I think there are some really huge differences between markets, and especially between the big cities and the rest of the country. When I was looking two years ago financial contingencies were so standard they weren’t even discussed. I also can’t imagine really committing to buy the house without an inspection first. Then again, if I was living in or near one of the big cities, I would probably prefer to rent anyway.
If you paid for an inspection on every house you were interested in it could get expensive. When I was looking part of the looking was doing a inspection my self. But I have the skills to note most problems. In fact I found problems that the inspector did not even note. But not every buyer has that skill. You have looked at maybe 50 houses and if you are lucky you find one, two, or three that have your interest. You make an offer on the best choice house. If the offer is accepted you sign contracts. If it is rejected or the counter offers is out of line then you go to the 2nd choice. If that deal does not go through, then make an offer on 3rd house. And that one gets accepted. Now I call for an inspection. I only pay for one inspection this way.
And if the inspector something I missed then I have a chance to have it corrected.
From my experience, a sale has a “possession date”. Usually, the finance contingencies etc. say something like “2 weeks”. If you can’t get bank approval by then, you probably won’t. Possession date would probably be a month after that, unless the buyer is easily guaranteed to get approval - after all, you want to be certain before you start moving (usually, unless you have other plans). most leases, like the one the buyer is leaving run from the first of the month and need a month’s notice - so the buyer wants to be sure he will own the house before committing to move, and the seller will have time to arrange their own move. of course, there are situations like “I just arrived in town, live in a motel” or the house is empty, where the wait is not necessary.
If an inspection is not allowed as a condition on the offer, sometimes the buyer will arrange for an inspection before making an offer. If you only inspect a house that if it passes you would buy at the asking price, then an inspection is money well spent.
In a strong seller’s market the buyer walking away is not going to be much of a problem - but that does not mean that they can’t. We went through this also. When we sold our second house we had a no financing contingency. We got an offer during the open house, so it was considered the hottest house in our town.
The buyers did not have a no-contingency clause for the sale of their house, and started to get antsy. Our realtor, with others lined up to buy if the deal fell threw, kind of said “make my day” and they wound up buying after all. But we never doubted they could walk away - the impact just wasn’t going to be very great.
So in a strong seller’s market there is even less of a reason to try to make the buyer perform. So I think we agree, and none of this has anything to do with renegotiating small points.
Real estate attorneys: If a seller is suing for failure to perform, and while the suit is pending sells the house, is the suit still valid? Obviously in this case the buyer cannot perform even if directed to do so by the court. Our attorney certainly did not think suing was a viable option, but this was Louisiana so other states might have very different laws on this.
And if I were a potential buyer, I’d be very leery of a house which is in litigation.
Around here the market has been very hot, and a large proportion of the sales have been for cash. In this situation a no-contingency clause is going to make sense, since any potential buyer demanding one is going to lose a bidding war.
I never thought of “Deep Space” as “very hot”. 
I guess our market is only warm then, or maybe there was some advantages of the FSBO nature of our purchase and being well liked by the seller.
I could feasibly see ourselves risking the earnest money with no financial contingency if forced to do so in a hot market while being relatively certain of getting the loan. It wasn’t clear to me if that was the only consequence. Signing such an agreement seems like madness if the consequences are more severe (e.g. being sued for the purchase price of the home with no easy access to those sorts of funds).
If you are suing for damages caused by failure to preform the house is not in litigation. By failing to preform the buyer has given up any obligation the sell would have. What would be litigation would be the deposit. Does it get returned to the buyer or does it go to the seller. By failing to preform the seller would be free to put the house back on the market with no strings.
I would not put any offer on a property without proper contingencies. I have only heard of one house being sold that way. It was cash only and no inspections prior to close of escrow. The property was red tagged, so you could not even legally go onto the property. The city owned the house taken in a drug raid. It was a drug lab.
To purchase a house without an inspection contingency is inviting disaster.
A year or two ago, the big fuss in Canada was grow-op houses that had been “rehabilitated”. Now the rules oblige the real estate agents (and any other seller) to disclose such issues with the history of a house. Some sellers were doing superficial mold removal and presenting the house as safe.
here’s the job supposedly done right: (full TV episode edited)
https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwi47YTnt-bJAhVJlh4KHZ4OBXwQtwIIGzAA&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DwvP4keKl3OM&usg=AFQjCNFJEoAAGGp5y0JRWQnCgIpljAuYsA&sig2=TtyQspBu5wx0NfOL43qdIQ&bvm=bv.110151844,d.dmo
In most states the seller is required to disclose any known issues to the buyer. There have been stories about houses that had been “flipped” and after the buyer moved in and had lived there a few months problems begin to appear and the new homeowner finds out that the work the flipper had done was not up to code. And the seller has moved on to another city. There is a TV show Holms on Homes about improperly done remodels or repairs.
yeah, I have Holmes set up to record and I’ve probably seen every episode. He mainly dealt with results of shoddy contractors originally, but his newer show focussed on failed home inspection results. (or people who failed to insist on a home inspection). He had some real doozies.
This was one reason why our agent said that buyer and seller should not talk. All communication should go through the agents. That way separate third parties can vouch for all communications… “did the question of basement flooding ever come up?” “Did the seller disclose it was a grow-op?”
After all, if the deal falls through 3 months later, when the problems are discovered - odds are most of the money paid, went to the bank to pay off the seller’s mortgage. That bank has no obligation. So your recourse is a seller with minimal assets. meanwhile, you live in a failed house, but owe a full mortgage.
This is why either a home inspection is a typical sale condition, or a serious buyer will pay for an inspection before making an offer. A couple of hundred spent on an inspection is not wasted if you don’t buy the house, if it saved you from being stuck with major repairs a year later.
If the seller is suing the buyer that means he’s not giving back the down payment. Therefore, the buyer is almost always going to sue back for the down payment and place a lien on the house. Once that happens and there is a public record of litigation against the house, the seller is not going to be able to sell it to anyone until the dispute is resolved.
Most real estate contracts do not allow a seller to sue for specific performance. They always limit damages to the contract down payment. If there was no such limitation in the contract, then the seller could technically sue for specific performance. However, since this is an equitable remedy, the court would have to decide if it’s an appropriate remedy. Obviously if specific performance is impossible, then the court isn’t going to grant it.
No the house will not have a lien put on it. You can not put a lien on a house just because you want to. It would take a court order and that could only be done if the buyer won the case and the seller did not pay.
The down payment is put in an escrow account. The buyer could only sue to have the seller sign the release on the escrow account.
I was thinking the buyer could file a lis pendens. However, if the buyer is not claiming specific performance, and is only asking for the down payment back, then he wouldn’t have grounds for a lis pendens. But they almost always file one without grounds anyway.
There are also contracts that have provisions in them that make the down payment an automatic lien on the house. I’m not sure how this would work, however. Maybe you have to record the contract in order to perfect the lien?
In most cases that I knew, the down payment does not change hands (nor the balance, from the mortgage lender) until possession date. (Usually all this money etc. goes into the hands of lawyers who hold it in trust so both sides can confirm all the necessary money is in place, and titles, etc.). What happens is an offer is accompanied by a payment in good faith - IIRC when I bought my new house, it was $500 or $750 or something. Enough to show you are serious, but trivial compared to the value of the house. Back out of the deal (except by the conditions) and you don’t get the money back. Argue over things, and that’s the money at stake. For that, it’s hardly worth spending money on lawyers, especially if one party is obviously right. (And I assume there’s case law out the wazoo for these things)
It depends on the market. In New York CIty, the down payment (or good faith deposit) is often 10% of the purchase price. It can easily go as high as $100,000 over here.
In this case, it makes even more sense to do a home inspection before putting down an offer. If someone won’t let you inspect the place before you fork over $100,000 irrevocably, then that should be an indication of something.
Down payment is not the same as ‘earnest money’ or ‘good faith money’.
In CA at least, the down payment changes hands only at closing (when the deed also changes hands).
The earnest money (local term) becomes the property of the seller upon either:
written acceptance
or
removal of last contingency
I do not remember which.
I was raised by farm kids in a run-down house.
I learned home repair (and construction, for that matter) early.
I do my OWN inspection and then have a professional inspection done.
Should have been clearer. I meant financing contingencies. Any seller objecting to an inspection contingency is one most people would run from.