Loan contingency can let buyer cancel proposed sale
Savvy buyers always include a detailed financing contingency in their offers that allows them to back out of a sale if they can’t get a satisfactory loan.
Q. We agreed to sell our home about a month ago for $210,000. The buyer’s offer was contingent on making a 10 percent down payment of $21,000 and getting a fixed-rate loan at 4.5 percent or less to finance the balance.
Now she wants to cancel the sale and get her deposit back because she claims the lowest rate she can find is 5 percent.
However, our own sales agent says he could find the woman a mortgage if she really wants to buy the house. Can we keep the $2,500 good-faith deposit she made if she won’t accept the mortgage that our agent claims he can arrange for her?
A. Probably not. If the buyer has made a reasonable attempt to get a loan at 4.5 percent or less but was turned down by the bank, the financing contingency she included in her offer will likely allow her to nix the proposed sale and have her deposit returned.
If your agent can indeed secure a loan on the terms the buyer originally dictated, you might be able to sue her for breach of contract if she doesn’t complete the purchase. But in reality, the money you’d pay to an attorney and the time you would waste in court probably wouldn’t be worth it — especially because the outcome would be far from certain.
It probably would be best to cancel the sale, return the woman’s deposit and put the house back on the market.
REAL ESTATE TRIVIA
Top “buyer turn-offs” include pets that aren’t caged or chained, website Bankrate. com reports, as well as animal-head trophies and paintings or statues of nudes.
Sports memorabilia can send potential buyers fleeing, too, if, say, they are fans of the New York Jets, but the house they’re touring is filled with pennants or other items showing the seller’s support of the rival Giants. Q. What is a “UHNWI” house?
A. It’s a house that I certainly cannot afford to buy and that you probably can’t, either.
“UHNWI” came into the real estate lexicon only in the past year. It’s an abbreviation for a property that can’t be purchased by someone who is not an “Ultra High Net Worth Individual.”
Definitions vary, but my real estate broker friends in California and New York said the minimum net worth needed to be classified as a UHNWI is $30 million. Even better is to be part of the “Billionaire’s Club,” the members of which have at least $1 billion worth of real estate, stocks, cash or other assets.
Q. I know from reading your past real estate columns that you seem to be an ecofriendly guy, so I was really disappointed when you recently advised a homeowner to junk his broken washing machine and buy a new one instead of just repairing it.
Don’t you know how many old appliances are filling up our landfills?
A. Actually, yes, I do — and it’s far fewer than you would think.
If you recall, that initial letter-writer said it would cost about $345 to repair his 12-year-old washer, in addition to the $70 he had already spent.
I suggested that he buy a new washing machine, even though it would likely cost at least twice the amount that fixing the old one would, because the average life of a washing machine is about 10 years.
So, even if he paid to have that washing machine fixed today, he likely would have to call out a repairman again in another year or two and pay lots more money for something else that would later break down.
There’s no reason to waste money on expensive repairs if something such as a washer, stove or refrigerator is nearing the end of its useful life.
Most major appliances are made of about 85 percent metal, so they never even make it to a landfill. Instead, they’re stripped of their nonrecyclable parts and then melted in giant foundries to manufacture new steel products. Less than 15 percent of a discarded appliance goes to the dump, after much of the product’s plastic parts are melted and recycled, too.
Washers that have received the U.S. Environmental Protection Agency’s Energy Star stamp of approval also use about 25 percent less energy and 45 percent less water than those that were built before 2003. That saves the typical U.S. family about $210 a year in utility expenses,
according to the Environmental Protection Agency.
If all household washing machines purchased in the U.S. were Energy Starcertified, the agency adds, it would cut greenhouse emissions by more than 19 billion pounds each year. That’s the equivalent of taking more than 1.7 million vehicles off the road.
ABOUT LIVING TRUSTS
David Myers’ booklet, “Straight Talk About Living Trusts,” provides the information readers need to determine whether forming an inexpensive trust would be a good idea based on their individual circumstances.
For a copy, send $4 and a self-addressed, stamped envelope to D. Myers/Trust, P.O. Box 4405, Culver City, CA 902314405. Net proceeds will be donated to the American Red Cross.
Send questions to David Myers, P.O. Box 4405, Culver City, CA 90231-2960, and he will try to respond in a future column.