Expert: Lisa Webber - 1/23/2008

Question
Is a good faith deposit($8,000) REFUNDABLE?  THE BUYER HAD THE HOUSE
OFF THE MARKET FOR 3 1/2 MONTHS STATING THEY WERE PREAPPROVED FOR THE
HOUSE- MADE US PUT MORE ADD ONS TO THE PROPERTY AND NOW THET BACKED OUT
BECAUSE THE CAN NOT GET THE LOAN NOW EVEN WITH A COBORROW!!! NOW THEY
SAID SORRY GIVE US BACK THE DEPOSIT


Answer
Financing is one of the contingencies that is included in every contract that I've ever done.  I think the only time that might not be in the contract is if it were a cash purchase.  The reason for this is obviously that if the buyer is unable to be approved, they won't be able to purchase your house. When the buyer submitted the offer to you, they may have been "pre-approved" based upon an initial credit pull.  There are many things that could have happened.  We currently have a situation where we represent the buyer in a purchase.  They have a house under contract contingent upon financing and at the time of the offer, they had a contract on their house.  Unfortunately that contract fell through and they are unable to be qualified for both mortgages.  The husband is self-employed and now with the tightened lending standards, needs to prove his income and doesn't show much income on his tax returns.  We had another situation where we had a contract on one of our listings.  The buyer was "pre-approved" by the lender, but what we didn't know was his FICO was at the minimum allowed for the loan program.  The loan was a "sub prime" loan and what lenders typically do in these situations is they will do another credit pull right before settlement.  We were supposed to close on Monday, so on Friday the underwriter pulled his credit and the buyer had let a credit card payment and a student loan payment slip so his FICO had dropped and he no longer qualified for the loan, so he was unable to purchase the house.  The seller was understandably very upset and like you, he said why was the buyer pre-qualified a month ago and now they won't give him the loan. There was nothing anyone was able to do so the house had to go up for sale again and we had to find a new buyer.  Situations like this don't happen very often, fortunately.  If the buyer had a financing contingency, then the buyer does get their entire good faith deposit back.  I wish I had better news for you - good luck!