How Do I Get Out Of This!!!!!
Hi,
I am currently under contract to purchase a duplex in my area. I now find that I am no longer in a position to purchase this property. Although I have secured financing (amost), there were a number of conditions (funding conditions as my broker called them) that I will not be able to reach by the time of closing. Also, after spending more time to look at the deal, it doesn't look as promising as I initially thought.
The seller has been very agreeable through the buying process and I do not want to be unfair to them, but the property no longer fits my intended portfolio. How can I get out of this deal without too much damage to the seller?
The contract was a specific performance contract and I don't know what will happen when I can't close. I really don't mind if the seller keeps the earnest money, I just want to ease out of this deal as smoothly as possible.
I am also slightly worried for the Realtor that I am working with. I estimate that the Realtor has put in about 15 - 20 hours on this deal and really wants the deal to close. However, I can not make a bad investment choice just to make others happy.
I need some advice please. I am confused and have always found the folk here at TCI to be very helpful.
Thanks in advance,
JS. 
If you don't mind losing the earnest money, you can just sign a "release of earnest money" and walk away. The release should contain verbage stating that both parties agree this is complete resolution and no legal action will be taken by either side. If the seller is as agreeable as you describe, they will probally not complain too much. However, there is no sense in walking away from the money if you do not absolutely have to.
If you are working with a realtor, you will have used a standard state approved contract.
In almost every standard contract there are a number of "outs" for the buyer. If you or your realtor is smart, he/she/you will have selected deadlines for these "outs" that are as close to the closing date as possible to give you the maximum time possible in which to back out of the contract. The most common outs are:
1) Buyer's right to cancel based on evaluations and inspections: Approval of contact of seller disclosures, physical condition inspection, survey, homeowners insurance costs, other tests & evaluations.
2) Buyer's right to cancel based on lender not approving a loan.
3) Buyer's right to cancel based on the property appraising for less than the purchase price.
It sounds like item 2 may work in your case. You will just need a letter from the lender stating that you have been declined.
If you cannot get the letter, go to item 1. If the evaluations and inspections deadline has not passed, you simply need to have a letter delivered to the seller's agent stating that as per the relevant section of the contract, you are canceling based on your disapproval of your inspection of the property. Nothing more. The law does not say you have to give reasons for disapproval, you can simply disapprove.
good luck!
If your obligation to buy the property was contingent upon your securing financing, and your lender won't issue a mortgage commitment without conditions that you cannot satisfy, then it should mean (depending on the contract provisions) that the deal can be terminated and you get back any down money you've paid.
You're right -- you have no obligation to buy something on terms unacceptable to you in order to make others happy. Deals that have contingencies (for whatever) aren't "done deals" until and unless they close. Your agent should understand this.
I too know how you feel as this just happened to me. I had two properties under contract with a wholeseller and i felt his pain and i know he needed the money from the closing. I could not get the financing and had to walk away. He promised me my $100 back even thou he lost his $200 over the deal. As it turns out I am still doing the deals but was told by the realtor that they were for sale again after the wholesaler had lost the deals. At $18,000 less the same lender still turned down the deals but I hustled and found two new lenders and should close be Friday. I still feel for the wholeseller who stood to make $8000 on the sale but business is business and I do not owe him any money. They were even listed in MLS later after and fair game for anyone. I thought they were a good deal at his price and even a better deal now at a lower price. I did not do all this just to get them at a lower price but it just happened. I actually went to see another Realtor in the same office and while I was there I said hello to the listing agent briefly and she told me the properties were available again and she was fustrated and the sellers too and they would take a lot less $10,000 plus the wholesellers $8,000 for a total of $18,000 less for a total of $60,000 for two houses, I just could not say no.
Good LUCK and Thank You
Hope this helps some
Ted Jr