Whoa, we’re half way there… and all of a sudden that perfect house, with the perfect yard, with that first floor master isn’t so perfect anymore, or so your buyer says. Maybe your buyer “works on the docks” and the “union’s been on strike” so your buyer does not know if they will actually be able afford the home. Maybe your buyers were under contract to pay cash for the home and they have decided that they better “hold on to what we’ve got” and they no longer want to spend all of their dollars on a house. Maybe the inspection report revealed more issues with the home than the buyer is willing to deal with. It could be for any reason or no reason at all that your buyer or buyers no longer want the house they went under contract (and put deposits down) to purchase.
Surprisingly, we aren’t here to argue over why the heck we have Due Diligence or how the concept of Due Diligence may make zero sense to out-of-state buyers (there is a separate blog post on that), we are here to talk about timely termination!!! The short story: IF YOUR BUYER WANTS TO TERMINATE their Contract, please do not take Bon Jovi’s advice on your approach in that it, “doesn’t make a difference if we make it or not” and make sure you get your buyer’s termination over to the seller or listing agent before the expiration of the Due Diligence Period. That is, of course, if your buyer wants to get their Earnest Money Deposit back. The current standard offer to purchase agreement (2-T) provides that the Due Diligence Period ends at 5pm on the date listed in Paragraph 1(j). Thus the time to terminate, as you may have guessed, is NOT 5:05pm or even 5:01pm. The time to terminate is BEFORE 5pm.
Of course there are other reasons a buyer may be able to get their deposit(s) back outside of a Due Diligence Period, but again, we are here to talk about Buyer Termination!
So, be prepared well before the end of the Due Diligence Period! Have any applicable termination paperwork filled out and signed by the buyer (if necessary) and SEND. IT. OUT. Don’t wait and educate…your buyers over and over on what Due Diligence is and how it works and what they (the buyer) stand to lose should they decide to terminate the contract during (or even after) the Due Diligence Period.
We all know that real estate transactions for the purchase and sale of real property, for lack of a better term, can be a real Journey (but don’t ever stop believing!) and your buyer may end up “down on his luck, it’s tough, so tough” if they want to terminate and that termination isn’t timely delivered before that 5pm cutoff time. So save your buyer some heartache, stress, and MONEY (Earnest Money, that is) and rest easy knowing that you and your buyer will not be Living On a Prayer hoping (at the request of your buyer, of course) that a seller may be a nice enough person to give money to the Buyer that they do not have to give.