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When a Home Seller Cancels the Contract for Non-Performance
When a home seller cancels the contract for non-performance, she must have a specific action that the buyer failed to complete. In this case, it is the buyer’s good faith deposit. The contract specifically states the buyer’s funds must be deposited into the title company within 3 days after acceptance of the buyer’s offer.
In this particular escrow, there have been many conversations about the deposit and several reasons why the funds have not been wired. A car wreck, an illness and then a tragedy in the family with their child. Another reason for the delay just happened this week. The funds were somehow wired to the wrong title company. The seller’s agent has been very patient. Everyone has a line in the sand and the seller and her Realtor have reached that point with the buyer. The buyer has truly tried everything within her means but has been unable to perform.
As we are 12 days into this and no deposit has been made, the Notice to Buyer to Perform was received yesterday. The notice specifically states: “If the buyer does not remove all contingencies within two days from the day after the delivery of the notice, the seller can cancel the agreement.” As the notice was received yesterday, the buyers legally have until the day after tomorrow at 5:00 PM to deliver the earnest money deposit; if they do not, the seller simply cancels and sells to another buyer.
When a home seller cancels the contract for non-performance, this can be sad news for buyers. The buyers in this case are from out of state, so even further complications. This notice is important. The seller has lost valuable time on the market to sell the property as it has been in pending status. Pending sale in MLS detours other buyers from looking at the property.
When a home seller cancels the contract for non-performance, this is a last resort ditch effort. If a buyer wants to save this escrow from cancelling, they must go to the bank today. The seller’s agent needs confirmation the funds were wired and deposited with the title company.
If you are looking to buy a home, always make sure you have your deposit funds ready to go when you sign your purchase agreement. This will ensure that when a seller cancels the contract for non-performance, it will happen to someone else, but not you!
If you are thinking about selling a property, rest assured Weintraub & Wallace Realtors will always insist on a deposit check immediately on our listings. Call us today at RE/MAX Gold, 916-233-6759.
— JaCi Wallace
The Upside When FHA Buyers Cancel the Escrow
FHA buyers who cancel escrow pave the way for the next FHA buyer.
It’s doubtful that most potential home buyers start out the home buying process by thinking they will become one of those freaked out FHA buyers who might cancel the escrow, but it can happen even in markets of tight inventory more often than you would imagine. There are many reasons, none particularly substantial from an experienced listing agent’s point of view. The reasons tend to range the gamut, from unsophisticated to twisted to incorrect analyzations, but whatever the reasons the decision is right for them. Buyer’s agents do their best to manage these events; however, they are not always successful.
You can’t change the mindset of stubbornness in some people. It’s a fine walk for buyer’s agents. On the one hand, they may instinctively realize the buyer is unreasonable but, if they agree, they lose the buyer. Sometimes they are afraid to point out: No, the seller will not rip off the two-year-old brown roof and replace it with your favorite color of black. In that instance, the buyer would probably feel alienated and jump ship. They often feel there is not enough real estate business to allow them the luxury of choosing their buyers, so they stick with whomever they get.
The thing is you can’t blame the buyer’s agents when FHA buyers cancel the escrow. Their agents are doing the best they can. You also really can’t blame the buyers, especially when they are first-time home buyers. It probably hasn’t sunk in that all homes have defects, nor that they might not buy a home now, especially if they try to force the seller to meet demands the next buyer won’t make. Or, that it could take them another year to find a home. We have such reduced inventory in the Sacramento area, so little for sale, and almost every cute home will receive more than one offer for it. With every rejected contract, though, they learn more about the market in Sacramento and what it will take to buy a home.
Meanwhile, back at the ranch, the sellers might be wary that the next buyer will cancel the escrow. But that is unlikely. The odds are most buyers who go into escrow manage to close escrow. Sometimes, sellers want to take an offer from a conventional buyer over that from an FHA buyer — OK, most of the time, they do. But in a situation where it was an FHA buyer who elected to cancel the escrow, the seller is actually in luck. Because FHA appraisals are assigned a case number, and when the home immediately resells to another FHA buyer, that same case number will be pulled.
I sold a home in Natomas last year this way. We did not want a conventional offer but accepted FHA for that reason. Agents could not understand, what? No conventional offers?
An FHA buyer who cancels escrow means there are no appraisal concerns for the next FHA buyer. The seller simply lost a couple of weeks of marketing time, but there are dozens of excited buyers right around the corner who would love to buy that home this spring. All the reports have been completed, too, so the seller is able to supply full disclosure prior to an offer. When an FHA buyer cancels the escrow, it’s a slight setback but odds are the next buyer will be stronger, better informed and more deserving in the seller’s eyes, especially when there are no concerns of a low appraisal.
Better yet, the market has gone up. If you’re thinking about selling a home in the Sacramento area, call Elizabeth Weintraub, 916.233.6759. Put 40 years of experience to work for you.
