Buy a house not released by the first buyer

[teachulesson]

I want to make an offer to a house in California and the listing agent told me that the house was suppose to be sold 11 months ago, but on the last day of the escrow the buyer want to quit. Since the seller wouldn't refund his deposit, the buyer refuse to sign the release from contract form till now. So the seller has the house on the market again. The seller would have a contingency on my contract saying that he will let me know whether I can have the house on exact day of escrow, because he is afraid the previous buyer could come back to him eventhough the seller think it could be very little chance since there have been 11 months passed.

I like the house and really want to buy it, but I don't know what is the risk for me in this complicate situation? What I should do in my contract to protect myself?

[HomeGuru]

Originally Posted by teachulesson

I want to make an offer to a house in California and the listing agent told me that the house was suppose to be sold 11 months ago, but on the last day of the escrow the buyer want to quit. Since the seller wouldn't refund his deposit, the buyer refuse to sign the release from contract form till now. So the seller has the house on the market again. The seller would have a contingency on my contract saying that he will let me know whether I can have the house on exact day of escrow, because he is afraid the previous buyer could come back to him eventhough the seller think it could be very little chance since there have been 11 months passed.

I like the house and really want to buy it, but I don't know what is the risk for me in this complicate situation? What I should do in my contract to protect myself?

**A: and what did your Realtor tell you should be put in the contract?

[JETX]

Originally Posted by teachulesson

I don't know what is the risk for me in this complicate situation?

If you sign the contract with the stipulations as proposed, your risk is that you could lose the house plus ALL of your costs (inspections, application, etc.) at the last minute... and find yourself with no place to live.

What I should do in my contract to protect myself?

Include the requirement that if the seller fails to close as scheduled, he pays you $25,000 as 'liquidated damages' for your loss of value, costs, risk, etc.

[teachulesson]

Originally Posted by HomeGuru

**A: and what did your Realtor tell you should be put in the contract?

My realtor told me to add a restriction to the seller's contingency that the only case he wouldn't let me have the house on the day of escrow is he sold the house to the previouse buyer before my escrow day. Other than the previous buyer, he couldn't sign contract with any other buyer after signing my contract.

[teachulesson]

Originally Posted by JETX

If you sign the contract with the stipulations as proposed, your risk is that you could lose the house plus ALL of your costs (inspections, application, etc.) at the last minute... and find yourself with no place to live.


Include the requirement that if the seller fails to close as scheduled, he pays you $25,000 as 'liquidated damages' for your loss of value, costs, risk, etc.

Could I loose closing cost? Because in California buyer and seller do 50/50 on the closing cost. If the previous buyer come back sue the seller after I get the house, do I have the risk to loose the house?

[JETX]

Originally Posted by teachulesson

Could I loose closing cost? Because in California buyer and seller do 50/50 on the closing cost. If the previous buyer come back sue the seller after I get the house, do I have the risk to loose the house?

If they 'pull the house' from you PRIOR to closing.... then you clearly would NOT risk losing closing costs.

However, you can (and would) lose the following:
1) Costs of inspection
2) Costs of survey
3) Costs of loan (application, fees, etc.)
4) Loss of your place to live (assuming you are in a lease and give notice of termination).... only to find out you have no place to move to.
5) Loss of value of money.
6) Loss of missing out on other possible more 'beneficial' purchases while waiting for this one to happen.
7) And lots of other less tangible things.

And lets not forget.... you would be an idiot to sign such an agreement without any assurance of your actual purchase.....

And finally, get rid of your agent. He/She is clearly NOT working on your behalf if he/she doesn't tell you all of the above.... and that you should go ahead and sign.

[HomeGuru]

I agree with JETX.