Home Buyers Walk Away from Closing
Most of the buyers walk away from the escrow and there are a number of reasons behind this. Walking away from closing mostly happens in buyer’s market than in the seller’s market. It happens because, when prices are low, some buyers buy the property for making some profit, but get frightened when the price declines. The declined prices make the buyer uncomfortable and they just want to get rid of this purchase. They try to find some immediate solutions to draw their invested amount. The fear begins to creep in right after, the purchase offer is accepted. By the time full-blown panic has set in, it’s typically a day or two before closing.
Sellers Who Walk Away From Closing
There are really fewer chances that any seller walks away from closing. If sellers are going to feel seller’s remorse that typically happens upon offer presentation when the reality of actually selling sets in. Sometime, it happen that sellers who bought another home and shortly changed mind. They may want to move into the new home before the first home closed escrow. Within a few days of settling into place, they decide to cancel the sale of first home and move back. There is no doubt that they own two homes, but it happens once in a blue moon.
Why Home Buyers Walk Away From Closing
A perfectly written purchase agreements normally includes contract contingencies that are supposed to be removed within the certain period of time. Mostly the buyer walk away from closing or cancel a contract during the contingency stage.
There are a number of reasons why buyers walk away at the last minute. Some of the major reasons are given here:
Cold Feet-
It happens sometimes threats do not come across at once when buying a home. The buyers who feel regretful about the end, chances are that he or she will not buy a home because the pressure of owning a home can be too much for them to handle with an ease. Such kinds of buyers will prefer to get a home on rent instead of buying a home.
Rejected mortgage financing-
Even though lenders may issue a loan preapproval letter, it doesn’t mean the lender will actually give a loan to the buyers. An experience and skilled mortgage consultant can foresee many conditions for getting the loan approved, but every loan does not get approved. There may be a number reasons behind the rejection of this loan.
Found another home
There are always some better options available in the market. Once a buyer has committed to purchase a house he or she will be looking at different open houses and comparing with each other. It is possible that a buyer finds a much better house. Finding the better home will be saying goodbye to the first home. It’s not a good idea to let impulses control your life.
Change in lifestyle
There are many factors that can change your lifestyle. Unexpected job transfer, loss in business, a pay demotion, unplanned divorce, disability, loss of spouse and unexpected things may change your lifestyle. Change in lifestyle means that the buyer will also change the plan of buying a home. Sometimes medical emergencies can also cause the change the plan of buying a home and can cancel the transaction. Unfortunately, one’s life doesn’t always work out the way it is planned after an offer to purchase is accepted. It’s good to have a Plan B.
Natural Disasters
No one has control over natural disasters. Weather conditions are unpredictable and the life as well. The home itself could be destroyed in tornado, hurricane, earthquake, flood and a number of other natural disasters can destroy a home. Even hard rain storm could cause trees to uproot themselves and crash into the home. Except trees, windows, doors, floor and even walls also can be damaged by a heavy rain. If a home got damaged due to any reason the buyers will be walking away. There are chances that they request a home repair, but if the repair request is not entertained they would be leaving the home and will look for other better options.
Consequences of Walking Away From Closing
Unluckily, once the buyer have released contingencies from the contract it will put their earnest money deposit at risk. Some contracts demand for liquidated damages in case of a default. A seller may be free to sue for actual damages, which could exceed the deposit if the liquidated damages are not treated properly.
The earnest money deposits are negotiable. It is common for sellers to accept $ 10,000 as a deposit on a $ 500,000 home. However, the higher the deposit, the more money the buyer has at risk under liquidated damages. A number of buyers don’t care about the closing and want to walk away for due to some reasons often will forfeit their deposit. If the initial deposit is only $1000 then this amount would not be enough for buyer that can force him or her purchasing the house.
