Losses are part of the real estate game today

Dear Sue,
We had been in escrow for 42 days. The close date was just three days away. My agent called and told me that the buyer’s lender reneged on their loan approval and that the buyer was unable to go ahead with the purchase of our home. Our agent said that we couldn’t keep the deposit because the loan contingency was kept in place until the loan funded!
This doesn’t seem right. We have de-staged and packed up a lot of our belongings. Our home is probably going to be harder to sell now. Shouldn’t we be able to keep at least some of the deposit?
— Furious Fran
Dear Fran,
Anyone would be frustrated. In today’s market it is really difficult to get a buyer and then to lose one can be very disheartening.
Suffering a loss is part of doing business. You can minimize losses but it is impossible to eliminate them. It’s a part of life. It’s important that you pick up and move on.
The volatile stock market, negative press and general anxiety about the world’s financial instability, along with tighter lending practices and struggling lending institutions, are all contributing to last minute escrow surprises.
Until the close, a transaction today is fragile, especially if the down payment is less than 20 percent.
I talked to an agent recently who had a transaction where the buyer and seller were in total agreement. The transaction failed when the appraisal didn’t come in at the contract price.
Lenders are extremely conservative in a transitional market.
When it was a seller’s market, the sellers were in charge. They got their price and their terms. Sellers ruled because they could. If a buyer didn’t agree, the seller moved on to the next buyer in line.
In today’s buyer’s market, the exact opposite is true. Buyers rule. Buyers are keeping their financing contingencies in place until the loan is funded.
For them, it makes sense because of the mortgage lenders unpredictability. As the market improves sellers will be less willing to accept this contingency.
At some point buyers will have to become more competitive and submit offers with fewer contingencies. That is how free markets operate.
If the buyer checked the loan contingency to remain in effect until the loan has funded, you have no rights to the deposit. You might consider countering out the loan clause in your next offer. If the buyer refuses you might consider asking the buyer to forfeit a part of the deposit. Who knows, the buyer may agree to a compromise.
Understanding the nature of today’s market is a matter of good Home $$$s and Sense.
Sue Thompson is owner and sales manager of HomeTown Realtors. She can be reached at   seesue@seehometown.com, or on the Web at www.homedollarsandsense.com.