Home, Land, Property Buying and Selling - defaulting on purchase agreement

I signed a purchase agreement for a home I really love in another state not knowing that the real estate market in my area is really slow and prices are falling which will make my selling my current house very hard. I could probably get a mortgage on the new home, but I can't afford the payments unless my current house sells. can I get out of my contract under those circumstances?

Welcome to the forums!

If I'm not mistaken you can get out of the contract most anytime before closing, you will however loose your deposit. It isn't uncommon for it to be wrote into the contract that it is dependent on the sale of your existing home. I assume you didn't do that.

Purchase agreements with a clause making the sale contingent on selling your current home are common. Definitely want that on your next purchase.

I have a contingency to obtain a loan, but don't have one on selling my house. Originally I was going to get a line of credit, and that's why the contingency was for being able to obtain a loan. However, little did I know that my payments would be 3 times what I'm, paying for my current home and I can not afford to pay that much. If I did that I would be in financial trouble within 3 months.

I just checked my contract and it has the closing on Nov 30 and if I don't have the funds by then the agreement expires. Well, I certainly won't have funds then, so what wil happen?

I've been waiting for a modified contract from the seller extending our agreement so that I can sell my house, but haven't heard from the owner yet.

I did agree orally that the owner could continue to show the property and if he got another offer, I would have 48 hours for first right of refusal.

I want to be fair to the seller even though I would love to get this particular property, that's why I agreed to that.

Anyone have a comment on my situation? I can use all the help I can get.

How much deposit did you give them on the new place?

I would talk to the seller and let them know that you have a problem. A good question is can you qualify for the new loan without selling your home. If not, depending on the contract you could terminate it and get your earnest money back.

I gave $1000. ernest money. As for qualifying for a loan without selling my home. When I calculate how much mortgage I can afford, it is far less than an internet mortgage company estimates. They are willing to give me a 100% mortgage, probably because I have excellent credit, but there is no way I can afford the payments they quoted. That's why i don't know whether I can get out of the contract or not. What good is it to qualify for a loan if you cannot pay the mortgage payments for more than 3 months without going under, Shouldn't that be part of the contingency? That you can actually afford the payments?

It would depend on how the contingency was written.

I buy/sell a lot of homes... and have never, ever lost a earnest money deposit for backing out. There are too many clauses in the standard contract that provide for the buyer to back out without penalty. The standard inspection clause alone gives you the opportunity to demand (unreasonable or not) repairs to the prospective property that you know, without a doubt, that the seller will not agree to - thereby negating the contract.....

The only contingency I have is I can get out of the contract if I can't get financed. That is it. I stupidly waived all other contingencies. My main problem is the housing market where I live in my current house has bottomed out, and I'm pretty sure the value of my house has gone down. If it has there is no way we can afford the new house since we have to sell the current one first. I plan on having my home appraised this month and then I'll know for sure. Bur even if the value is still there it could take a year or two to sell in this market, so I'd rather get out of the contract now and not have it hanging over my head
meanwhile, the new house is still listed with mls even though we signed a contract, that way if someone else puts in an offer, we have first right of refusal. So this is a win win situation for the owner. I'd like some thoughts on this situation

I hate to lose money as much as anyone but it might be in your best interest to defualt on the 'new' home and loose your earnest money. It might be the lesser evil - especially if you wind up liable for 2 mortgage payments and not enough money to pay them :eek:

I can't imagine any company willing to loan you money when you still have the 1st home mortgaged. Its all based on debt vs income....maybe if you get a few letters of rejection?

I buy/sell a lot of homes... and have never, ever lost a earnest money deposit for backing out.

I trust you are not a Realtor. Your strategy of demanding unreasonable post-inspection repairs simply to get out of a binding contract seems a bit sleazy to me.

I've only sold seven homes in my lifetime, and the earnest money issue surfaced in two of them. In one, the buyers just decided they didn't want to move after all. I kept their deposit. In the second, the buyer had just started a new job and, after contracting to buy my house, claimed to "just discover" that the job required her to live within a certain distance of her workplace. I had a backup full price offer and she seemed young and naive, so I gave hers back.

No - not a realtor (talk about defining the word "sleazy")... Just a hard working individual who values his money. I've never had to back out without reason from a purchase contract - but know that, should circumstances dictate I do so - I'll never lose a dime - and am happy with that - and can sleep at night very well.