Table of Contents
Latest posts by Gea Elika (see all)
- The Costs Per Square Foot of Renovating in NYC - April 17, 2018
- What is an Exclusive Listing Agreement when Selling Real Estate? - April 7, 2018
- Making Sense of (FAR) Floor Area Ratio in NYC - March 31, 2018
Finding the right apartment in New York City is tough. You have scoured and visited numerous properties, maybe even placing offers on a couple of apartments, only to be turned down or losing a best and final offer. Now, your hard work is about to pay off, and you are on the cusp of the American Dream. Your offer has been accepted, and you think it is smooth sailing.
However, while buyer’s remorse is a commonly known phenomenon, sellers may also have second thoughts. When a seller kicks the tires, this creates a fiasco that can cost you money, delay your purchase, or even break your deal. However, before you go through this situation, we outline some cases of seller’s remorse in order for you to be aware of a potentially troubling situation and actions you can take if it happens to you.
Image by Government of Alberta / Flickr
Reasons for seller’s remorse
While there can be any number of reasons for a seller to change his/her mind, there are several that are more common. Seller’s remorse often happens because the seller was not really motivated in the first place and was just testing the market. A related reason is a seller deciding he/she was not happy with the price after all and decides to wait for a stronger market.
Other times are a location canceled. Perhaps the seller moved to a new city and realized it was not the right place to reside, or he/she is dealing with the recent loss of a job and can no longer afford to move.
The sellers might realize other options available in the open market are not as appealing, particularly in these times when inventory is tight and if the seller is emotionally tied to renovations that were done.
There are other, emotional reasons, such as not wanting to let go of the memories. Another common reason is a separation or divorce. In this situation, one party may decide he or she wants to return back “home.”
Looking for a way out
Sellers have few options once they have countersigned a contract and accepted the deposit, which is good news for buyers. If this is happening to you, check your sales agreement. Make sure there are no contingencies that allow the seller to back out of the deal.
From the buyer’s point of view, make sure you follow the contract, such as obtaining a mortgage within a certain time frame. Otherwise, you have given the sellers away out. A mortgage contingency can provide you with protection, allowing you to back out of the deal if you cannot obtain a loan within a specified period in most cases for the full valuation of the contract price, such as 30 to 60 days. You should adhere to these guidelines, or obtain an extension promptly, lest this be used against you. Similarly, you need to follow other aspects of the process, such as getting an inspection if desired within the due diligence period, typically five to seven business days. Delays in the signing of the contract can allow the sellers time to reassess and back out.
Once the contract is signed, the seller is in breach of contract if he/she backs out. This assumes you have met all of your requirements, and there are no contingencies that allow the seller to exit without penalty, of course.
You can hire a lawyer, and sue for “specific performance”, which compels the buyer to transfer the property under the terms of the contract. Attorney and court fees may be tacked on, should it go that far.
Furthermore, you can sue to recover “consequential damages,” which are reasonable costs that you had to pay due to the seller’s breach of contract. These include expenses for temporary housing, storage, and other living expenses.
Before reaching this point, the seller may offer you a settlement to compensate you for your time and expenditures. Providing you are satisfied with the figure, you may choose to accept it and move on.
In New York, your offer is not binding upon the seller’s acceptance, unlike some other states. An offer form is filled out and a contract is sent to your attorney, but both parties are not legally bound until both sides sign a formal agreement with the deposit transferred. There is a time lag time during the due diligence period between the buyer’s acceptance, and both names are signed on the dotted line. Prior to this, either the buyer or seller can walk away from the deal without penalty. Therefore, if you love the home, it is imperative that you and your attorney work quickly to finalize the contract, including an inspection and an attorney reviewing the financial statements and board minutes for the co-op/condo.