What are the chances of a buyer backing out at the last minute?

graptorFebruary 22, 2011

I know that I am in a far better position than many but, its still makes me very nervous. I am one week before the closing on my old home and two weeks till the closing on my new home. I am obviously past all the contingencies with a buyer who has a loan commitment and also doesnt have a home to sell.

Its just that Im in what I would consider a very vulnerable position. Most of my home is packed up and in storage 50 miles away near my new home. We have enrolled my child in a new school and are waiting on the exact closing date to figure out what his first day in school will be. I have never sold a home before and it has me on edge.

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There's a saying that "it ain't over until it's over".. You're right to worry; I've read lots of stories about buyers backing out. When I sold my old house in 2008; we didn't think we'd make it to the closing table.. we were in Memorial Day weekend; so Friday; we still were not sure if we were picking up the U Haul & packing the plants in it; we had unresolved issues; according to the buyer.. I had the moving company coming Tuesday morning @ 7am. It was one of the most stressful times of my life.

Buyer does the walk through at 10am; we're still not done moving out; hub leaves to go to closing; moving company had to get another truck; by 11ish we were finally moved out; I was running the vac when the power cut out. I let my hub know so the buyers knew I couldn't finish running the vac when the buyer flipped out because we didn't leave utilities on for them. My hub swore he didn't think he was going to sign but he did & we made it out in time to close on the new house the same day. We then had the movers unload the next day; they moved our storage a week or so later.

So; I feel your pain. Good luck.

    Bookmark   February 22, 2011 at 11:49AM
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Can they do that? If you're past the contingencies, how would they legally be able to back out? How much of a deposit did they make?

    Bookmark   February 22, 2011 at 12:54PM
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My realtor told me that a $1,000 contingency was normal for our area and the price of my house, $65,000. Thats also the same amount I put down for my contingency on my new home that costs $140,000.

I have also been told that besides losing the contingency money and the other money I have spent in fees for my new house, thats pretty much all a buyer would lose if they backed out.

    Bookmark   February 22, 2011 at 1:10PM
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Here's the bad news:
All it takes is the buyer to head down to the nearest car dealer and sign up (or new credit card, or any such), credit score is affected, lender backs out, buyer is off the hook, whether inadvertently or not.

(This is a warning we give our buyers - DON'T YOU DARE do anything that will change your credit score once approved! Wait until 3 days after closing!)

Just try to relax until it's over, don't count any chickens, but there's just not much you can do until the money is transferred to your bank, and then you can exhale!

    Bookmark   February 22, 2011 at 1:32PM
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Lots can happen in a closing. It isn't over till the check has been put in the bank and cleared. 99% of the time closing go as they should with a few glitches here and there.
Paperwork is often lost or late. Numbers don't add up correctly.......which btw you should be checking everyones numbers every step of the way. In 30 some yrs DH have been home owners we've bought and sold over 10 properties. DH ALWAYS double checks the numbers. It's not uncommon for him to find mistakes that amount to several thousands of dollars. Yes it takes extra time and it's a pain sometimes to ask where certain numbers are coming from BUT in the long run it's YOUR money, your purchase so it's up to you to check the numbers AND read the contract BEFORE you sign it. Don't let anyone rush you.

    Bookmark   February 22, 2011 at 1:34PM
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Most closings go through without a hitch, so the odds are with you. Where I live, tho, $1,000 would only be offer money, with more money due with P&S. If the buyer must pony up more money when signing P&S, then they are less likely to let the deal fall through.

    Bookmark   February 22, 2011 at 1:48PM
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The $1,000 contingency seemed very low to me but, that was the amount my realtor asked for and she assured me that is a standard amount for the area. Ive asked around and most of my neighbors actually put less money down during their purchase. I remember 14 years ago only putting $500 in contingency when I bought the house originally.

You would think there would be far more to lose for a buyer breaking a legal contract. In this area the seller is on the hook for a lot more during a sale and it really doesnt matter how much your house sells for, the expenses of moving are the same. The idea that you would have to be completely moved out of your home and at the mercy of a buyer seems to be a pretty big flaw in the local system.

    Bookmark   February 22, 2011 at 2:36PM
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I am an agent in Ohio and most of the bank owned properties require $1000 earnest money. Unless you are a cash buyer than it is ususally 10%. Non bank owned properties it depends on what the buyers and sellers agree on.

    Bookmark   February 22, 2011 at 2:57PM
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Our buyer backed out 3 days before closing....because they "changed their minds".

It ain't over until the check is in hand and the last paper is signed. In our case, we worked closely with our lawyer. Ultimately, the buyer had to say goodbye to every cent of their earnest money, which amounted to nearly 5% of the purchase price.

Our situation reinforced for us that if you are the seller, you want earnest money to be as large as possible.

Good luck.

    Bookmark   February 22, 2011 at 3:15PM
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When we bought our current home, we were ready to walk at the closing.

The bank's paperwork was incorrect.
We specifically stipulated no escrow accounts as a condition of getting a mortgage through them.

The paperwork sent to the lawyer's office had escrow accounts built into the payments. Fortunately, my husband and I were (and still are) in the habit of reading whatever we sign out name to.

There was a flurry of phone calls, with the bank saying to sign the papers and a correction would be amended later.

Uh.... no.

We were ready to call it off... then the bank couriered the proper paperwork over.
I KNOW the seller's were spazzy... we were too!
But it could have NOT happened, right at the very end.

    Bookmark   February 22, 2011 at 3:18PM
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We were afraid of that with our last buyer. They were downsizing. We found out that they went out and looked at more houses after we had accepted an offer from them. The buyers were selling a house in our town. Our realtor checked to make sure it was still going well. They had to be out of their house the same day we had to be out of ours. The buyers were putting the utilities in their name so we relaxed quite a bit after that.

    Bookmark   February 22, 2011 at 4:14PM
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We had a FSBO buyer back out somewhat before closing but after keeping our house off the market for several months. The buyer was my boss and because of organization politics, I felt we could not hold his deposit. Learned a lot of lessons on that one. Went on to sell within a few weeks after putting our sign back up and closing went as expected.

The next house we sold, another FSBO, the buyer was trying to back out on the day of closing. My DH had come from a distance to be at closing, and the buyer, a dr., had basically turned over the matter to his office mgr. who had not gotten insurance and the check,etc. So the dr., well known for his temper and blustering, had a little fit at me and suggested that he would not close because there was something wrong with the roof. I realized that he was very misogynistic and turned over all communication to my DH. They met, went up on the roof, and then agreed that we would go to closing and do our part on the assigned day, that day, Friday, and he would finish up Monday. I made my DH stay in town to ensure that everything happened on Monday. A bad weekend. It was a spec house we did with my brother. The people at the title company, handling our closing, said, well these things usually close, but then again, where is the dr? You are here, and where is he? He was local. Sure enough, everything closed out on Monday and we took the money with a big sigh of relief.

Next house, we had been on market for a while, using a realtor, and finally get a decent contract, but they put in an exit clause related to the sale of their home that allowed them to move directly from their home to ours. We were on pins and needles until closing since that exit clause was in force until basically that day. Talking with the buyer later, I don't think they even thought of it from our side.

    Bookmark   February 24, 2011 at 8:39PM
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When I was selling in Calif. a few years ago, there were 3 cases where the buyer backed out after the house was under contract. My realtor told me that in Calif. the buyer is very well protected and the chances of getting the earnest money are very low.

Luckily the 4th contract was the charm and the deal closed.

good luck'

    Bookmark   February 25, 2011 at 2:08PM
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None of your responses are making me feel better but, they are making me hold back from committing to anything till my buyer has closed.

    Bookmark   February 25, 2011 at 9:47PM
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Oh believe me it DOES happen. My son had his house sold and they were to close the next morning....grandmother who "promised" the young couple the down-payment, backed out...deal off!!!...house still has not sold again, 4 months later.

Also, when my daughter had their house "sold", it was a three-way deal...well the first person's didn't go through and so that left the other two fall apart too....daughter had already started moving into their new home...and had to move back in the old house. SO BEWARE!...it is NOT a done deal until you have the money in the bank!

    Bookmark   February 26, 2011 at 2:48PM
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Well, in just a couple of days you'll know either way. At least you know that your stress is not unreasonable.

After buying and selling many homes without a glitch, I had a really weird feeling about a certain closing, right around the time when Countryside went down. Just couldn't shake off the feeling that something was going to go wrong, when I didn't have any reason at that time to know why. Of course, the day before closing, the bank backed out because of the credit score thing. We had the home back on the market within 24 hours and the buyers came back with another offer (or addendum, can't remember how it was handled) in a few days, and we closed about a week or so later about $10-15K less in our pockets, but it would've been more if that house sat on the market any longer.

    Bookmark   February 26, 2011 at 3:46PM
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This is has got to be one of the best closing stories. Its funny now, but it sure wasn't very funny at the time.

After my wife's mother passed away, it was up to us to sell the house. It was a cute little 1920's house that did need some things done, but it was still a nice place.

We had what we thought was a good offer from a really strong buyer. He was a college professor that was living in Italy and had just moved to town to take a job at a local college. My wife's father was a teacher, my wife and her brothers all went to this college, and we thought it was so cool another teacher would be living in the house. Like it was destiny or something.

Everything went very smoothly, no problems at all. All house inspections went fine, his loan was approved, etc. Then 2 hours (yes TWO HOURS) before closing, our realtor called us and told us the whole thing was cancelled.

When the whole story broke it was totally unbelievable. We assumed that this buyer was renting a local house or staying in a hotel. No, not the case.........he and his wife were living in a tent in an abandoned lot. Can you believe that? A tent! His loan was approved based on the fact that he had enough of a downpayment. This downpayment was based upon him selling a classic car that was still located in Italy. The car never sold, therefore no downpayment, therefore the whole deal was off. I think we were more angry with the bank to allow it to get this far than we were with the goofy buyer. Even funnier........even though the sale never went through, this bozo had already changed his mailing address to the property address. We got all of his mail for about 2 weeks afterwards.

Goes to show ANYTHING can happen. Cross your fingers and hope everything goes through. Good luck!

    Bookmark   March 1, 2011 at 2:09PM
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The closing went through today without a hitch. Thank you all for your coments.

    Bookmark   March 10, 2011 at 4:48PM
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My realtor told me about a sale he made of a $2.5 million house. No problem until the last day: the buyer had a heart attack and died at the closing before signing the paperwork.

    Bookmark   March 10, 2011 at 7:01PM
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Yay!!! So glad your closing went through! Now you can breathe a sigh of relief!

    Bookmark   March 10, 2011 at 8:12PM
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Congrats! I'm sure that's a load off of your mind

    Bookmark   March 11, 2011 at 4:49PM
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Thanks! Now on to the closing of my new house. By the way, there is no way I'm backing out of that deal.

    Bookmark   March 11, 2011 at 9:09PM
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Congratulations on your closing! You made it! I wish that was me. We were two days before closing, getting ready to move a whole horse farm, business, and child to another state, and our buyer's bank decided they couldn't give her the loan because it's an agricultural property even though they knew it was a horse farm from the beginning. Hence, I'm on this board now because I'm stressed and obsessed, lol.

    Bookmark   March 15, 2011 at 12:14PM
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I think selling a house has to be one of the most stressful times of your life. Keep on living your life, someone with credit approval will want your house.

    Bookmark   March 21, 2011 at 3:51PM
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When we bought this home and did the final closing the seller's agent handed me a check for 35 dollars explaining that the fence around the home was not finally inspected by the county building dept. I almost walked away. So yes, "it is not over, until it is over". One thing could kill your sale, maybe not your fault, but you never know.

I caved, bought the home, the fence failed inspection, had to get the contractor to fix the set back, paint it myself, out 1100 dollars in paint and weeks of painting.

    Bookmark   April 6, 2011 at 9:27PM
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Love, I feel for you. Went through a year of hell and finally sold. It is the most stressful, and continues to be, right until the closing. We had a blizzard two days before, some of our trees came down, one on our neighbors roof.

Day of closing, power still off(2 days), no heat (worried about freezing pipes), no water (well), no toilets (septic). Thought I'd have a nervous breakdown. Roads closed because trees down, snow up to your hips.

We moved into our new place night of the blizzard and couldn't get back to our house for the walk-through because the roads were blocked.

Long and short, it all worked and went through. I had to hire a tree service to clean up all the downed trees and get the 100ft Maple off my neighbors roof. Pay for the damage, arrange with the insurance company to repair their roof....don't ask.

Its over! Everytime I think back to last year, I pinch myself.

Keeping fingers crossed for you. It will happen!


    Bookmark   April 6, 2011 at 10:27PM
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