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Why Did THIS Transaction Fall Out of Contract?????

Marketing the property well was a given. With internet presence galore, the MLS, Open Houses and a couple of ads it's no wonder my listing was in contract within a month. Even in a a slower market. I even helped my guy clean up and repair a couple of minor things so they signed off on the home inspection. Everything was going oh.....so too well. But... 'ship' happens.

So what exactly did happen?

Passed the Home Inspection and even met them a second time to go over the minor repairs the seller and I completed.
Addtional deposit was sent in to escrow after the completion/approval of the Home Inspection period.
Appraisal came in on the money...we didn't doubt that one.
All Association and Condominium Docs were signed and approved
Buyers had Loan Approval (just Termite Inspection to be done)
Seller already had an estimate for the movers and was to give his approval today.
The Seller already put in a request for retiring from his job.
The Selling agent was going to have a contractor paint for them.
The buyers were excited up until ...yesterday.

No explanation. Just a call to their agent and escrow saying "cancelling the purchase contract. Nothing. Zip. Zilch. Broken promises and lives disrupted. NO EXPLANATION. Even in their signed cancellation to escrow this morning. NO EXPLANATION. They even put in a stop payment for the additional deposit! My seller is VERY upset. Understandable.

Wow. The disregard these buyers had for the lives they disrupted.

Never a dull moment in real estate....pick up, move on.

Why?

No Explanation.

Posted by Celeste "SALLY" Cheeseman HAWAII Relocations & Real Estate on 11/19/2008 12:36 AM

Comments (59)

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Originally posted at: Hawaii Real Estate & Relocations : Why Did THIS Transaction Fall Out of Contract?????

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59 Comments on Why Did THIS Transaction Fall Out of Contract?????

NOV

Unfortunately, we don't always get answers to these types of questions. Sometimes buyers can't explain their reasons.

Hi there,

Maybe just cold feet? It sounds like the issue could be with them and not the property. Now a question, can your seller go after them for the increased (portion) of the deposit?

UGH, Sally. How disappointing. A story we keep hearing over and over these days. I agree with Lynda...

Jeff

Sally, sorry to hear that happened to you and your clients. I wonder the same things as Lynda Eisenmann. On the bright side...I love your graphic!

That just stinks, especially in this market. And it really is very unfortunate for your seller.

I do think I would have my Attorney send out some nasty grams. The seller can be made to fulfill his contractual obligations. You did your job.

Celeste: Cold feet or a problem in the relationship. Either one would cause this without an explanation. Family illness, job layoff, things of that nature the buyers would be telling you about it.

I'm so sorry this happened to your seller.

Sorry this happened to you both-hopefully, your seller is not upset with you. Maybe they'll get a better offer and you will shine!

Sally, what a shame! I hope Lisa is right and they will get a better offer, and SOON! I know you are disappointed, but your poor seller!

Celeste, incredible. How are your sellers dealing with it? They say when one door closes another opens, doesn't help now but something better will come along. It's the power of positive thinking!

Laura G

Sally I have never had one fall apart on me that close to closing. I have heard of them, things such as the buyers job being cut, worries about finances would be probably top of the list.

WooHoo, That suck!!! It happens though. Ii happens quite frequently in my market. The seller may want to seek legal advice. Of course what will probably happen is you will resale it quickly and for more money now that the inspection and repairs have been done. Just keep moving forward.

What a shame for your sellers. They must feel like the rug was pulled out from under them. Playing the devil's advocate here... You just have to assume whatever the reason, it had to be a really, really good one because the alternative, means they're just incredibly rude, irresponsible and inconsiderate.

Let's just hope that a bigger and better offer comes along quickly to make up for all the trouble and heartache.

Hi Sally,
It's those that have no rhyme or reason for falling apart that keeps us awake at night!

Sally,

The very sad part is that no financial remedy can make this very awkward situation go away and the buyer gets away pretty much unscathed!

My hope is that the sellers will walk through it with you and move on to the next buyer...a little wiser & no worse for the wear!

Sally, It seems to be happening more now, than in the past. Fear, a better deal, we just don't know. Why won't the other agent share the reason?

You might have a Case...if the time lines have expired on the buyers side in any capacity and they didn't give you written notice then the seller might be able to file an escrow dispute order or go to arbitration. And even if they can't they still have to sign off on the release of the buyers escrow. That's usually the way our contracts read but I'm not sure of Hawaii. If the money is held in a title company ...they won't release it back to the buyers unless the sellers sign off on it.

Something must have happened in the interim...,maybe someone else got involved and changed their thinking...that's usually the case.....and its sad because if they are getting a mortgage...I've seen this in the past where they get the LO or the MB to just send a letter saying they didn't qualify for the loan...maybe they changed the rates and the buyer didn't like the new rate?

I think it's best that they consult an attorney on this...I'm not one to give out legal advice...only past experiences I've seen.

Sometimes, as a buyer's agent, you see a bit of hesitation from them at the beginning. They say something like "Well let's make an offer on this one?" Almost posing the sentence as a question or stating it like it's a bad thing. At that moment, it's our job to get to the bottom of the nonverbal communication they are sending. All of us want to hear our clients say they want to make an offer, but there are times you have to stop and really understand them. An agent in my office had one buyer back out because of the school district, something that was known from the beginning. Just an example of how you really have to listen and pay attention to your buyers verbal and nonverbal list of criteria. I would bet the buyer's agent for this transaction was not as surprised as you were! Best of luck finding a new buyer! Hopefully those inspections will come in handy as a selling tool!

Hopefully, the sellers will not just "roll over" and release the buyer's earnest money. The sellers are clearly entitled to that as damages for the buyers' default, if that is what it is. I'm not clear that the contract is fully ratified although since there was an inspection, I'm assuming it so.

A person cannot simply "cancel" a contract unilaterally. That's why there are escrow payments for damages to the other party.

NOW, time to go forward and not back. The repairs have been made and the house is in better condition than ever. Sell it.

TOTOH, if the buyer's did default and "cancel" within the meaning of the contract, the sellers may want to proceed with collection on the additional escrow and, if the contract provided, proceed for specific performance or additional damages.

One thing for sure, the buyers should NOT get their earnest money back. If that would be permitted under Hawaii law, it would be a crime.

Sally, bummer major bummer. So many lives are effected. I have one almost contingent free to close in Dec. But the finance contingency still remains. They havent' done the appraisal yet. Buyer agent went hunting up North and no cell phone coverage. My sellers are on pins and needles. In MI the buyers can get back the EMD up until all contingencies are free, is it that way in HI.

What a total bummer. I've never personally had one cancel this close to closing, but I've seen it happen to other agents. It would be nice if they gave you a reason, like someone lost their job, because just knowing helps you understand...

Christine: That's fine...they can't explain but they'll lose their EMD. These people spent money on the home inspection, appraisal, deposits. Now...the only thing I can think of is family situations...In fact, I really don't care what the reason....as long as there is a valid reason for uprooting my client's life.

Lynda: They stopped payment and of course he could seek legal counsel and take them to court. Bottom line...why waste money...although for my client it is beyond that...it's the principle of the thing. Me? I just have to move on...if he want to keep selling it fine. If not, that's fine too. I just don't need the stress.

Sally,

Things are done differently there than here in Ontario. Once a contract has been signed and all conditions have been removed, there is no backing out here or the buyer risks a major lawsuit. It seems things can be left hanging there til the last minute....and in the meantime a buyer might find another house they like better, or perhaps some personal issues crop up and they are unable to proceed.

I'm saddened for your sellers and for you and all of the work you've put into this....thankfully this is a rare occurence.

Jeff: Yeah...I know it's not the property...it's the buyers. But I just don't see why these people just think they can run around and disrupt peoples lives like that. I guess it's not for me to know...just move on and keep doing what I'm doing.

Kelly: I can understand my seller being upset but we need to move on already.

Sally, very sorry to hear that. It actually sounds like they were inevitably going to backout. I take it your seller will be keeping the Depsoit? :(

Patrick

If there is anything I've learned along the way is that contracts aren't contracts. We've seen people weasel out of sound contracts with absolutely no repercussions. I don't get it!

Sally, I'm sad to hear one of your deals fell apart. This happens to the best of us. If anyone is going to pick up and continue where they left off it's you. There's unfortunately too many people out there who are not educated on how to conduct themselves on either side of the transaction. I still believe there should be a course buyers and sellers should take before purchasing a home. It may sound unecessary to some but situations like the one Sally dealt with proves that it can only help teach people proper etiquette. Keep on doin what you're doing Sally, you're a star! :)

Carol: What makes it worse is that my seller is taking it real hard and needs to pull himself out of it so we can move on and sell his unit.

Laura: It's the buyer that did not fulfill their obligations. They are definitely in breach of contract right now.

Kris: This is what I kept telling the seller....and under no circumstances can I buy into the emotional part as it is not a good thing right now.

I'm so sorry this happened, hopefully the next transaction is smooth and easy!

Kim, RE/MAX EXCEL

Lisa: I shine anyway :).....I also sleep well at night knowing I did do everything for my client. Let's see how he does today.

Ann: Yeah..he's bummed out. Never mind about me....I say pick up and move on ...NOW. :)

Laura: Not good. I hope so too.

Larry: Never say never :) I think this was something personal that happened.

BB: Yeah...it does. He says he is going to do so. Think think think.

Richard: I think it impossible to assume anything at this point. I really believe that without an explanation is just plain rude to begin with.

Cynthia: No kidding...but I slept good last night. I had a tooth extracted (it cracked to the bone!) so had a horrendous day yesterday :)

Sara: No kidding. But there is nothing to prevent us from moving on instead of wasting energy on something we have no control over.

Richard: She claims she doesn't know either.

Neal: The seller may/may not. We didn't get the loan approval in writing and it's just heresay from the other agent. The loan officer doesn't respond.

Laurie: I'm sure it will. :)

Lenn: He's not...believe me. And I don't blame him. I'm with you! Seller's not though.... :( maybe later on....in the meantime got a showing this afternoon for that unit and taking buyers out at noon :) On top of everything else, I paid for condo docs....(he said he'll reimburse me) and the Management Co is charging for the transfer and processing fee ....regardless of the transaction falling out of escrow.

Missy: Yeah....Bummer. Supposedly the financing contingency was not an issue... The appraisal was complete on this one. Everything but the termite inspection. Up until Monday...escrow still received lender email requesting one more doc....and stating the buyer wanted to close early. Geez.

Kelly: No kidding. That in itself was rude.

Jo: Seller could open a suit but there are other issues not yet clarified.

Patrick: Minus other expenses.

Carol: Yes, there are contingencies along the way that protect both buyer and seller to cancel the contract but only if one or the other isn't fulfilling their obligations. Seller does have the right to seek legal counsel on this one.

Castle: Oh, moving on buddy...believe me! Showing property for relocation clients....and seller needs to find a happy medium. I listened last night and it wasn't nice :) I always said...there should be a coe for buyers and sellers alike :)

Kim: Me too!

Sally I have been seeing Buyers getting cold feet lately and trying to find any reason they can to get out of their contract. You have to ask yourself what in the world could have happened in the short time between signing a contract and getting ready to Close???

Nervous Buyers do not act rationally.

Sally - that bites! Looks like your sellers should at least go after the extra escrow. I hope your seller ends up getting OVER the asking price now!

Sally, I feel so sorry for YOU and your sellers. I don't know what would cause someone to back out at the last minute and I'm sure it's putting pressure on you that you're not able to give them a reason. Good luck to you and I hope another buyer comes along very soon.

George: No kidding. It's been common place since the market turned a little here as well. One thing is for certain. ....I have had buyers and 99% have not backed out. This is a first for a seller with the buyer backing out. Not good at all.

Linda: Yup. It sure does. He is .... going hard and whatever is left he will get. We can only hope :)

Carole: Thanks Carole....it's something I've learned that I have no control over....other people. I think that they buyers need a reality check. Seller is inquiring. Whew.

So the buyers just told their agent to cancel the contract? I would think the selling agent would insist on a reason. Didn't he/she tell the buyers that they had to give the sellers a reason?

NOV

Lisa: Yup...and Yup...and Yup.....she's in the dark as well.

How awful, awful! Cold feet, saw another house, divorce, lost their mind, can guess all we want can't we? Uness they tell you you won't find out -- frustrating --and who knows perhaps knowing might have helped your seller a bit! Hope the reapirs, improvements means it sells again fast, fast!

That's terrible. I feel bad for you and the seller. It's hard to believe that the buyer's agent didn't see this coming.

Aloha Sally,

I feel your frustration. I have seen this happen on several occasions and nothing is more disappointing to the seller and REA than having the proverbial rug pulled out from under them in the 11th hour.

Ironically, sometimes it's better not to hear the actual reasons buyers pulled out from a deal. Sometimes the reasons torture the sellers even more than having the contract broken.

Peace,

Sally,

It's always unfortunate when contracts seem to carry no weight anymore and buyers/sellers are not required to perform to the terms of the agreement, but it happens more now than ever before. Todays constant barrage of negative news regarding real estate creates fear amongst buyers. Our state has laws that give the seller or buyer the right to pursue legal action to require specific perfomance in a contract, provided their was no real reason to not perform. Maybe your sellers have an option like that available to them, if this is the case?

Alexsandra: Yeah...the unit is wonderful...just now there are boxes galore....he was almost ready to confirm shipment. He deserves compensation. That's a fact.

Pam: She said she was shocked. She just met with them Saturday. Sunday they moved to a hotel. One thing is for certain. I do believe the Seller is within his rights to bring legal action.

Paul: It happens with both buyers and sellers and bottom line, we as Realtors® do everything in our power to make sure everything goes ahead smoothly. Our state laws also give the seller or buyer the right to pursue legal action and the seller is pursuing alternatives due to non performance. Why some think they can just run around and disrespect people like this is beyond me. Then again, there are all kinds in this world aren't there?

NOV

That has got to be the single most frustrating thing in real estate. Not knowing. I hate not knowing the end of the story. In this instance, should the sellers pursue legal remedy, you may find out what happened but in most cases where the buyer drops off the face of the earth, we never know what happened to them. Most frustrating. It's like watching a 2.5 hour long movie and missing the last 15 minutes.

NOV

Sally, the same thing happened to me a few weeks back. It was the most difficult day in my real estate career. I arrived to a home that was totally packed up. It was the day before the close of escrow and the sellers were devistated. I can totally relate to how you felt telling the sellers.

One of the uglier things about this type market is the callousness of buyers to the results of their actions. It's almost as if they resent the seller's markets of the past and sometimes just do it because they can. They make unreasonable demands and see how many hoops the sellers will jump through. UGLY comes out more in this market, doesn't it. BUT I know the RIGHT buyer will come, not sure when, but will come. It happened to my listing. 9 offers before we found the gem. UGH...mostly things beyond our control, like lost money in stock market in September crash...etc. SO, we keep the faith of what we are doing, stage well, market well and they found us. We close on Wednesday, god willing. Your clients are lucky to have you to help them move on, but it is hard to do.

NOV

Dear Sally: Love your attitude. A shocker, a heartbreaker, but good thing is you know you did everything you can do and there are just some things that you can not control.

You might never know the real reason - things can be extremely complicated now a days. The other thing is the buyer might not even want to pull out but might not have a choice, you just never know. Either way, you just do what the contract calls for.

Either way, do what you do, charge ahead and best luck in getting ti sold. I know you will, soon!

NOV

The buyers know that it is the buyer's market and if they do not get their way, they will walk. It is really too bad with all the hard work and effort you put in. I have the same thing happened. The seller is left with disappointment.

Even if the buyers provide the reason for the cancellation, they are excuses and you sometimes will not know the real reasons. I hope you sell your property soon. I am working on my listing and trying to get a buyer again also. My seller depends on me to keep going and working hard for her to sell her property. She needs me to sell it and I will sell it.

Jieranai Maier

NOV

I'm sorry to hear this story. Nightmares in this business do happen and they are unsettling to say the least. This scenario certainly does sound like a breach of contract and it would appear that your client does have legal recourse.

DEC

This really stinks for the sellers! Buyers must have had something big happen and are unwilling to share. Hope things get better.

Maria: YOu and me both...the not knowing is a killer but can be handled ...:)

Leolinda: Now that is sad. How can one not give a reason for messing with someones life????

Terrylynn: Yup..we keep moving on...it's all we can do.

Sylvia: I hope so...

Jieranai: We have to just move on and always think in the best interests of our clients...that is most important. :)

Jon: Yes he does. Why can't people just do what they agreed to anyway?

Sharon: Yeah....seller moved on too...can't afford to stay stuck :)

I am so afraid to hear something like this on a transaction I have. There is also a loan contingency and the buyer seems to be scraping to get in the house.....never a good sign but I am praying.

DEC

Sally -- By now I am sure you know it was not the property or your efforts. I can tell you from an experience that I had, where I had a buyer back out 2 days before closing, that it is often for a difficult circumstance by the buyer that these "too good to be true deals" do not close. In my case, the buyer lost their job just 2 days prior to the closing. They were better off losing the escrow, then closing on the deal. I believe it was a blessing for them. God forbid they had closed and then lost the job. While it is disruptive for all concerned, sometimes it is for the best. I am sure you will find another buyer quickly. I wish you and your clients the very best on the sale of their home. Peace to you -- Diana Denton Szmurlo, Geneva, IL

Hi all, I'm a buyer that wants to back out. BOOOO....I know, reading all these comments, and with some I agree...

I just bought in August what I thought, our dream home. Financials were good, some money on the side , and while putting our house on the market we saw the "dream home" and we started pursuing it. We just put our house on the market and after some negotiations we closed the deal on the new house-they refused the condition of sale-but we put a closing for December and as for sellers ,they assured us that date can be extended. Like this we thought that are no worries, looking at the previous history of the market.

Coming September things got out and the economy start crumpling, and ever since, regardless of the multiple price drops, we can't even smell a potential buyer. The price dropped so low that I can't even afford the new mortgage, and my pre approval was based on half of what I thought I could get from my sale. I want to leave the down payment(15 K) but they want to go for more and I'm worried we'll end up in court. On top of everything we both work in automotive industry.

No one should fit in those shoes either.

There's always, at least, two sides of a story and unfortunately in the previous case it was never revealed.

Good luck to you and your seller.

Best regards to everyone

Latonia: Good luck :)

Diana: Who knows what the reasons were...but bottom line they were personal. They need not play with peoples lives like that and yes, we've moved on....regrouping for this month and new listing agreement in place and starting January will go full force again.

Steve: I understand your situation completely. Too bad they didn't agree to a condition of sale....and yes, if we could foresee in the future regarding our finances we surely would plan better. Bottom line we all have choices too. And in our case it left everyone in a stagnant state.

The seller has to regroup and get his home situated with boxes all over the place now. The movers were going to be scheduled in a week and everything was just about completed. There were no contingencies for a sale for a home or anything of that nature and the buyers were pushing for an early closing. In one day everything changed with no explanation.

Good luck to you as well.

DEC

Sorry to hear about this happening to you Sally, and yup I'd want a reason too. You know what's selling great at the moment...newspapers. Everyday, people in a transaction (from the begining to the end) wake up grab a paper to see if today's headlines will affect them...yup, coldfeet is at an all time high these days. But hey, I've read enough from you to bet you get them an even better deal.

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