Myth # 6 Sellers Are Often Told That If The Buyer Cancels, They Can Keep The Deposit (easier said than done)
Licensees cannot dispense legal advice ~ Yet, they do
Real Estate Attorneys don't have to read the belated news in the newspapers about "The Market," they know by the clientele sitting in their lobby. When prices are rising, some sellers want to cancel. When prices are dropping, some buyers want to cancel. Rarely do these buyers or sellers claim the real reason for their actions.
Canceling at the end of a transaction
Rescinding a contract and having the deposit returned to the buyer is not uncommon in any marketplace. However, if a buyer needs a Real Estate Attorney to cancel the sale, it's often because they have removed all contingencies which would have allowed for a cancellation at the agent level.
Buyer's Remorse or Agent's Mistakes
Absent obvious mistakes, these Attorneys will often call in a "Real Estate Expert," to review the file and look for loopholes. Real Estate Attorneys tell me that the usual mistake(s) made by Agents can render a contract moot.
Unfairly Stigmatized Properties
Frequently, these homes reappear on the Market with a new price and/or Listing Office. The listing commonly will have the disclaimer "Transaction Fell Through, No Fault of Seller." Savvy Buyers pounce on these homes!
Drawing a Line in the Sand
They tell me that in "Failure to Disclose" cases the deposit is generally returned. Conversely, I'm also told that when a Buyer appears not to have a valid reason to cancel, it is not uncommon that both parties will fight until their last legal dollar. The litigation costs sometimes exceed the amount of the deposit in dispute. After all, it is the principle of the thing.
Sellers: Make sure you hire an agent who demonstrates deftness in the technical side of the business, not the agent who shows his/her value through the artistry of four-color, double-sided postcards and fliers.
Agents: Whatever the topic, learn what to say and how to say it. For instance, "The buyer's deposit might be in jeopardy." Dispensing legal advice and/or inattention to details and disclosures routinely finds Agents reimbursing clients for the loss of the deposit in question.
Buyers: Make sure you understand the mechanics of how you can safely cancel a sale. If your agent can't explain the contract, contingencies, disclosures and their ramifications, his/her Manager will.
San Jose Real Estate Attorney Ron Rossi has spoken and written extensively about the legal nuances of deposit disputes. He can do that, I can't. In the limited training to become a Real Estate Agent, one is trained repeatedly Not to give Legal or Tax advice. When Agents counsel Sellers they can keep a deposit, they just practiced law. And Real Estate Attorneys are more than happy to point that out.
Pat Kapowich, "Negotiating Smooth Transactions Throughout The South Bay" SiliconValleyBroker.com