Closing the loop
The market suddenly changed. And now some sellers can’t sell. Some buyers can’t close. When I say ‘suddenly’ I mean virtually overnight. No one saw this coming and now there are some buyer’s out there that got caught in the moment and cannot close on the house they bought because they cannot sell the house they have. What can they do?
I got this question the other day on my chat widget.
I have heard the real estate market in KW has started to cool down. We bought a house two weeks ago and we are now not sure whether we did a right purchase or we made a wrong decision. Does the forecasts show decreasing trend for KW house price?
It is actually a common theme. People wondering because they bought when the market was white hot if they could have done better if they waited. Maybe. Maybe not. If you bought for the right reasons, it matters not.
What’s more worrying is if you had of bought a house a month or six weeks ago without conditions and now you are trying to sell your current house so that you can move up. This is like musical chairs and now the music has suddenly stopped. What if you cannot close? What do you do if selling is closing the loop.
What if the Buyer cannot close?
If the buyer cannot close the deal (likely because they cannot sell his house for what he hoped and expected), they will certainly forfeit their deposit. Did you notice that the required deposits in Kitchener Waterloo changed from being about 1% of list price to becoming $10,000 to $20,000?
That’s going to hurt.
But there is more. The buyer can also be subject to a lawsuit from the seller, to cover the difference between the agreed upon sale price and what the seller subsequently sells the property for.
What can the buyer do?
1) Ask for an extension
They buyer still wants to buy and the seller still wants to sell. The buyer just needs more time. The buyer can ask that the closing date gets pushed back a month to give them more time to sell.
2) Assign the agreement
The buyer might be able to find a new buyer for the property and assign it to them. This may prove harder than asking for an extension and may require the seller’s help.