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Buying or Selling a Home/Backing out of a home buy after the contingency has expired

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Expert: - 10/11/2008


Question
Hello Jessica,
I made an offer on a home in Chino Hills CA. The house is owned by a bank (Wells Fargo). The 15 day contingency period has expired and due to the recent down turn in the stock market, the mutual funds that I was counting on for the down payment have lost value. I ma still qualify for the loan, but the reserve money that I was hoping to have after closing is not there any more.Is there any way for me to back out without loosing the $5000 earnest money that I gave escrow?

Answer
Dear Amit;
When you signed the contract you essentially guaranteed that you would go through with the deal no matter what (with the exception of not being able to qualify for the loan.)  Now that you are not as comfortable about your financial situation I can understand your reluctance to go through with the deal, but I am sure that the seller won't see things that way.  You will probably lose your earnest money and actually run the risk of being sued for the full amount of the home or damages.  I suggest that you contact a real estate attorney to discuss loopholes in the contract and how you can proceed.  Sometimes there are hidden contingencies that a careful review of the contract can point out.  I do not advocate breaking a contract but I also don't advocate being house poor and becoming over extended with your finances.  
Good luck and best wishes.

~Jessica Bryan  

Buying or Selling a Home

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Jessica Bryan

Expertise

buying and selling process such as:
General questions from first time buyers
How to market a home
Why choose a REALTOR
How do I find a REALTOR
Should I consider buying or selling without a REALTOR--how much can I save
Should I remodel or move
How much can I expect to gain by fixing up my home before selling
Helpful tips when selling
Helpful tips when buying
finding a good mortgage loan
what is the difference between banks, mortgage bankers, and mortgage brokers
Questions from the general public, people thinking about getting their real estate license, newly licensed.
Fellow professionals who have interests in networking and how to get started
What is a market evaluation and how does it differ from an appraisal what are the different loan programs
services a REALTOR can perform
when to use a lawyer
when to use escrow
what are the regional differences in the buying and selling process
what is the MLS and how does it work
how can the layman access information on the web--listings and other information
These are just a few of the questions. I can suggest that if I am unable to answer a question I will refer the inquiry to a source that can.

Experience

Anyone who is in this business and who dedicates oneself to professionalism has continued to take classes and along with it,additional credentials, awards and honors. I can list a host of them, but my greatest accomplishments happen to be those of getting first time buyers (who didn't think they could afford to buy a home)into a home of their dreams. The look on their faces when I hand over the keys is worth all of the hard work.

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