Cancelling a Contract of Sale and Return of Earnest Money

[mmandev]

What is the name of your state? Oklahoma

We just signed a contract of sale of real estate. On the document, it said: Contingent upon Buyer obtaining a bridge loan through their home. It has been three weeks now of searching for loans, and we could get a loan, but it is much to high for us to afford. We cannot afford to buy this house and hold on to our present house. Can we get out of the contract? Can we get our $5,000 earnest money check back? In the contract it did not say what a bridge loan might cost us, and looking at our finances and retirement money, we just cannot afford this second house. Thank you.

[HomeGuru]

Originally Posted by mmandev

What is the name of your state? Oklahoma

We just signed a contract of sale of real estate. On the document, it said: Contingent upon Buyer obtaining a bridge loan through their home. It has been three weeks now of searching for loans, and we could get a loan, but it is much to high for us to afford. We cannot afford to buy this house and hold on to our present house. Can we get out of the contract? Can we get our $5,000 earnest money check back? In the contract it did not say what a bridge loan might cost us, and looking at our finances and retirement money, we just cannot afford this second house. Thank you.

**A: on the surface, you would be in default and lose your $5K.
Reason being you could get the bridge loan and chose not to.

[Charles11]

Originally Posted by mmandev

What is the name of your state? Oklahoma

We just signed a contract of sale of real estate. On the document, it said: Contingent upon Buyer obtaining a bridge loan through their home. It has been three weeks now of searching for loans, and we could get a loan, but it is much to high for us to afford. We cannot afford to buy this house and hold on to our present house. Can we get out of the contract? Can we get our $5,000 earnest money check back? In the contract it did not say what a bridge loan might cost us, and looking at our finances and retirement money, we just cannot afford this second house. Thank you.

Did the contract specify what terms the bridge loan needed to conform to, eg. "no more than 7% interest rate"?

Are you being quoted a higher rate/cost than is generally typical for this loan or that you were initially told?

Many financing contingencies do not specify the exact terms that need to be met and although you might be able to get a loan under certain terms, like 12% interest and your first born, you could still successfully claim a failure to get financing and have your earnest money returned if the only financing available to you is inconsistent with generally accepted norms for the loan you are seeking.

Chas

[mmandev]

Did the contract specify what terms the bridge loan needed to conform to, eg. "no more than 7% interest rate"?

It had no interest rate. I asked that it be contingent on financing acceptable to the buyer, but the realtor said to leave it general, and it would be OK. I'm sure I got taken on that one.

Are you being quoted a higher rate/cost than is generally typical for this loan or that you were initially told?

It is high for us, because we would be paying for two homes for the length of the 3 year arm.

Many financing contingencies do not specify the exact terms that need to be met and although you might be able to get a loan under certain terms, like 12% interest and your first born, you could still successfully claim a failure to get financing and have your earnest money returned if the only financing available to you is inconsistent with generally accepted norms for the loan you are seeking.

Chas
Would I use the phrase "failure to get financing"? The problem is that the realtor knows the funding person at the bank in that town and would know that there would be a financing possibility...only, it would be too high for us to pay. Thank you for your advice. Any more?

[HomeGuru]

Originally Posted by mmandev

Did the contract specify what terms the bridge loan needed to conform to, eg. "no more than 7% interest rate"?

It had no interest rate. I asked that it be contingent on financing acceptable to the buyer, but the realtor said to leave it general, and it would be OK. I'm sure I got taken on that one.

Are you being quoted a higher rate/cost than is generally typical for this loan or that you were initially told?

It is high for us, because we would be paying for two homes for the length of the 3 year arm.

Many financing contingencies do not specify the exact terms that need to be met and although you might be able to get a loan under certain terms, like 12% interest and your first born, you could still successfully claim a failure to get financing and have your earnest money returned if the only financing available to you is inconsistent with generally accepted norms for the loan you are seeking.

Chas
Would I use the phrase "failure to get financing"? The problem is that the realtor knows the funding person at the bank in that town and would know that there would be a financing possibility...only, it would be too high for us to pay. Thank you for your advice. Any more?

**A: your Realtor is an idiot. Financing clauses need to be as specifc as possible**************..

[Charles11]

Would I use the phrase "failure to get financing"? The problem is that the realtor knows the funding person at the bank in that town and would know that there would be a financing possibility...only, it would be too high for us to pay. Thank you for your advice. Any more?

It kinda sounds like you didn't really understand what the total costs of this venture would be (which you really should have with lender disclosures etc.) more than you are being quoted outrageous rates and costs.

You have not said how your agent proposes to extract you from this situation (not that it is necessarily their fault).

The fact you are posting here would lead me to have questions about your agent. You have $5000 on the line, it is worth having an atty review this contract to ascertain your options. If they don't come up with a way to extract you - you might be able to negotiate a partial return of EM with the seller.

[JusticeSeeker1]

I agree as to the realtor comment above. Also, yes you should have an attorney review the contract.

[email]SeekerOfJustice@aol.com[/email]

[PghREA]

your Realtor is an idiot. Financing clauses need to be as specifc as possible**************..(HomeGuru)

I agree! See if you can get the mortgage company to write you a denial letter. The fact that you could get a bridge loan and chose not to does not work in your favor.

[HomeGuru]

Now that's an idea.