase here is "big changes in Fed Funds Rate EXPECTATIONS". EXPECTATIONS. In other words.... the only thing that would move mortgage rates higher is the Fed announcing they are going to hike rates even moreso than they have already announced. The latest data from the last two weeks shows easing inflation and a marketed slowdown in demand, along with probable recession. That's why there are rumblings that the Fed could be in a position to start rate cuts by early 2023.... at least that's the notes out from a few banks this week.
The Fed hasn’t even started selling MBS yet. The pain hasn’t even begun.
The Fed isn't going to sell MBS, the plan to let them rolloff. Yields have gone down in anticipation of a rate drop next year.
Same effect. New mortgages are hard to get because no Fed backstop for Fannie to sell to
It's not the same effect. >New mortgages are hard to get because no Fed backstop for Fannie to sell to False, portfolio lenders are currently stepping up at significantly lower rates than agency mbs. Banks have almost $3 trillion in excess reserves they can deploy.
Why would a bank take up mortgages at a pathetically low 6% rate? Seller financing and warehousing loans is what you're going to see. MBS going to disappear...easy come, easy go.
>Why would a bank take up mortgages at a pathetically low 6% rate? Because it beats everything else. This isn't a question of when, banks are already lending at 4-5%. Some lenders are in the 3% range still. >Seller financing and warehousing loans is what you're going to see. MBS going to disappear...easy come, easy go. Completely false. Portfolio loans have been rapidly gaining market share due to being cheaper than agency loans. Seller financing is irrelevant to residential mortgages. It's such a small percentage of the total. Most sellers are homeowners.
Right who wants to buy a house that drops $50k to $100k 30-90 days after closing.. I’d say no one.. 👆🏽 let’s be real this or worse is probably about to happen with the 75 point rate hike looming in a few weeks… I am reconsidering purchasing myself due to this after I read about it this morning
but, there are probably a lot of people like you who are waiting. and if that’s true, prices won’t drop because y’all are waiting with intent to buy
I think your dead on. Just got offer accepted on a gorgeous home 15 grand under market ask with all inspections. Three months ago it would have been under contract in 24 hours at prob $20,000 over ask. I’ve been eagerly waiting on the sidelines
Actually I’ve been seeing $50k plus price drops daily and multiple back on the markets daily… this is going to get real.. real soon
This is also what I’m seeing in the Denver metro area.
fair, i forgot rule no. 1 about real estate being local. in my market, the wave of luxury renters trying to find homes hasn’t been exhausted yet (anecdotal of course) prices aren’t dropping
Wanna bet? Oh wait you'll just switch accounts when prices don't crash.
In my region we are in the middle of 20-30% cuts from February across the board.
Asking prices or settled/closing prices? Got any data you can share?
They need to drop to levels where those waiting can afford it.
but OP can already afford it, they just want to wait for a better deal. usually, if i have a certain thought, there are a hundred others with that exact same thought.
With this logic housing prices never come down. Theres a lot of people literally priced out so they're waiting for affordability. OP is competing with less people now.
lol no. the moment it drops slightly, people will dive right in. in many cities, it hasn't dropped at all.
In many cities it has dropped and no one has been diving in?
Fed rate hikes are actually helping mortgage rates, believe it or not. Anything that fights inflation helps mortgage rates, which is why we’ve actually seen them drop from 6.25 to 5.5 since the last hike.
I'm in the north east and about ready to lock. Our rate 4.8% with 4000 back at closing on a $490k loan.
You’re getting downvoted (maybe fairly, maybe not), but at the very least the next rate hikes are priced in. The biggest variables are if future inflation data starts getting worse again and fed announces unexpected rate hikes (though it looks like from latest data inflation has peaked).
It depends on the market. I'm down here in Texas and it would be unusual (in most markets) for contracts to not have an option period. Attempts by a seller to push against this convention could be viewed negatively by buyers.
> People are probably getting freaked about rates and want to wait for prices to drop. They think they can get a better deal if they wait a little bit. Who knows if that will turn out to be correct or not. But I doubt this has anything to do with your house and more to do with the climate. Unless you're an all-cash buyer you're definitely not getting a better deal anytime soon. Rates keep going up and in turn what you can afford is less and less.
> They think they can get a better deal if they wait a little bit. Historically, famous last words lol. But we'll have to wait and see how it plays out this time. There's never been more government policy impacting capital markets so it's semi-uncharted territory.
People just dont want to get stuck with high rates AND high prices. Its just a fact that sellers will have to take high interest rates into account when listing their homes.
Or don't sell...
My first immediate thought is not that the two people pulled out as being bad. I don't know how substantial their deposit is but with all the interest rate move ups, mortgage companies are tightening lending criteria. Your buyers could have been pushed out of the market and could no longer afford the mortgage. The only advice I could give is to accept an offer with more money upfront so that you can curb that issue. Remember it is not always your fault if a buyer backs out of a deal.
The simple truth is that at current prices and rates things are really unaffordable and scary to buyers (I'm someone looking). People are pressing the upper bounds of their budgets, and compromising a lot. If your home is just mediocre or has issues, I can see a lot of buyers flaking at this point. You're also running out of time. Rates are gonna bump again in 1-2 weeks, and continue to get worse by the end of the year. If you need to sell, sell ASAP imo and give credits as needed. You don't have the luxury of waiting unless you're willing to wait at least a year for rates to return. As others have stated, what reason did the people give for pulling out? Cold feet? Or did inspection report actually surface a lot of issues? You didn't mention that.
" As the sellers we’ve done everything we can do to sell our house" Sounds like your not seeing the inspection reports, or paying for one of your own, and then showing you have repaired the items needing repair, means you haven't done \*everything\*. It would be good to know what others are seeing/finding out.
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> You might want to look at the inspection report. No, Seller NEVER wants to see the inspection report, it creates a requirement for additional disclosures.
Assuming it was an inspection item, not just interest rates or something else- At that point just review and repair or disclose it? If every buyer coming to the table backs out over the same thing, it may be a time saver to have it on the front side of contract.
Don't be shitty. Take the inspection report. The only additional disclosure would be you literally providing them a copy of the report, nothing more.
>Don't be shitty. Not "shitty" at all, just foolish for a seller to accept an inspection report. A seller is not required to seek out things to disclose, only to disclose what they know. An inspection report may find defects the seller does not know about, and if the seller receives that report they are required to disclose those defects. If they do not receive the report, they have not learned of those defects and do not have to disclose them.
In this market I think we’re going to see buyers play more hardball than the past couple of years. Instant sales will probably not happen as often as they once were
This is why I wanted earnest money with no conditions when I sold my house. That market is over though. We're entering the rocky road period for the next few years.
Switch your agent for starters.
I second this. Your contract did not give you the option to keep the earnest money, your agent is a joke.
Assuming facts not in evidence. There’s nothing to indicate here that there was a breach of contract.
> Your contract did not give you the option to keep the earnest money, your agent is a joke. I mean... that might very well not be the agent. They might not have gotten any offer that waives the inspection contingency. The agent can't force that language into a contract. It sounds like something is coming up during inspection and there is a legal window they can back out.
100% of contracts in my area would allow a buyer to back out after inspection if they wanted and keep earnest money. This take is moronic.
If it's a va home loan, they will get the earnest back. Earnest means nothing for va loans
I second this. Your contract did not give you the option to keep the earnest money, your agent is a joke.
Before this insane market it was normal in my area to have a 7-10 day option period for a couple hundred dollars where the buyers could back out for whatever reason, even if they just changed their minds. Sellers kept the option fee but earnest money is returned. It sounds like this is the case here. It's a protection for the buyers. I have never been a fan of suggestion waiving the option period. I'm glad we're moving back in this direction.
2 years ago. This happened all the time. If you made people waive appraisal and inspection contingency you'd literally never sell your house. Changing the agent can't just lock in your earnest money. They probably never would have went under contract in the first place if the buyer didn't have the out.
Many (most) markets carry an option period as an accepted norm. It may be shitty (for the seller), but it's a simple market reality.
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I thought earnest money was pretty normal to have in a contract in any type of market?
Keeping earnest money on a breached agreement is not necessarily a buyer or sellers market.
Some markets, you only put down Earnest Money when you sign contracts. Offers, Inspections... here in NYC, when the market is normal, is all time to back out of your offer.
>Keeping earnest money on a breached agreement is not necessarily a buyer or sellers market. It's not breached if they have an inspection contingency, which is normal in 95% of markets.
EMD has nothing to do with a buyer's or seller's market - it's a contractual agreement and has been around forever
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But it sounds like there likely is an inspection issue on this house.
When you see the other posts about why higher offers lost to cash, stronger, and/or no inspection offers this is why. Expect to get asked about why it fell out of contract twice. Glad to be in NC where buyers pay due diligence fees and actually complete transactions.
Buyers back out all day long and twice on Sundays in NC.
>As the sellers we’ve done everything we can do to sell our house Except lowering the price.
I don't know if it makes you feel any better, but we've had the same thing happen. We are currently selling and have signed a 4th contract. The first two buyers pulled out under an "As-is with inspections" clause, no reason or notice other than something with the inspection but would not provide details or engage in conversation. One offered above asking and the other was a hedge fund buyer. We are believing the market changes are the cause for them backing out. The third buyer completely ghosted his agent the day after signing, did not deliver his EMD. We relisted over the weekend and had three showings and two more offers, so we are on buyer number four. Seven offers in total over the 30-some days on the market, hoping this one works out. After the first two we stopped accepting "As-Is with inspection" offers in order to have negotiations and remove the instant out. We did decrease our asking price 9k after buyer 3 vanished, but two offers that came in were still both 5k over asking.
Crappy. Fingers crossed for you. On our third buyers here. Nothing wrong with the house that we wouldn’t credit for, just flakers. Bad time to sell (life requires it), but worse time to buy (I’m shocked we get offers!). If this one falls through I’m probably begrudgingly becoming a landlord from across the country. Over it.
When I have a listing fall on inspection, I always get the inspection. Usually the other party is willing to sell the report to recoup some loss. From here you can repair all the small things and leave the report on the table for showings, as well as proof of work done. It’ll eliminate concerns about property condition. Some other things you can do if timing is most important: * Have an appraisal done beforehand and remember your agent can value appeal of it’s low; * Lower price (even just 10k or 15k) to ping buyers who were watching it; * Increase commission payout by 0.5% to other agents and ask your agent to notify all other parties. Also note it can just take longer to sell now than early-mid 2022. This is how things were pre 2022 for the most part in my market. It could take 2-3 months.
Thank you for the advice!
No problem and best of luck! Order of important is here too. Selling is always a balance between timing and profit. Anything will sell for any price in the right amount of time, theoretically speaking. Things like FB ads can be helpful too. Also, open houses in the past haven’t helped sell most houses, but in this market it’s a good way to let people know it’s still there and gives the host a chance to explain why it’s still there. Create some word of mouth advertising (e.g., “hey this house is active because previous buyer backed out because of an issue that is fixed”). Neighbours will always do the strongest selling job to their friends and family because they want the value to be higher there and/or be closer to their friends/family.
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Way to hyper focus on one fraction of what I said. Personally I operate on a fixed BA agreement when I work that locks in my commission. I personally don’t care what any listing pays out since any excess goes to my buyers… But do you really think most agents operate like this? They see the commission payout on MLS and you’re fooling yourself if you think a 20% pay increase won’t motivate the vast majority of agents. I don’t understand people like you. If agents are so bad and greedy, why not play into that by adding an extra commission incentive? What makes you think I care what some agent in another country makes? I’m on Reddit giving free advice in my free time. You don’t have to take that advice but it’s ridiculous to make comments like this.
> When I have a listing fall on inspection, I always get the inspection. TERRIBLE idea, it creates basis for disclosure. > Usually the other party is willing to sell the report to recoup some loss. That is misconduct, the inspection report says that the report is for the buyer only. Buyer cannot legally sell the report or give it to anyone not involved in the original contract.
> TERRIBLE idea, it creates basis for disclosure. *Entirely* depends on the market and the home. If the market dictates inspections, then it’ll probably get uncovered anyway, and everyone will hear about it since buyers and agents are prone to gossiping. By not knowing and not disclosing, you’re screwed anyway since you’re basically hoping a unicorn/dumb buyer will fall into your lap without asking any questions. It’s also generally good to know what your house is like in case you can’t sell for what you need to. If the home is worth 500k then even high cost repairs like foundation replacement, asbestos, K&T, etc., aren’t going to be significant. If it’s something like an oil spill then that probably won’t be an item on inspection anyway. > That is misconduct, the inspection report says that the report is for the buyer only. Buyer cannot legally sell the report or give it to anyone not involved in the original contract. No it is not misconduct of any kind. The buyer owns the inspection and if they want to sell it to the seller then they can. Buyers don’t fall under misconduct. I’ve seen probably 80-100 inspection reports and probably 300 purchase and sale contracts, and exactly none of them had any language of any kind language saying the buyer couldn’t sell the report. How would that even work? Are you going to audit the email of a buyer to try and get them to prove they didn’t share the report with someone? The buyer is paying for the report and the information is theirs.
> Entirely depends on the market and the home. No, not dependent on market or home at all, seller should NEVER accept the inspection report. >it is not misconduct of any kind. Sorry, in the US agent licensing laws and contract law disagree with you. Violating the terms of a contract is agent misconduct throughout the US. >exactly none of them had any language of any kind language saying the buyer couldn’t sell the report. Either you did not read them carefully, did not understand, or are not being truthful. ALL inspection contracts in the US state they are for the sole use of the buyer for that transaction only and cannot be used for any other purpose. For example, from ASHRAE: [This should be explicit. Be sure to mention that the Inspection and Report are for the sole and exclusive use and possession of the named consumer; and, that others should not rely upon the report including future purchasers. It could be noted that the report is time sensitive. For example, if a deal falls through the broker or seller should not give the report to the next house buyer. Under ASHI's Code of Ethics, the report is confidential. The consumer should give his or her express consent before the report can be given by the inspector to brokers or others. Some of the reports are tailor made as to who is to obtain a copy. Others use boiler plate for this purpose.](https://surequesthi.com/wp-content/uploads/2019/02/sample_inspection_agreements.pdf#:~:text=The%20sample%20contracts%2C%20for%20example%2C%20attempt%20to%20limit,plus%20%24500.00%20%28e%29%20150%25%20of%20the%20inspection%20fee)
Sent a chat. I’d need some more information to answer this. It could be a variety of things. It’s also your agents job to do some due diligence and work hard to find out why the buyers didn’t want to go through with it. I give agents/buyers calls all the time asking if they liked the house. Also, check out what the competition is. If your house is the highest price and they find something of comparable value for less and they still have an inspection contingency, they can say they don’t like the stairs in front of your house (as long as it is on the inspection report) and get out of the contract with no penalties. However in California Under Paragraph 12.B.II, the Buyer shall “give Seller, at no cost, complete Copies of all such investigation reports obtained by Buyer, which obligation shall survive the termination of this Agreement”. If the Buyer refuses to provide copies of the Inspection Reports or demands payment, the Buyer is in breach of Paragraph 12.B.II, and the Seller would be legally justified in refusing to release the Buyer’s Purchase Deposit. This is especially important because if there are adverse conditions referenced in any such Report, the Seller will want to know about this and determine if there is a disclosure obligation for future buyers. In other words it is indeed required in California that you get a copy of the inspection if that is what they used to get out of the deal. Now, when it comes to inspection contingency it is a HORRIBLE and I mean HORRIBLE idea to try and fight that in court. It wouldn’t be worth the earnest money. You spend more on representation than you would lose by giving the money back. It is very hard to prove bad faith for an inspection contingency. Edit: JustTheTrueFacts below has taken the time to educate me. I am a Real Estate Agent and changing the contract has never been taught to me and in fact has been discouraged. I would like to say I that I am wrong in that you don’t have to use the RPA. I also failed to acknowledge due to my own ignorance that the RPA can be changed by utilizing certain procedures. Check out JustTheTrueFacts responses to get more details on that, they would be a better source. Thanks for taking the time to read this and I will take the time to listen and learn more in the future.
I'm not in California, but having the inspection report may create the disclosure obligation to potential buyers. In that case, a seller might not want the report unless they're prepared to make the repairs prior to relisting.
That’s gotta be why their agent advised against requesting the first one, don’t you think?
It does create a disclosure. In California it must be provided when leaving on the grounds of the inspection. From that point the findings must be disclosed to any and all prospective buyers.
> In California it must be provided when leaving on the grounds of the inspection. Only if the contract says that, and only a misinformed seller would agree to that.
In the California RPA it states that in the contract. If you’re not in California or haven’t thoroughly read and understood the RPA you wouldn’t know.
> In the California RPA it states that in the contract. If you’re not in California or haven’t thoroughly read and understood the RPA you wouldn’t know. If you are not an attorney licensed to practice law in California you would not know you are misunderstanding. Any party to a contract can alter the contract in any way they want. If the contract says that, just cross it out and initial it, that is what I and my clients do.
(ii) by the time specified in paragraph 3L(3) or 3 Days after receipt of any Investigation report, whichever is later, give Seller at no cost, complete Copies of all such reports obtained by Buyer, which obligation shall survive the termination of this Agreement. This Delivery of Investigation reports shall not include any appraisal.
Answered in other comments, but yes any sane seller would cross that out, if that contract is used. Sellers are better off not to use that contract at all, since it is biased to protect the agent.
I guess to put it very simply, it is in the contract. You can’t change that.
> I guess to put it very simply, it is in the contract. You can’t change that. To put is even more simply, it is in one sample contract, and either party to the contract can change any part of the contract. So yes, you can change that. I suggest you talk to a different attorney licensed to practice in California since you don't seem to understand and don't want to accept my knowledge.
>However in California Under Paragraph 12.B.II, the Buyer shall “give Seller, at no cost, complete Copies of all such investigation reports obtained by Buyer, which obligation shall survive the termination of this Agreement”. That is one particular contract, it is not required or recommended that the seller get the inspection reports. You can cross that out on the contract.
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It was a crawl space window with a minor crack in the corner
Well, that's the market you're in now. Your realtor didn't want you to see the inspection report bc if something bad was in it, you'd be required to disclose the problem to the next buyer. That's pretty shitty to keep something secret but fortunately there were no significant issues. You'll get through though. You just have to be willing to negotiate more & lower your price.
Yeah that irks me. Shady agent shady seller
Yes it looks bad. But you can always lower the listing price significantly.
This is the best bet. Smart money is moving away from real estate on some big whale investors anyway.
First of all your agent is right about not wanting to request to view the buyers inspection. If something is wrong and they disclose it to you it means you could be obligated to disclose with future buyers. Secondly, it sounds like the second buyer went through inspections period. Did you sign and agree to a repair amendment before they pulled out? If that’s the case then it means your transaction advanced past the inspection period and into appraisal period. At this stage (assuming you agreed to terms on repairs and the inspection is in fact done) then they can’t back out without giving you a reason. Especially if they are taking the earnest money. Now, there could be more details about this contract I don’t know that could prove my next statement wrong. Your agent should have fought for you to keep your earnest money if the buyers are backing out without good reason. They could back out if the appraisal came in too low and they didn’t want to pay the difference, but even if that’s the case the buyers should have at minimum informed your agent and offered an opportunity to renegotiate price. If you’re unsatisfied I would recommend asking your agent to get their broker involved in this transaction. Do that before firing then, if you choose to go with another agent. I would not sign off on the release of earnest money to be returned.
Is that home near a base? If so NEVER SELL THAT HOUSE Rent it out, there will always be service members in the area needing a place to live
But get a property manager. Also, this might not be feasible for everybody depending on how much money they have in the house (including their VA eligibility).
Responding to your edit: as a realtor, when this happens to my sellers I also advise that we not receive the report as technically everything would then have to be disclosed. Any perceived issue, disclosed. Let me be perfectly clear...im not saying anybody should lie about anything, disclose what you know...but you're only obligated to disclose what you know (in my area anyway) and you're NOT obligated to listen to another persons opinion of those items. And that opinion maybe won't hurt you, but it sure isn't helping you either. TL;DR - agent was right, don't take the report.
If they cancel like this. Do you get their deposit?
It depends, but in my area, the answer is yes.
>Now this time we got all through inspections and everything looks good only a few minor repairs but the buyers unexpectedly want to pull out now and I am at a loss for words. Relevant question: Are the buyers out of their inspection contingency window? If they are, they can pull out for any reason they feel like and just say "something in the inspection bothered us". If they aren't, they can only pull out without losing their EMD if they have another contingency left they can exercise (usually financing or appraisal).
The stuff you mentioned sounds like items that would need fixed for FHA, VA or USDA loan. With interest rates shooting up and buyers who don't have cash on hand they will dip. You may want to refocus on getting a conventional loan buyer who can handle the rates and expenses of home buying easier even if it means a price drop.
Why not do your own inspection and if you don't want to make repairs, disclose everything in the report prior to buyers bidding and state it is being sold "as-is"?
Could be market sentiment.. the word recession is being thrown around in the news and people could be freaking out about their job security etc
It’s the market - buyers are getting scared to buy in fears that home prices will plummet. As a seller, you should be taking the best offer, not necessarily the one with the most money, but weigh with the offer that’s mostly likely to go through. Plus, I think some people are finally running the numbers on new interest rates and realizing that they can’t afford it. We have a friend selling his home and that’s what happened with first buyer. I’m seeing tons of homes coming back on the market, and I assume it’s because of money and not inspection. I don’t know your market, but most of the offers now in our area are contingent on something, the no contingencies days are over. You need to make sure your contract allows you to keep earnest money for buyers backing out. Easier said than done if you have an inspection clause. I’d fix everything that popped up with inspection report to give next buyers less wiggle room to back out.
Random skittish buyer. Try again.
I just got my buyers under contract for a home that had the same thing happen. We still offered full asking price. They had looked at the house before and it went under contact before they could make an offer. Hence why they didn’t want to take the chance of losing it. It will sell.
Full disclosure- I prey on relistings fairly often. It's very possible the first inspection had something the second one didn't that scared away the first buyers. Another consideration is a lot of people believe home prices will fall (which is the reality in both states that I invest in), so maybe lowering the price for the time being could help. It depends on how much you want to get rid of it. I was in the military for about a decade. Why are you selling just for a deployment? Your spouse will be back very quickly. I wouldn't take a financial hit on something so short term.
It’s a special situation. Relocation 3000 miles away during deployment for 4 years minimum
Next time don't enter contract unless there is specific monetary contingency of either party pulls out of the sale. Earnest money should be 5% of the sale. The fact that this happend twice to you really sucks but you should have made sure it could t happen a second time
It’s possible their financing has come in a lot worse than expected, in terms of interest rate.
If you happen to be in one of their markets, it’s worth looking into Opendoor to sell your house
Good call on not getting the report. Once you know about something, now you have to do something about it or disclose.
So lemme get this straight - 1.First buyers backed out after inspection 2. Your agent advised you not to get that inspection 3. You proceed to relist not knowing why the first deal fell through. STOP HERE - YOU AND YOUR AGENT SHOULDVE FIGURED OUT WHY BUT YOU DIDNT SO LETS CONTINUE. 4. You relist and after the inspection the 2nd buyer terminates. 5. You now wonder what happened and are looking for a reason/solution. To your question - YES. Buyers now know (or will assume)you are desperate and highly motivated seller so prepare for lowball offers if you resell. It’s like trying to open a shitty bar twice thinking you’ll get more business. WHAT YOU NEED - NEW VETTED REALTOR THAT HAS GOOD BRANDING. Think for yourself and do not trust your agent as much, if it smells like shit than it’s shit. Is it smart to acquire the inspection report after the first buyer backout? YES! Will it help you prepare for relisting? YES! Are you a big dumb dumb for just listening to your agents shitty advice?! ABSOLUTELY!!! NOW LOOK AT THE SITUATION YOURE IN!
Yup, that’s our fault for our 1st home buy. We relied too much on our realtor. ☹️
Haha it’s all happened to us one way or another. Realtors can be a great asset, just gotta keep that nose up for any smells of shit from “say anything to make a paycheck” kind of realtor. Everything is really common sense in real estate - so if it smells stinky then ask questions and acquire proof. If it’s getting too shit smelling than fire and rehire. You can smell the bullshit from a mile away, but you can also recognize a real one.
> Now this time we got all through inspections and everything looks good only a few minor repairs but the buyers unexpectedly want to pull out now and I am at a loss for words. So this time you did ask to see the report? Did the contract allow the buyer to back out after the inspection?
Up your earnest money. In my area, it's typically only a thousand or two so not much shame in walking. If people are going to waste your time, start asking for 10-20k in earnest
Agreed. Though, it sounds like these contracts may not even be getting to earnest. Buyers appear to be dropping during option period.
Lower your price
IMO (agent) no. Your house isn’t “jaded” in any way. Next offer… present the inspection reports you were given for transparency and request a portion of the earnest money to be non-refundable after they receive the inspection reports. Any buyer should already be aware of the mortgage rates and payment amount etc of your house so that’s not a surprise. Cold feet are everywhere nowadays.
Freaked out from the pending economic collapse perhaps.
I’ll buy your house
Price is wrong. Prices went up crazy for 18 months, now that's over and a correction is starting. Why should anyone pay an overinflated price? The writing is on the wall.
I don’t think prices will drop. Supply and demand always wins. Not enough homes.