Escrow Cancellations are the New Pink for Spring – Again
(Fashions come, fashions go. And then, about five minutes after you have thrown out all of your shoulder pads and parachute pants, they tend to rear their ugly heads again. I am re-upping this from 2009 because, well, it's been one of those months.)
I have a little something I have to get off my chest. Maybe it’s just that my deck has been stacked this month, or just maybe the things I am seeing are in fact signaling a pandemic.
When did the purchase agreement stop being seen as a legally binding contract? Where did all that good faith go?
I wrote about the whole fear of commitment thing awhile back – I think I’ve written on just about everything “awhile back”– but the practice of buyers using the purchase agreement as a place holder until they decide if they really want to buy the house is spreading faster than the swine flu.
While you may be contractually within your rights to cancel on day 16, 21 or 29 of your 30-day contract (alas, the contract tends to like buyers biggest), you will likely be putting many other folks through the proverbial wringer. Lost market time, packed moving boxes, and a previously staged home which is now a shell of its former glory are just some of the side effects for the seller. Enormous time and effort – from the principals to a vast supporting cast of agents, escrow and title officers, and other professionals – are down the old toilet. Yes, you can take your money and go home. Just know that you will be leaving a path of destruction in your wake.
Perhaps you discovered something about the home while under contract that changed your decision to buy. I get that, but not all “discoveries” are created equal. There are good arguments for bailing from an agreement, and there are bad. Let’s look at some examples:
Good: Home is situated on a previously unmapped active volcano.
Bad: Home is situated on a foundation.
Good: Home was built entirely with duct tape and Lego bricks.
Bad: Home was built.
The problem for the seller is that there is no reasonableness test for cancelling contract during the inspection and disclosure contingency process. And when we hear that you are suddenly disturbed that the home faces west, fronts a street, or is painted beige – all stuff you would have known had you taken off the ski mask — we know this is code for “Neener, neener. I changed my mind, and you can’t stop me.”
No reasonable person would expect you to proceed with purchasing a home you don’t like. Buying a home is kind of a big deal. But there is a little suggestion I like to share with my buyer clients; stay with me here, because this is where it gets complicated. If you don’t like it, don’t offer to buy it!
In business, there are strategies and then there are tactics. So it goes with home buying. Writing an offer is a tactic, but the seller’s assumption, crazy as it sounds, is that your underlying strategy is ultimately to purchase and move into their home. They are going to commandeer boxes, schedule movers, secure replacement housing, and even give notice at work. Putting them through all of that if you are just taking a practice run is not cool.