The Wall Street Journal says more buyers are backing out of deals.
The two times this happens most often are 1) if the property was bought, pre-construction, and the buyers see that the development hasn’t sold any other units and/or the developer has re-priced units at list prices considerably lower than the buyers bought at and, 2) if the buyers aren’t able to find anyone to buy their current homes.
In the first example, best scenario, the developer gives you your money back. This is very uncommon. Most likely, I think you’d end up in court, with your money stuck in escrow. Second best scenario is the developer lowers your purchase price to what everyone else is paying.
In the second example, you’re in trouble. Hopefully, you have a mortgage loan contingency, saying that if you can’t get a mortgage loan, you won’t have to buy the new place. Assuming you’re not rich, the bank won’t let you take out two mortgage loans, one for your current place and one for the new place. If you don’t have a contingency, you could be looking at a situation where you’ll lose your 5-10% down payment.
Real-life examples are still anecdotal at this point; whether things will get worse, is unknown.
Complete story: Home Buyers Back Out Of Deals in Record Numbers – By June Fletcher and Ruth Simon, The Wall Street Journal Online
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