Expert: Dick Dennis - 7/1/2006

Question
My wife and I are supposed to close on a home at the end of the month but I have some concerns.  Number one is the monthly payment we will be getting into.  I work alot of overtime at my present job.  I have been working there for 10 months and generally get the same amount of overtime each pay period.  Recently when talking with a co-worker I was informed that although when you are hired the o/t is "guaranteed" the company has previously cut hours from 12/day to 8/day.  This amount of pay cut would cause me to be unable to make the new payment.  My next concern is that my contract includes an agreement that states that the sellers may lease the property from us for 14 days for $500.  While getting a quote on ins. I was advised that this type of agreement can be very messy to deal with.  I would like to get out of the contract in the most pleasant way if at all possible.  An appraisal has been ordered but the report has not been recieved yet.  I have locked in my interest rate with my lender and recieved a good faith but have not mailed back the signed application or submitted any documentation.  Do I have any options.  I know that I will loose my earnest money and probably have to pay for the appraisal but that would be better than being in a home I can't afford if the o/t is not allowed or getting into a sticky mess with sellers and possession on home.  Any suggestions/opinions would be greatly appreciated.  Thanks

Answer
My guess is that this is your first home, Everett. Down through the years I have found that the first thing to watch for from a couple buying their first home is "buyer's remorse." The buyer usually looks for any kind of reason for backing out of their first purchase together. I hope this is not the case, because you definitely will be losing your earnest money deposit.

There is one way to squeeze out of this: Since your purchase is contingent upon you qualifying for the loan, make it so that the lender has not qualified you for the loan with which to buy the house. That way you should be able to get your deposit returned, but you would have to pay the appraisal.

One other thing. I have always discouraged buyers from allowing the seller to rent the house from the buyer after the close. I have seen too many nightmares develop from that arrangement. One of the most consistent is when the seller doesn't leave the house in good condition, and the buyer discovers things that were not there .  .  .  or were there . . . at the time of the walk-thru (you did do a walk-thru didn't you? Or are you going to do it after the sellers move out? And if it turns out that you don't like the way they left the house, it is too late. The property has changed hands and now you have to hire an real estate attorney to reverse the whole process.

I do wish you well, Everett.

Dick Dennis             dixiedee13@aol.com

www.oldproblemsolver.com