Backing out of offer not inked yet

kitchenloverJuly 7, 2010

So my SO and I put in an offer on a house the other day that was accepted. We did negotiating on price and contingencies via email with their listing agent. No purchase agreement has yet been signed.

Anyway, a house we had been trying to see with no luck is now available to us for viewing tomorrow night. I feel it is in a slightly better neighborhood and is a bigger house at a lower price. It is a short-sale, though, so it does have that strike against it vs. the first house.

I am expecting to like the second house better and want to know what the ramifications would be of backing out of the offer on the first house?

Yes, we were stupid to have put the offer on in on house No.1 so quickly but got worried we would lose it if we didn't act fast, as has been the case with so many houses we've seen this summer.

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You will need an attorney to say for sure. Real estate contracts have to be in writing to be valid. An email exchange may or may not be considered "in writing" in these circumstances or in your location.

There is a federal law making some emailed agreements enforceable, but I don't know if applies in all circumstances.

Consult a local real estate attorney.

    Bookmark   July 7, 2010 at 10:47AM
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"No purchase agreement has yet been signed."

You likely do not have an actual contract.
Talk with a local RE attorney.

    Bookmark   July 7, 2010 at 2:57PM
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Be careful about dumping a house you liked enough to put an offer in on for a short sale.

I had two short-sales slip through my fingers--the first was a multi-offer situation where my offer was the highest, but the bank accepted the first offer that they came across on the stack on the desk. The second short-sale, we heard nothing at all for nearly 5 weeks and so we withdrew our offer. Also, there is no guarantee that the price they are listed at is a price that the bank will accept.

Proceed with caution, or you may end up with two empty hands.

    Bookmark   July 7, 2010 at 3:34PM
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what revamp said.

    Bookmark   July 7, 2010 at 3:54PM
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I missed the part in the OP about the second home being a short sale. Personally, I wouldn't even go look at a short sale house. Too much room for disappointment.

    Bookmark   July 7, 2010 at 7:09PM
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what revamp said too!

    Bookmark   July 7, 2010 at 9:47PM
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When selling my mother's home in 2005, I had about 4 instances where the deal fell through after e-mail and counter-offer agreements. I don't know if my realtor dropped the ball (suspected in at least one failure) or if the people found something else. Anyway, it happens all the time. The buyer will get the earnest money back. Only problem may be, if you decide you do want that house, you may not be taken seriously.
Good luck

    Bookmark   July 8, 2010 at 5:11PM
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What did you end up doing?

    Bookmark   July 14, 2010 at 10:14AM
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We are going to be renting a house for a year.

We backed out of the offer for the other house (with no ramifications) and the short sale turned out to be kind of 'meh.' It didn't appear to have too much deferred maintenance but I didn't like the floor plan very much. It is a screaming deal though. Currently listed at $150k in a neighborhood full of $250k-$300k homes.

The house we are renting my boyfriend wants to buy, and the owners are willing to sell. The neighborhood is great, curb appeal is good, but I think it's too small (about 1,300 sq. ft.). We'll see.

At least now we can give ourselves more time to look, and maybe get one of the bigger houses we've seen that are currently priced too high for our budget. We've seen some beauties that are still on the market, one of which just had a $15k reduction.

    Bookmark   July 26, 2010 at 11:06AM
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It is a screaming deal though. Currently listed at $150k in a neighborhood full of $250k-$300k homes.

In a short sale situation potential buyers have no way of knowing if the bank will accept an offer at "list" price, so it doesn't really matter if it's a screaming deal. A seller could list their home at $1, but if the bank won't accept the short sale, it really doesn't matter. It's just a waste of the buyer's time.

    Bookmark   July 26, 2010 at 12:08PM
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