Broken engagements

I submitted an offer to purchase a house in Wayland this past summer with a measily $1000 deposit (on the suggestion of my agent - I have no clue if that amount is customary or not). The house inspection revealed more than I could handle which probably explained why it was listed about $150k below market. I was not comfortable doing that much work to the house even if the seller was willing to put in a large chunk of change, so I walked away. The seller did not try to chase me back with a cashback incentive even though my offer was the first full-price offer with a conforming loan he got in 6 months.

A quick comment from an attorney (but not a real estate attorney). An offer to purchase can sometimes be binding upon acceptance by the seller. This occurs if the offer calls for the parties to execute a standard form P&S agreement (e.g., Greater Boston Real Estate Board's standard agreement). The idea is that by agreeing to execute it, the parties have essentially manifested assent to the terms in the standardized form. Assuming all other contingencies in the offer are met (such as financing, inspection, Title 5, etc.), the parties can be bound by the standard terms of the P&S document even if one of the parties later refuses to execute it.

This may make sense from a purely legal perspective, but it creates a trap for the unwary in the real world. So, please take a look at your offer before you submit it. Most offer forms do call for the execution of standardized P&S documents, which can create real headaches if you later change your mind and want to get your deposit back. (The same is true for sellers, who may be forced to sell despite receiving a better offer). Ideally, a buyer would consult with a real estate attorney before the offer is submitted. He/she can change the language of the offer to avoid this problem.

I once walked away from a deal, in a fiasco that did not show either sellers or real estate professionals in the best light.

It was a townhouse with a serious issue in one exterior wall. I gave the sellers choices. Fix it, or give me a credit. But because an exterior wall is common property, I also made a demand of the tiny association: I'll fix my wall, but don't dare come after me later for any assessment to pay for your walls.

Seems like a simple demand. The real estate agents could not understand it, nor could they communicate it to the sellers. Endless back and forth. The sellers' attorney smugly refused. So I walked. Suddenly their attorney fell all over himself in panic, jamming my attorney's voicemail box like a neurotic ex-boyfriend. Too late.

Much later, the sellers sold to someone else. They avoided the problem not only by failing to disclose the issue, but by actively disguising it. Attorney and realtor happily knifed the buyer and pocketed their fees.

I strongly agree with #2

I've walked before, because a parking space couldn't actually be parked in. Got my earnest money back with some arguing. I admit the joke was on me in the end - it was a 1 bed condo in the south end (nice part) for 180k...

I walked away once because there was extensive termite damage (that I didn't have any hope of finding without an inspector). The sellers really should have disclosed this. They claimed that they didn't know, but I don't believe them.

I got my deposit back with no problem. It should be written into the offer letter that the offer is null and void (and you get your deposit back) if the inspection brings to light work/damage that would exceed X dollars. Where X is some value over $1000 or so.

The Offer to Purchase is a binding contract, according to law. I apologize if I gave the impression that an Offer to Purchase is not a contract to be made seriously. However, the conditions that are attached to it, specifically the inspection, make it a contract that fails frequently.

If a real estate attorney includes a proper addendum to the Standard P&S, here is another reason, of many possible reasons, a buyer could walk away with his or her deposit.

The seller invokes his or her right to an automatic 30-day extension to the closing date pursuant to paragraph 10 of the Standard P&S (i.e., to resolve minor title issue), but the buyer's attorney included a clause limiting the length of that extension, if the buyer's loan commitment or rate lock expires prior to the 30 days. This has been very important this year, with rates at 6.75% one day and 6.125% a couple weeks later.

In addition, closings are routinely delayed a day or two, through no fault of the buyer, because a lender doesn't get the loan package to the closing in time or some other reason. Technically, that is a breach of the agreement, and the seller can change his or her mind about selling and take the buyer's deposit, but not if the buyer's attorney includes a clause giving the buyer an automatic three-business-day extension, if the transaction doesn't close on time due to lender delay.

Of course, the above is for informational purposes only, and you definitely should consult a real estate attorney prior to making an offer on a property.