sellers won't return earnest money

[hotcakes49]

State is Virginia. Working thru my realtor, I & my boyfriend entered a contract to purchase a home, put $1000 down with a contingency on financing. We were pre-approved and sent a letter of financing approval to the sellers by the date & time required in the contract. However, the mortgage company backed out of the deal because the underwriters wouldn't cut us the loan. The mortgage co. suggested we try for a FHA loan (first time buyers) and we went back to the sellers with a contract addendum to extend the date of closing by 2 weeks to get the financing squared away. We had already paid for the home inspection, survey, appraisal, etc--all together spending about $2000. The appraisal had come back $15K over our sales price and we figured we were making a good deal.

Well, low and behold the sellers decided to cancel the contract rather than give us the additional time to go thru FHA, plus said they are keeping the deposit earnest money. They re-listed the house, but this time upped the price to what it had appraised for. (The appraisal that I paid for to add insult to injury). I've gone back and forth between my realtor and broker and their realtor to demand my money back. Sellers refuse to sign it over--only thing they stated was that we didn't meet the deadline for sending proof of financing. My realtor pulled out the fax confirmation and they've still refused to budge.

If we ask a court to settle this, who do I sue, the sellers? Would I win? Would I be allowed to ask for damages of the expenses I incurred pending the sale--especially since they got greedy thinking they could get a better price. The deposit is in escrow with my realtor and she says that after a period of time if there's no meetings of the minds then the money goes to the state. Sorry this is longwinded, tried to include all the details.

The funny thing is that, the house is still on the market (6 months later) and they've had to lower the price to below our contract price.

[seniorjudge]

Originally Posted by hotcakes49

State is Virginia. Working thru my realtor, I & my boyfriend entered a contract to purchase a home, put $1000 down with a contingency on financing. We were pre-approved and sent a letter of financing approval to the sellers by the date & time required in the contract. However, the mortgage company backed out of the deal because the underwriters wouldn't cut us the loan. The mortgage co. suggested we try for a FHA loan (first time buyers) and we went back to the sellers with a contract addendum to extend the date of closing by 2 weeks to get the financing squared away. We had already paid for the home inspection, survey, appraisal, etc--all together spending about $2000. The appraisal had come back $15K over our sales price and we figured we were making a good deal.

Well, low and behold the sellers decided to cancel the contract rather than give us the additional time to go thru FHA, plus said they are keeping the deposit earnest money. They re-listed the house, but this time upped the price to what it had appraised for. (The appraisal that I paid for to add insult to injury). I've gone back and forth between my realtor and broker and their realtor to demand my money back. Sellers refuse to sign it over--only thing they stated was that we didn't meet the deadline for sending proof of financing. My realtor pulled out the fax confirmation and they've still refused to budge.

If we ask a court to settle this, who do I sue, the sellers? Would I win? Would I be allowed to ask for damages of the expenses I incurred pending the sale--especially since they got greedy thinking they could get a better price. The deposit is in escrow with my realtor and she says that after a period of time if there's no meetings of the minds then the money goes to the state. Sorry this is longwinded, tried to include all the details.

The funny thing is that, the house is still on the market (6 months later) and they've had to lower the price to below our contract price.

If you still want the house, go after it again.

If not, then sue the sellers in small claims and try to prove to the judge that you did not breach the terms of the written contract.

[hotcakes49]

thanks, really appreciate your reply. Should we also ask for our expenses that we'd incurred when we thought we were buying the house until the sellers pulled the plug. We are no longer interested in this house at any price, matter of fact the whole process has left a very bad taste.

[seniorjudge]

Originally Posted by hotcakes49

thanks, really appreciate your reply. Should we also ask for our expenses that we'd incurred when we thought we were buying the house until the sellers pulled the plug. We are no longer interested in this house at any price, matter of fact the whole process has left a very bad taste.

Ask for the ranch, settle for a goat.

Don't let this stop you from buying real estate...they're not making any more of it.

[HomeGuru]

Originally Posted by hotcakes49

thanks, really appreciate your reply. Should we also ask for our expenses that we'd incurred when we thought we were buying the house until the sellers pulled the plug. We are no longer interested in this house at any price, matter of fact the whole process has left a very bad taste.

**A: you do not have a claim for expenses and you do not have a solid case of getting your deposit back.

[mikeann97]

After geting the final apprasial on the home that the builder was building (which we made modifications to make it a custom home) He backed out on the same day that the apprasial for $32,000 more than the price he was selling it to us for. Now he doesn't want to give us our earnest/notice to proceed funds back or the items that we purchased out of our pockets for the home( hwich has already been installed in the home) back.

[hotcakes49]

Originally Posted by HomeGuru

**A: you do not have a claim for expenses and you do not have a solid case of getting your deposit back.

Thanks for your advice HG. I've never been to small claims court, it will be hard to prove anything. Especially since financing denials were done on the phone, and my realtor is a really good friend of the sellers (goes to church with them) and they are making me feel like a criminal for asking for my deposit back.

[pojo2]

What day into your original contract did you go BACK to the seller with the financing information? If the original had expired and you provided no proof of denial to the seller then you learned a 1K lesson. But just in case you still don't understand those dates in written contracts are VERY important!

[Gadfly]

hotcakes,

Before you go the court route, go the the local real estate board and go through the conflict resolution process. That should be mentioned in your contract and a judge may bounce the case if you have not done this first.

[hotcakes49]

Originally Posted by Gadfly

hotcakes,

Before you go the court route, go the the local real estate board and go through the conflict resolution process. That should be mentioned in your contract and a judge may bounce the case if you have not done this first.

Wow--All this great advice. I just want to follow-up...realtor called yesterday and left a message that the sellers have finally signed the release of my earnest money. It only took 6 months of waiting. I had gone to the court and gotten papers for filing a small claims case. In the end all turned out ok, but was a HUGE lesson learned.

[HomeGuru]

Originally Posted by hotcakes49

Wow--All this great advice. I just want to follow-up...realtor called yesterday and left a message that the sellers have finally signed the release of my earnest money. It only took 6 months of waiting. I had gone to the court and gotten papers for filing a small claims case. In the end all turned out ok, but was a HUGE lesson learned.

**A: another happy ending.