When NOT to use a notice to perform? (contingencies, disclosure, 2015)

[TheLonelyGoatherd]

Hello

Sorry this is long but I think it's worth a read. Because it is the strangest thing I've read in real estate.

We are in the process of house hunting in California. Previously I've read that CA real estate law is different from the rest of the county but I never read exactly how.

In another forum I belong to a buyer was talking about how a deal just fell through. What they described didn't make sense but if it's true, then wow.

They said they made an offer on a house. 2 weeks into the closing, their loan fell through. Turns out the loan person never really screened them well and it went to underwriting and tanked. The husband is self employed and they were never fitted for the loan they were put in.

So their realtor suggests the mortgage broker she knows. The couple apply for a new loan with this broker who has them fitted for the correct loan. This loan was a higher interest rate and more money down but other than that, they are great candidates for the mortgage. Everything is going great. They are getting every single bit of information back to the mortgage person on the same day they ask for it. So the buyers are certainly "performing".

so then last week the loan officer tells them they are finally officially approved for the loan on September 14th. The next step is the appraisal. If the house appraises, the closing will be the following Friday, Sept 24th. They are only 2 weeks past the original closing date at this point. And it only took 2 weeks to get them approved for this new loan

so this is where it gets weird..........


This person said that they originally waived the appraisal because their agent said that was common in this area. However their loan required an appraisal in order to approve. So they didn't worry about waiving their own appraisal thinking that they had the loan appraisal still protecting them.

So on the day they are offically approved for this loan, the seller's agent starts badgering the buyer's agent saying that they need to remove the "loan contingency".

The buyers said they did not want to remove the loan contingency until the appraisal is done. Because if they remove the loan contingency, they are basically saying that if their loan falls through they are still on the hook to buy the house. And they have no means to buy the house. So that means they'd lose their whole deposit.

The seller's agent says well they will lose their deposit anyway. Because if this house doesn't appraise, because they waived their own appraisal, they have committed to buying the house. It's CA real estate law that if your loan falls through because the house didn't appraise, AND you waived your own appraisal, then if you otherwise qualified for the loan, you are on the hook to buy the house! If you can't come up with cash, then you lose the deposit.

so the seller's agent threated that the buyers must remove the loan contingency or he will issue a notice to perform. Then they have 48 hours to buy the house OR the deal is cancelled. The buyers realize that if they don't remove the loan contingency the deal is cancelled and they risk losing the deposit. And if they DO remove the loan contingency and the house does NOT appraise, their loan falls through and they lose their deposit anyway because they waived their own appraisal. (huge mistake) The buyers said again they would remove the loan contingency AFTER the appraisal is done. This all is happening on a Tuesday. And their appraisal is scheduled for Thursday and supposed to be back Friday. The seller's agent would not let them wait until the appraisal was done. He wanted the loan contingency waived before the appraisal or he was issuing the notice to perform.

And the buyers are questioning why is this even coming up now? Their buyer's agent tells them that from when they started the contract they had 17 days to come up with a loan approval so they are outside the window and that the seller's agent is justified in his demands.
However they lost 2 weeks when the original loan fell through. So the buyers assumed the 17 day clock started again with the new loan, right? Well their agent never changed the dates. So they were still trying to fit a new loan into the old loan window. They asked the agent why she didn't change the dates and she gave a vague answer that usually it doesn't matter to seller's agents if the loan is moving along. And she kind of implied that the buyers are the ones being difficult if they don't sign the loan contingency removal before the house is appraised.

But the buyers counted the days and said that had their agent changed the contract dates when they started the new loan, they were actually well within the 17 days. And that the 17th day was actually on Friday, the same day the appraisal was due back! But the buyer's agent didn't change the dates and the seller's agent now was using it against them.

The buyers tried to seek advice and they were told that 99% of sellers agents would never care about that 17 day window if they have buyers who are

1)loan approved
2) two days out from the loan's appraisal and
3) 9 days away from a closing date
4) new closing date is only 2 weeks out from original closing date.
5) the seller's agent knows who the buyers loan officer is and she assured that the buyers were performing and giving every bit of information they were asked for and that finally they were deemed "loan approved"

In the end, the seller's agent said if they didn't remove the loan contingency he would cancel the deal. He even made threats of saying they will be in breech of contract if that appraisal doesn't come through. The buyers ended up canceling the whole deal. And now they don't know if they will receive their deposit back.

So my question is this.........

1) is that true if you waive an appraisal and you are getting a loan, that if your loan falls through because of your appraisal being low, that you still have to buy the house or lose your entire deposit? If so why would an agent encourage a buyer to waive an appraisal unless they are paying cash?

2) why would a seller's agent care so much about the timeline from the original contract knowing that the buyers were moving along in a new loan? Is that normal to tell a buyer to remove the loan contingency prior to the appraisal? Knowing that if the house doesn't appraise, that the buyer's deposit is at risk? Isn't it more prudent to give the deal a chance to close?

3) As a future buyer, I've honestly never thought about the contingency dates in the contract. If my loan was taking longer than I hoped, I wouldn't have thought to tell my agent to make sure to change the loan contingency dates in the contract. Is this something I should be doing?

Sorry this is so long! But it sounds to me like either this seller's agent maybe had his own buyer and wanted these buyers out or the buyer's agent is really leaving a big part of the story out.
I had no idea something like this could happen.

I feel bad for the seller's who likely think this couple just changed their mind at the last minute and don't realize their agent was making threats to issue a notice to perform when there was an appraisal 2 days away and a closing date 9 days away!

As of now, the house is back on the market. Is this a common occurrence? I've seen listings that say "back on market because buyer couldn't perform" I had no idea what that meant before.

[MortonR]

I can't speak to everything here, but I will say that in the last two real estate purchases I did, both within the last 12 months, one of them had an appraisal contingency for the load and didn't appraise for the selling price. If we walked we lost our deposit. The alternative was to complete the deal and pay the difference out of pocket, which we did.

Granted, we expected it because the market where we were buying was moving faster than appraisals in the area. However, had we not been prepared for it we would have lost our earnest money had we walked.

I would add that this was not in CA.

RM

[adjusterjack]

one of them had an appraisal contingency for the load and didn't appraise for the selling price. If we walked we lost our deposit.

Appraisal contingencies generally allow you to walk and get your earnest money back.

How did you let that get past you?

[Diana Holbrook]

Originally Posted by TheLonelyGoatherd

Hello

Sorry this is long but I think it's worth a read. Because it is the strangest thing I've read in real estate.

I bet I've heard of something stranger

We are in the process of house hunting in California. Previously I've read that CA real estate law is different from the rest of the county but I never read exactly how.

In another forum I belong to a buyer was talking about how a deal just fell through. What they described didn't make sense but if it's true, then wow.

They said they made an offer on a house. 2 weeks into the closing, their loan fell through. Turns out the loan person never really screened them well and it went to underwriting and tanked. The husband is self employed and they were never fitted for the loan they were put in.

So their realtor suggests the mortgage broker she knows. The couple apply for a new loan with this broker who has them fitted for the correct loan. This loan was a higher interest rate and more money down but other than that, they are great candidates for the mortgage. Everything is going great. They are getting every single bit of information back to the mortgage person on the same day they ask for it. So the buyers are certainly "performing".

so then last week the loan officer tells them they are finally officially approved for the loan on September 14th. The next step is the appraisal. If the house appraises, the closing will be the following Friday, Sept 24th. They are only 2 weeks past the original closing date at this point. And it only took 2 weeks to get them approved for this new loan

OK - I'm not from California, but I did stay at a Holiday Inn in California once.

So the facts so far are that their original loan fell through, but buyer's agent found them another lender who would approve them... and at this point they've been granted at least a two week extension - maybe three?

so this is where it gets weird..........

OK - we're ready!

I have edited out what I think are the unimportant parts and kept what I think the important parts are:

The seller's agent says well they will lose their deposit anyway. Because if this house doesn't appraise, because they waived their own appraisal, they have committed to buying the house. It's CA real estate law that if your loan falls through because the house didn't appraise, AND you waived your own appraisal, then if you otherwise qualified for the loan, you are on the hook to buy the house! If you can't come up with cash, then you lose the deposit.

Again... don't know what their contracts look like, but that sounds fair actually.

so the seller's agent threated that the buyers must remove the loan contingency or he will issue a notice to perform. Then they have 48 hours to buy the house OR the deal is cancelled. The buyers realize that if they don't remove the loan contingency the deal is cancelled and they risk losing the deposit. And if they DO remove the loan contingency and the house does NOT appraise, their loan falls through and they lose their deposit anyway because they waived their own appraisal. (huge mistake) The buyers said again they would remove the loan contingency AFTER the appraisal is done. This all is happening on a Tuesday. And their appraisal is scheduled for Thursday and supposed to be back Friday. The seller's agent would not let them wait until the appraisal was done. He wanted the loan contingency waived before the appraisal or he was issuing the notice to perform.

And the buyers are questioning why is this even coming up now?

Because they are at least a couple weeks past their contract close date, and seller doesn't have to wait forever.

Their buyer's agent tells them that from when they started the contract they had 17 days to come up with a loan approval so they are outside the window and that the seller's agent is justified in his demands.
However they lost 2 weeks when the original loan fell through. So the buyers assumed the 17 day clock started again with the new loan, right?

Terrible assumption. Why should seller have to wait another 17 days for buyer to apply for a new loan? It's not seller's fault they failed to qualify for the first loan... that's on the buyer. And seller has pulled his home off the market and held it past the contract date and deserves some compensation if buyer falls through at this point.

Well their agent never changed the dates. So they were still trying to fit a new loan into the old loan window. They asked the agent why she didn't change the dates and she gave a vague answer that usually it doesn't matter to seller's agents if the loan is moving along. And she kind of implied that the buyers are the ones being difficult if they don't sign the loan contingency removal before the house is appraised.

If the contract was never extended, buyer is lucky seller is even still dealing with them. Buyers are being difficult if they expect seller to assume ALL the risk for THEIR loan falling through.

But the buyers counted the days and said that had their agent changed the contract dates when they started the new loan, they were actually well within the 17 days. And that the 17th day was actually on Friday, the same day the appraisal was due back! But the buyer's agent didn't change the dates and the seller's agent now was using it against them.

Buyer's agent very well should have asked for an extension, but I doubt seller would be obligated to grant it.

The buyers tried to seek advice and they were told that 99% of sellers agents would never care about that 17 day window if they have buyers who are

1)loan approved
2) two days out from the loan's appraisal and
3) 9 days away from a closing date
4) new closing date is only 2 weeks out from original closing date.
5) the seller's agent knows who the buyers loan officer is and she assured that the buyers were performing and giving every bit of information they were asked for and that finally they were deemed "loan approved"

You are really minimizing the impact forcing a two week delay might have on the seller. It's actually huge. Lots of sellers would not wait two weeks. Especially if buyer still wants the right to walk away and get all their earnest money back... seller loses everything and it's not seller's fault.

In the end, the seller's agent said if they didn't remove the loan contingency he would cancel the deal. He even made threats of saying they will be in breech of contract if that appraisal doesn't come through. The buyers ended up canceling the whole deal. And now they don't know if they will receive their deposit back.

OK - but seller isn't wrong to want this.

So my question is this.........

1) is that true if you waive an appraisal and you are getting a loan, that if your loan falls through because of your appraisal being low, that you still have to buy the house or lose your entire deposit? If so why would an agent encourage a buyer to waive an appraisal unless they are paying cash?

Up here, appraisal would be tied to the loan contingency. So I don't know.

2) why would a seller's agent care so much about the timeline from the original contract knowing that the buyers were moving along in a new loan? Is that normal to tell a buyer to remove the loan contingency prior to the appraisal? Knowing that if the house doesn't appraise, that the buyer's deposit is at risk? Isn't it more prudent to give the deal a chance to close?

3) As a future buyer, I've honestly never thought about the contingency dates in the contract. If my loan was taking longer than I hoped, I wouldn't have thought to tell my agent to make sure to change the loan contingency dates in the contract. Is this something I should be doing?

The timeline is VERY important.

The seller must make commitments of their own based on the timeline in the contract. They may have their own purchase contract that is dependent on this closing. They may have to pack and move and assume commitments on a new place. It is vital to get your stuff done on time. ANY extension, even a day, may have severe consequences for the seller and they don't have to agree to your delays.

Sorry this is so long! But it sounds to me like either this seller's agent maybe had his own buyer and wanted these buyers out or the buyer's agent is really leaving a big part of the story out.
I had no idea something like this could happen.

I feel bad for the seller's who likely think this couple just changed their mind at the last minute and don't realize their agent was making threats to issue a notice to perform when there was an appraisal 2 days away and a closing date 9 days away!

As of now, the house is back on the market. Is this a common occurrence? I've seen listings that say "back on market because buyer couldn't perform" I had no idea what that meant before.

Seller lost a lot of time and potentially money if their own plans fell through because of the delay. I would not assume they don't know what the seller's agent "threatened" the buyers with, I would assume they were tired of waiting for this buyer and were directing their agent what to do.

Yes, they may lose more time this way having to start completely over with a new buyer, but sometimes when patience and good will runs out, they just want to end it.

I understand buyer not wanting to lose their deposit. But I think buyers were asking seller to assume all the costs of buyer's delays and failures, and that isn't really fair.

Who should pay for buyer's failure to get his financing and appraisal done on time?

[TheLonelyGoatherd]

Diana thank you for those points. I should add that this was a house that was on the market for 2 months and there were no other offers. AND after the first loan fell through the seller's started taking backup offers while the buyers got new financing. They got zero backup offers. Also the buyers were going to pay for the seller's rental for each day the closing went beyond the original date, so 2 weeks.
Does that change anything in your opinion of what the sellers demanded?

I see your points but I guess the question is, did the seller benefit from this at all? Instead of having a closing 2 weeks later, they lost their buyer, the house is still on the market and for less than the original buyer was offering. I don't see how demanding the loan contingency be removed the day before the appraisal helped them at all.

I've been a seller. Our buyer's loan fell through. We were never told why. I would have greatly appreciated it if they not only scrambled to get another loan BUT they got loan approval in 2 weeks. We instead went back on the market and took another 2 months to find a buyer. And we had to drop the price.
I had that happen with both houses we sold in the past 15 years. It sucked.

So this is a genuine question.....if a buyer's financing falls through....should they just NOT try to get a new loan for that house? Should they cancel that contract for that house and then start a whole new contract? Because it seems here that it was staying within the same contract that hurt this buyer.


I do realize that if a seller has offers lined up, then yes, kick the first buyer aside. But if you don't have other offers, is it still a good idea to start issuing a notice to perform when your buyer has a loan, an appraisal date and a close date?
I can't imagine what I'd do in that case as a buyer? I would be thinking the same as this buyer. Doesn't the fact that I have a new loan that I'm approved for in 2 weeks show that I was "performing"?

I'm also surprised that a buyer could lose their deposit if their loan falls through because a house doesn't appraise. That just doesn't seem right to me. As a seller I'd never want to keep a deposit in that way. I'd feel like it was my fault my house was overpriced. Maybe I'm too nice.

But I did learn to NEVER waive your appraisal. wow I didn't realize how that appraisal can protect your deposit in the event your loan appraisal is low and your loan falls through. (apparently this buyer's loan did NOT allow them to bring money to the table if it was low.)

Another question, it seems to me this buyer's agent dropped the ball when they didn't write up new dates for the new loan, correct?. From what I've read, 99% of seller's agents don't care if the dates aren't being met as long as the loan is moving along. But it seems these buyers got the 1% of agents who was more worried about the original dates than they were the fact that a new closing date was 9 days away.

[TheLonelyGoatherd]

Originally Posted by Diana Holbrook

I bet I've heard of something stranger

OK - I'm not from California, but I did stay at a Holiday Inn in California once.

So the facts so far are that their original loan fell through, but buyer's agent found them another lender who would approve them... and at this point they've been granted at least a two week extension - maybe three?

OK - we're ready!

I have edited out what I think are the unimportant parts and kept what I think the important parts are:

Again... don't know what their contracts look like, but that sounds fair actually.

Because they are at least a couple weeks past their contract close date, and seller doesn't have to wait forever.

Terrible assumption. Why should seller have to wait another 17 days for buyer to apply for a new loan? It's not seller's fault they failed to qualify for the first loan... that's on the buyer. And seller has pulled his home off the market and held it past the contract date and deserves some compensation if buyer falls through at this point.

If the contract was never extended, buyer is lucky seller is even still dealing with them. Buyers are being difficult if they expect seller to assume ALL the risk for THEIR loan falling through.

Buyer's agent very well should have asked for an extension, but I doubt seller would be obligated to grant it.

You are really minimizing the impact forcing a two week delay might have on the seller. It's actually huge. Lots of sellers would not wait two weeks. Especially if buyer still wants the right to walk away and get all their earnest money back... seller loses everything and it's not seller's fault.

OK - but seller isn't wrong to want this.

Up here, appraisal would be tied to the loan contingency. So I don't know.

The timeline is VERY important.

The seller must make commitments of their own based on the timeline in the contract. They may have their own purchase contract that is dependent on this closing. They may have to pack and move and assume commitments on a new place. It is vital to get your stuff done on time. ANY extension, even a day, may have severe consequences for the seller and they don't have to agree to your delays.




Seller lost a lot of time and potentially money if their own plans fell through because of the delay. I would not assume they don't know what the seller's agent "threatened" the buyers with, I would assume they were tired of waiting for this buyer and were directing their agent what to do.

Yes, they may lose more time this way having to start completely over with a new buyer, but sometimes when patience and good will runs out, they just want to end it.

I understand buyer not wanting to lose their deposit. But I think buyers were asking seller to assume all the costs of buyer's delays and failures, and that isn't really fair.

Who should pay for buyer's failure to get his financing and appraisal done on time?

Diana thank you for those points. I should add that this was a house that was on the market for 2 months and there were no other offers. AND after the first loan fell through the seller's started taking backup offers while the buyers got new financing. They got zero backup offers. Also the buyers were going to pay for the seller's rental for each day the closing went beyond the original date, so 2 weeks.
Does that change anything in your opinion of what the sellers demanded?

As a seller, if you don't want to wait, then to me, the time to say no would have been right when the first loan fell through. Why wait until a new loan is in place, the day before your appraisal is ordered AND your new closing date is on the horizon? That seems like the worst time to lose patience. Sellers never should have agreed to let the buyers get new financing. And the only reason they did agree is because they had zero backup offers. So again, how did the sellers come out ahead here? Serious question. As a seller the last thing I wanted to do was scare off my buyer! Especially at the home stretch.

I see your points but I guess the question is, did the seller benefit from this at all? Instead of having a closing 2 weeks later, they lost their buyer, the house is still on the market and for less than the original buyer was offering. I don't see how demanding the loan contingency be removed the day before the appraisal helped them at all.

I've been a seller. Our buyer's loan fell through. We were never told why. I would have greatly appreciated it if they not only scrambled to get another loan BUT they got loan approval in 2 weeks. We instead went back on the market and took another 2 months to find a buyer. And we had to drop the price.
I had that happen with both houses we sold in the past 15 years. It sucked.

So this is a genuine question.....if a buyer's financing falls through....should they just NOT try to get a new loan for that house? Should they cancel that contract for that house and then start a whole new contract? Because it seems here that it was staying within the same contract that hurt this buyer.


I do realize that if a seller has offers lined up, then yes, kick the first buyer aside. But if you don't have other offers, is it still a good idea to start issuing a notice to perform when your buyer has a loan, an appraisal date and a close date?
I can't imagine what I'd do in that case as a buyer? I would be thinking the same as this buyer. Doesn't the fact that I have a new loan that I'm approved for in 2 weeks show that I was "performing"?

I'm also surprised that a buyer could lose their deposit if their loan falls through because a house doesn't appraise. That just doesn't seem right to me. As a seller I'd never want to keep a deposit in that way. I'd feel like it was my fault my house was overpriced. Maybe I'm too nice.

But I did learn to NEVER waive your appraisal. wow I didn't realize how that appraisal can protect your deposit in the event your loan appraisal is low and your loan falls through. (apparently this buyer's loan did NOT allow them to bring money to the table if it was low.)

Another question, it seems to me this buyer's agent dropped the ball when they didn't write up new dates for the new loan, correct?. From what I've read, 99% of seller's agents don't care if the dates aren't being met as long as the loan is moving along. But it seems these buyers got the 1% of agents who was more worried about the original dates than they were the fact that a new closing date was 9 days away.

It honestly makes me want to continue renting for now and not even look at a house, even one that's been sitting. It also makes me feel like if I do buy I'll have to micromanage my realtor to make sure that they are changing dates in the contract in case a closing takes longer beyond my control (such my appraiser tested positive for covid and appraisal got bumped a few days. Who wants to do that?
As a buyer and a seller in the past, I've never felt pressure either time to stick to an exact date. When we sold our last house in 2015 in Virginia the closing was 60 days. I can't imagine hassling my buyer to show loan approval in 17 days and tell them to lift the contingency? It never came up.
That's why I wondered if this was a California thing or is this a 2021 hot market thing.

[Diana Holbrook]

Originally Posted by TheLonelyGoatherd

Diana thank you for those points. I should add that this was a house that was on the market for 2 months and there were no other offers. AND after the first loan fell through the seller's started taking backup offers while the buyers got new financing. They got zero backup offers. Also the buyers were going to pay for the seller's rental for each day the closing went beyond the original date, so 2 weeks.
Does that change anything in your opinion of what the sellers demanded?

Buyer's offer to pay seller's costs was a nice gesture I didn't know about from the story... so it does sweeten the buyer's side a little. They weren't expecting seller to pay all the consequences of the delay.

I see your points but I guess the question is, did the seller benefit from this at all? Instead of having a closing 2 weeks later, they lost their buyer, the house is still on the market and for less than the original buyer was offering. I don't see how demanding the loan contingency be removed the day before the appraisal helped them at all.

No, seller lost... but sometimes people lose confidence and good will wears thin.

I've been a seller. Our buyer's loan fell through. We were never told why. I would have greatly appreciated it if they not only scrambled to get another loan BUT they got loan approval in 2 weeks. We instead went back on the market and took another 2 months to find a buyer. And we had to drop the price.
I had that happen with both houses we sold in the past 15 years. It sucked.

So this is a genuine question.....if a buyer's financing falls through....should they just NOT try to get a new loan for that house? Should they cancel that contract for that house and then start a whole new contract? Because it seems here that it was staying within the same contract that hurt this buyer.

No, they should not just cancel, they should explain and ask for an extension... and sometimes dropping contingencies and making deposits non-refundable will help give sellers some confidence that buyer is actually going to close.

I do realize that if a seller has offers lined up, then yes, kick the first buyer aside. But if you don't have other offers, is it still a good idea to start issuing a notice to perform when your buyer has a loan, an appraisal date and a close date?
I can't imagine what I'd do in that case as a buyer? I would be thinking the same as this buyer. Doesn't the fact that I have a new loan that I'm approved for in 2 weeks show that I was "performing"?

If you're so confident you can perform, then why are you holding on to the contingency? I have been on your side with buyers, but I also understand sellers who think it's unfair if they are committed to go to closing, but buyer can walk away up until the last day on financing and get all their money back. That's not really fair.

Our state contracts also have a process for seller to limit the time when buyer can back out with no consequence. It doesn't surprise me that there's such a process in CA.

I'm also surprised that a buyer could lose their deposit if their loan falls through because a house doesn't appraise. That just doesn't seem right to me. As a seller I'd never want to keep a deposit in that way. I'd feel like it was my fault my house was overpriced. Maybe I'm too nice.

But I did learn to NEVER waive your appraisal. wow I didn't realize how that appraisal can protect your deposit in the event your loan appraisal is low and your loan falls through. (apparently this buyer's loan did NOT allow them to bring money to the table if it was low.)

Buyer offered what they thought the house was worth. In lots of situations in this market, buyers are making crazy high offers to win the bidding war. They can't then turn around and make it contingent on an appraisal that is bound to be less emotional and stick the seller with the lower price. It's part of what sucks for buyers in hot markets, but it's why buyers need to keep their wits about them.

Another question, it seems to me this buyer's agent dropped the ball when they didn't write up new dates for the new loan, correct?. From what I've read, 99% of seller's agents don't care if the dates aren't being met as long as the loan is moving along. But it seems these buyers got the 1% of agents who was more worried about the original dates than they were the fact that a new closing date was 9 days away.

Yes, they should have asked for a time extension along with the new loan. In our contracts buyer would have been required to give notice of the failure of the first loan and seller could have walked. Seller has to agree to give buyer a chance to seek new financing.

Dates and deadlines are VERY IMPORTANT. Get the idea out of your head that dates don't matter as long as you're working on it. That will get you in trouble.

What's important is disclosure and agreement.

[Silverfall]

Yes when you waive the appraisal contingency, at least here in Oregon, you are agreeing to perform on the contract regardless of where it comes in. I've never seen anyone with financing waive the appraisal contingency, but we do see a lot of "appraisal gap" coverage in our contracts which will guarantee a certain amount in the event of a shortfall. That happens in hot markets.

So if you waive it and can't perform because it came in low, then up here the buyer would lose their deposit. Essentially, when it is waived, you are representing to the seller that you have adequate funds to close the transaction in the event of a shortfall and you will bring them to close the transaction if it falls short.

[Lillie767]

No appraisal contingency in my contract to buy (I had funds for cash if mortgage was denied) and none in my contract to sell (hot market- no contingencies).

[TheLonelyGoatherd]

If you're so confident you can perform, then why are you holding on to the contingency?

in this case the buyer said they themselves were loan approved. But they needed the house to appraise. So in this case, I can see a buyer thinking, "Hey I'm performing. But now we need your house to perform and actually appraise".

Their argument was how can they remove a loan contingency, knowing they need a loan? And at this point, the only thing they needed was the loan to appraise. So removing the loan contingency the day before the appraisal, and knowing full well they do not have the money to buy the house and knowing if the house doesn't appraise they have no loan....well I can see the hesitation to remove that loan contingency

I would have that same line of thinking. That's why I wanted to ask if that was wrong. I'd be afraid of getting sued if I remove a loan contingency because that's saying "I'll buy your house even if I don't get a loan" meanwhile that's not true.

But it's good to hear another side of things! My mind is still more fresh as a seller, not a buyer. If my house was sitting for two months with no takers, I just wouldn't worry about making a point about sticking to an exact date, as long as I see my buyers hustling for a new loan. And this person even gave the name of her mortgage broker to the seller's agent so he could call her and be told straight from the broker that they were performing and getting all info to her the same day she asked. And the seller's agent spoke to the broker the day she said the buyers were finally "loan approved" and now they just need that appraisal. So the seller's agent has been kept aware of the new loan's progress.


It seems so stupid on the end of the seller's agent to freak out at this point. I wonder if the sellers themselves know about it? I'd kill my agent if I found out they were harassing my buyer about a check mark on the contract, honestly. I'd tell him to sit the F down, let this thing get to the closing table and let's all get our money shall we? Save the threats for any delays that come if we don't close.

Especially knowing I had no back up offers? OMG, no. But I just went through this recently myself. Not the same thing. But we had an offer on a house with a solar lease that we refused to pay for. The guy owed over 20k on solar panels that weren't worth 14k brand new. He wanted us to pay the lease. We had already went 100k over asking. The house was sitting 90 days at that point (yes we never should have went over asking) they had no backup offers. And this guy just wouldn't budge about paying off his own lease. The deal fell through

Now his house is STILL on the market a month later. And it's priced 100k lower that we offered. So I guess his principles and $1 could buy him a McDonald's coffee. Some sellers shoot themselves in the foot.

Honestly, I think a buyer has to kiss butt if a house has multiple offers. But these sellers who have homes sitting need to realize that while the market is hot, THEIR house is not! And they need to treat their buyers a little better. I've seen many homes listed "back on market" this year. And now I wonder if it was sellers acting like divas.

Thank you for the input about the other side. I definitely can see that. But in my case and the case of my internet friend, neither seller is in a better position than if they just gave a little to the buyer. I'd hate myself if I was that seller right now, lol.