If a real estate contract is withdrawn because of a claim of lack of financing (Austin: foreclosed, good credit)

[ROY DUBOSE]

Originally Posted by austin-steve

Interesting.

karma

[loves2read]

you are going to have to prove "damages"--what have you suffered--
did you already make other arrangements to buy a house that you lost money on because this one did not sell?
did you put deposit down on movers that you lost?
did you have another contract offer that you gave up for this one?

my husband says that you only get relief if you can prove that you have suffered a financial loss--emotional loss does not count
you will have to prove that she "failed" to make honest effort--how can you do that?
I have always heard that you can't prove someone did not do something like that--you can't prove a negative..

[austin-steve]

I have always heard that you can't prove someone did not do something like that--you can't prove a negative..

Also, most real estate sales contracts have the "Mediation" box checked, which means the parties agree to submit their disputes to mediation before suing. Mediation is non-binding and takes a while.

Put it this way, of the top 10 "most likely to fail" lawsuits one could think of, forcing an unqualified buyer to purchase your home by disputing the buyer's contractual right to terminate for lack of financing would have to rank right up there as number 1 or 2. Might as well try suing the weatherman for an inaccurate forecast.

Deals fall apart every day for many reasons. 99.9% of people move on and focus on trying to accomplish what they set out to accomplish, which is to buy or sell a house. A different course of action would suggest different motivations than the supposed outcome sought. i.e. - do I want to find a good buyer or do I want to punish an unqualified buyer, thus halting the entire sales process to pursue what is virtually a "zero probability of success" effort?

This would be the classic "cutting off your nose to spite your face" type of effort. Move on.

Steve

[austinnerd]

Originally Posted by orbius

... because its the right thing to do and I dont like people abusing the rules to their own advantage at my expense.

You mean it's the right thing to do if they intentionally used the clause as an "out" right? So far you haven't answered any queries as to why you think that the other party didn't put forth a good faith effort. So right now it's hard to tell if you're just pissed that they backed out at all or if you really have a legit (from an ethical standpoint since you bring up "the right thing to do") beef.

[Jennibc]

From this thread, it sounds to me the OP just wants to keep the Ernest money rather than sue for specific performance. However, once he consults his lawyer in the family, the lawyer will probably advise him to let it go because doing a cost benefit analysis, the amount of a few thousand is not worth the time, energy, and cost of a law suit.

When we bought this house the seller didn't disclose to us that we had no hot water in the front sink. It costs us $2000 in electrical and plumbing work to rectify the situation. Because I hold a JD and have been legally trained, I could sue him and would only incur court costs. But we won't. It's too big of headache for 2000 and technically we did get warm water there and there would be the entire question of whether that was something that legally had to be disclosed under the contract.

[Paulmmm]

Originally Posted by orbius

Some good information and some drek but hey its the internet I'll take what I can get. Thanks to the people who care enough to post some reasonable information.
Luckily I have a lawyer in the family and have plenty of money so I'm that one person out of 100 who is willing to file this kind of lawsuit just because its the right thing to do and I dont like people abusing the rules to their own advantage at my expense.

Just out of curiosity, since you say that there's a lawyer in your family, and you're rich, and you intend to do it no matter what because it's the right thing to do, why did you ask for C-Der's opinions in the first place? Wouldn't it have been quicker and easier on you to just ask your relative lawyer instead of asking the board and then ignoring what everyone here is recommending?

[XLadylawX]

The OP also raises an interesting issue re financing falling through. We keep hearing that lenders are being super strict these days even with qualified buyers. Does anyone here know how hard it is to obtain a loan in Austin these days? I was speaking to a RE Broker in California and she indicated to me that I may have trouble getting financing for a primary residence unless I put MORE than a 20% downpayment because I own another house (now an investment) in California. This is despite the fact that I have good credit and the ability to pay a mortgage.

Anyone have any thoughts on this?

[Jennibc]

We had no problem finding financing but we also had a 40% downpayment and our credit was in the highest bracket. My realtor here didn't think it would be a problem at all. However, when we were readying our house to sell up in Seattle we were planning on taking out a second to spiffy up the property (new carpet, paint, remodel a room, new roof, new plumbing) and there, our realtor was concerned we wouldn't be able to get financing. We did, but that he was so worried makes me think that he's seen other people in the same position face difficulties.

[pjoseph2]

Credit is available (in outrageous amounts) to those who qualify. At incredibly low rates, might i add.

Those who qualify are reluctant to leverage because they can read the economic tea leaves well.

The Fed and Treasury are raining dollars. But Banks are not lending for a good reason. There are barely any creditworthy borrowers left. And then there is this small detail about bank balance sheets.

More stories about 'strategic defaulters' gloating. And banks pretending that everything is alright. The new normal in America.

[austin-steve]

Does anyone here know how hard it is to obtain a loan in Austin these days?

It's never, throughout all of the past few years financial crisis, been hard for people with solid W2 income and good credit (FICO 700+) to get a loan. They always have been, and always will be, easy borrowers.

The people who have trouble are self-employed with tax returns showing insufficient income to qualify, or people with marred credit and/or low downpayment. The no-doc loans are gone.

Also, even for qualified people, the higher restrictions can make the approval process a bit more frustrating, and it can take longer and you might be asked to provide more stuff than before, but you'll still get approved if you're a clean borrower and the house appraises.

We send our buyers to a lender who does full pre-approval (vs. pre-qualify) before we even show houses. Even people who think they are good to go run into surprises, so anything short of full approval (credit, income and available funds verification) before looking is ill-advised.

Also, you might be suprised to know that a lot of the appraisals are done via "drive by". That is, the appraiser never goes in the house and approves the sales price based just on the location of the home and recent sold comps. I actually don't like that because it ignores the interior condiion and out-of-date issues, age of equipment, age of roof, etc., but that what a lot of the banks are allowing.

Steve