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They're being super aggressive because you're not fully committed & they have other pending offers that can commit. Pretty sure you would do exactly the same thing.
Don't take legal advice from your realtor, they aren't lawyers. You have a contract & they're usually pretty readable, you just have to read it. In my area, in the event of non performance, the first step is arbitration & the presumption is that your earnest deposit is liquidated (mutually agreed to) damages. So accepting another offer doesn't necessarily put you in the clear. They can keep your deposit for the time & trouble wasted on waiting for you to close. Sounds like you got a decent deal, so close it. Or walk, so they can take another offer from someone who is more serious about closing the deal than you are.
Actually, we are quite serious. They accepted a contingent on sale offer with a June 2nd contingency release. What they are doing is giving advanced notices to perform at every step to try and leave no room for error. For example, after the inspection was scheduled an immediate notice to perform was issued to remove house inspection contingency. There is no getting around us having to wait for our house to close and they were aware of that when they accepted.
Assuming all repair negotiations are over and the house you are selling appraised appropriately for the buyers I would have your agent work with your buyers to really nail down their closing date. That might entail your agent reaching out to their agent, their lender, and/or their closing attorney. Basically, make sure there are no loose strings that might delay closing.
You have a lot of money at stake and do not want to lose your earnest money and have to start over . I would hope by this date, their underwriting is finished and it's just a matter of the closing attorney getting everything together. Shifting closing from Friday to Monday means a lot more to you than to your buyer and at this point they probably don't want to back out and start over.
The OP is asking a very simple question -- they are the prospective BUYER of home and wrote an offer that was $30k less than asking price AND contingent upon the sale of their existing home. In that sense they are also a "selling party". The deal for the party opposite the OP has a SELLER who, in the interim, has gotten back up offers that are BETTER, presumably because they include no such contingency AND/OR are closer / above asking price.
The OP is right to be reluctant to drop the contingency; even if everything looks ok from the perspective of selling their existing home they would be UNABLE to complete the deal and such a situation COULD trigger the loss of earnest money.
There would seem to be a situation that if the SELLER initiates a cancellation of the contract with the OP they could retain the earnest money BUT in practice as long as the SELLER sells to anybody in a deal better than what the OP offered the BUYER MUST refund all the earnest money. That is central to the whole way real estate deals ALWAYS work. The OP must have one of the worst ever "explainers" as their buyers agent ...
There are all kinds of fancy words being thrown around like "specific performance", "liquidated damages" , and arbitration but the fact is not only is $30k A LOT OF MONEY there would be LAWSUITS AGAINST EVERYONE that would make this a nightmare and THAT is exactly what any lawyer in California or any other state would explain...
I will add that if the OP still wants to buy the house that they seem to have gotten a heckuva deal while making sure that they sell their existing home they should stick to what is in the contract. If they have legitimate fears that the buyer looking to purchase their home MIGHT run into problems it does not make sense to drop the contingency UNLESS THEY HAVE AN MEANS OF FINANCING THE NEW HOME WITHOUT THEIR EXISTING SELLING as much for the piece of mind as for any fear of loss of earnest money, which is something a GOOD "explainer" of a buyers agent should have stressed. Of course then the OP could still WORRY that their buyer does get financing just a little too slowly yet that deal does go through but the SELLER of the new home cancels so the OP has sold his home with no place to move. This is generally rather uncommon and I mention it more to help the OP realize that worrying is NOT going to do / undo any issues... The various notices that the SELLER is "demanding" of them should similarly be sought out from the party attempting to buy the OP's home and the SELLER should be told to BEHAVE LIKE GROWN UP and not try to "take their ball and go home"!
thanks for the detailed write-up Chet! You understand exactly.
We have gotten direct contact from our buyer's lender that they are in line for loan docs and everything was approved so I'm fairly confident it will fund but you are correct that I'm worried about two situations.
1. We hit the 2nd, our buyer doesn't fund until the 5th and I don't remove the sale contingency on the house I'm buying. Now they cancel our purchase contract, our buyer does fund the 5th and I no longer have a house. I did negotiate a 2-month rent back so I will have some time, but that is a fear.
2. We hit the 2nd, our buyer doesn't fund until the 5th. Over the weekend our buyer loses his job or some other crazy thing and we've removed sale contingency and went with the hope and pray strategy. Now they can't fund and we can't close on the other side.
These are low probability cases, but my daily job is "figure out all the worst things that can happen so we can plan accordingly" so I tend to think through worst-case scenarios.
Personally, I would drop the contingency and hold my breath. If it falls apart and they go with the backup contract there is no way I can see that a title company would release the EMD funds to the seller. I have actually been on the selling end of a deal like this and the sale fell thru and I couldn't get the EMD funds from my buyer even though I tried.
Personally, I would drop the contingency and hold my breath. If it falls apart and they go with the backup contract there is no way I can see that a title company would release the EMD funds to the seller. I have actually been on the selling end of a deal like this and the sale fell thru and I couldn't get the EMD funds from my buyer even though I tried.
Agree. So basically the sale would have to fall through AND they would need to have grounds to recover the earnest money? Seems unlikely that both of those things would happen.
Worst-case scenario, how much is the earnest money? I guess it comes down to would you rather risk losing the earnest money or losing the house?
I just got off the phone with an attorney. He said there is no legal justification for them to return the EMD ($25K) if they accept and move forward with a backup offer if we're in breach. The EMD on our property is $10K so we'd have to try and recoup that but still be out 15K plus the legal fees.
He did advise to remove contingencies if we're confident our buyers are closing as it doesn't usually get that ugly. So we'll see
I am a NON-CALIFORNIA lawyer, but there seems to be some confusion here. The OP is buying a home. The Seller approved a contract whereby the OP would have until June 2 to complete the sale of the OP's own home and close on the Seller's home. Those are the contractual terms. If the OP does not fulfill those terms, the OP has breached the contract. The Seller apparently accepted a below-market offer from the OP and deprived himself of selling the home for a higher price until June 2. The contingency that may fall through is really unrelated to the home the Seller is selling and is completely beyond the Seller's control. It sounds to me like a firm (hard) negotiated contingency. I am not saying the OP will lose the earnest money, but I would not be AT ALL confident that the OP will not if the contract states the earnest money will be forfeited if the OP does not perform. If it just says "close of escrow shall be on or before June 2, 2017," there may be some wiggle room. Look for a "time is of the essence" provision in the contract - if you see one, start sweating. In any event, you need to get ahold of a CALIFORNIA lawyer, pronto. Good Lord, the California market is competitive enough that there must be RE lawyers who make Sunday house calls. Even a really experienced realtor is going to have a good feel for how this is going to go. The earnest money won't just be handed over to the Seller by the escrow agent - they will hold it if there is the hint of a dispute - but you will find yourself in mediation, arbitration or whatever the contract requires and you indeed could lose.
I was under the impression that he had to remove the contingency of selling his home (similarly to removing appraisal contingency or inspection contingency), that he planned to rent back from his buyer for two months and then close on the home he is buying.
How can anybody answer or even speculate without seeing the exact terms of the actual CONTRACT ??
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