Once you have put down earnest money on a house, are you locked in with no options? It actually depends on how your contract is written.
Many Generation Xers and Millennials are increasingly remorseful about their home purchases. A recent article in the Wall Street Journal points to a survey by Nerdwallet.com in January that revealed, “nearly half (49%) of homeowners who responded said they would do something differently if they had to go through the process again.”
While there is a point when the contract “goes hard” and the buyer is locked into the decision, many contingencies can be written into the contract to protect both buyer and seller. Some key points to consider when creating your mortgage contract or if you are considering backing out include:
- Craft carefully. Consider creating a mortgage contingency allowing you to specify the interest rate instead of wording that mentions “prevailing rates.” Or, you could make the contract contingent (dependent) on the mortgage actually being funded by the lender. This is quite common. “This extends the contingency all the way to the closing,” says David Reiss, a Brooklyn Law School professor who specializes in real estate.
- Sharpen your negotiation skills. Even after contingencies have been exhausted, try to negotiate with the seller. Depending on the market and the likelihood the seller could quickly find another buyer, there might be a chance for a reduction or return of the deposit.
- Remember the broker. After negotiating with the seller, remember that the seller might still be liable to a broker for the commission. This makes is harder for the seller to let you out of the deal. It is an issue that needs to be addressed.
Need help in finding the right agent to help you craft just the right contingencies? LDSAgents.com can help you find an agent in most locations who understands your needs and desires.