Real Estate

Mutual Termination After Purchase Offer Was Finalized

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[OP]
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Mutual Termination After Purchase Offer Was Finalized

A relative of mine agreed to purchase a house. She made an offer without conditions and it was accepted. A month or so later, her circumstances have changed and she asked the seller if they were interested in terminating the purchase agreement by mutual consent. They are, because prices have risen and they can get more money now.

So, my question is: Is she liable for anything to her buying agent if she does this? No agreement was signed with the buying agent prior for them starting to look at houses together.

Thanks.
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I'm still blown away how people are bidding on homes with no conditions and then changing their minds afterwards. In this case a month later. It blows my mind. Some people shouldn't buy. Sorry for the rant.
[OP]
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JayLove06 wrote: I'm still blown away how people are bidding on homes with no conditions and then changing their minds afterwards. In this case a month later. It blows my mind. Some people shouldn't buy. Sorry for the rant.
If new information is received, why not try to adjust accordingly. She was prepared to go through with the sale if the sellers wished to. In this case, it is win-win to mutually terminate.
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mc_molineux wrote: A relative of mine agreed to purchase a house. She made an offer without conditions and it was accepted. A month or so later, her circumstances have changed and she asked the seller if they were interested in terminating the purchase agreement by mutual consent. They are, because prices have risen and they can get more money now.

So, my question is: Is she liable for anything to her buying agent if she does this? No agreement was signed with the buying agent prior for them starting to look at houses together.

Thanks.
if a purchase agreement was signed then 99% she will owe commission to her agent.....doesnt matter if a BRA was not signed before

her agent is expecting a commission on selling the house .....
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mc_molineux wrote: If new information is received, why not try to adjust accordingly. She was prepared to go through with the sale if the sellers wished to. In this case, it is win-win to mutually terminate.
Don't worry about it. There's just been a number of posts in here lately about people wanting to terminate purchase agreements, or wondering what they can do about buyers terminating agreements. Don't take it personally.

She should read over what she has signed with her agent, as well as what the mutual termination agreement says. The devil is in the details.

C
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mc_molineux wrote: If new information is received, why not try to adjust accordingly. She was prepared to go through with the sale if the sellers wished to. In this case, it is win-win to mutually terminate.
I get it, it's a win-win because the seller is agreeing to it. That's not the point though. That's the whole point of non-conditional. "new information" that right was waved... Anyways, I dislike wishy washy people and this seems to be getting more traction. People waving conditions then thinking they can still negotiate/cancel deals afterwards. Shouldn't be allowed.
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JayLove06 wrote: I get it, it's a win-win because the seller is agreeing to it. That's not the point though. That's the whole point of non-conditional. "new information" that right was waved... Anyways, I dislike wishy washy people and this seems to be getting more traction. People waving conditions then thinking they can still negotiate/cancel deals afterwards. Shouldn't be allowed.
We're also in the middle of circumstances that almost all of us have never seen before. So shit happens, and you have to play with the cards you're dealt.

C
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JayLove06 wrote: I get it, it's a win-win because the seller is agreeing to it. That's not the point though. That's the whole point of non-conditional. "new information" that right was waved... Anyways, I dislike wishy washy people and this seems to be getting more traction. People waving conditions then thinking they can still negotiate/cancel deals afterwards. Shouldn't be allowed.
Well the seller agreed to sell as well and now also wishes to rescind and nullify the agreement. So both parties are guilty of what you're saying
[OP]
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CNeufeld wrote: She should read over what she has signed with her agent, as well as what the mutual termination agreement says. The devil is in the details.
I have reviewed the Offer to Purchase, which was the only thing signed. The relevant parts state that the agent is representing my relative as buyer, not the seller, and that the listing agent is representing the seller not the buyer. It also states that the seller agrees to pay the listing agent the commission of 4%. This part is only signed by the sellers. Nothing seems to say how much the buyer's agent receives, or how they will be paid.

Agree that the mutual termination agreement will be important.
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mc_molineux wrote: I have reviewed the Offer to Purchase, which was the only thing signed. The relevant parts state that the agent is representing my relative as buyer, not the seller, and that the listing agent is representing the seller not the buyer. It also states that the seller agrees to pay the listing agent the commission of 4%. This part is only signed by the sellers. Nothing seems to say how much the buyer's agent receives, or how they will be paid.

Agree that the mutual termination agreement will be important.
She probably needs to review the BRA (Buyer Representation Agreement) she signed with the Buying agent. There would be a section around commission the buying agent is entitled to.

The big question would be if the buying agent's commission is realized upon finalization of a firm purchase/sale agreement, or if it's realized only upon closing of the home. If the latter, she would be fine as no sale = no commission. If the former, then she would be liable to the expected commission of cancelled deal to the buying agent.

I don't know which is correct, but I'm sure most BRAs are similar so hopefully a realtor can comment.
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mc_molineux wrote: I have reviewed the Offer to Purchase, which was the only thing signed. The relevant parts state that the agent is representing my relative as buyer, not the seller, and that the listing agent is representing the seller not the buyer. It also states that the seller agrees to pay the listing agent the commission of 4%. This part is only signed by the sellers. Nothing seems to say how much the buyer's agent receives, or how they will be paid.

Agree that the mutual termination agreement will be important.
I thought it was typical that even if a BRA wasn't signed before the agent starts showing a buyer properties, it WOULD be done when an offer was submitted. Is it possible your relative lost/misplaced/is confused on signing another document?

C
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CNeufeld wrote: We're also in the middle of circumstances that almost all of us have never seen before. So shit happens, and you have to play with the cards you're dealt.

C
For sure which is why you don't buy without conditions. Right?
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JayLove06 wrote: I get it, it's a win-win because the seller is agreeing to it. That's not the point though. That's the whole point of non-conditional. "new information" that right was waved... Anyways, I dislike wishy washy people and this seems to be getting more traction. People waving conditions then thinking they can still negotiate/cancel deals afterwards. Shouldn't be allowed.
Some people could lose their jobs inbetween the purchase agreement (after all conditions waived) and closing date. Some situations are beyond the control of the buyers, and completely unintentional.
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StatsGuy wrote: Well the seller agreed to sell as well and now also wishes to rescind and nullify the agreement. So both parties are guilty of what you're saying
The buyer approached the seller.
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rob444 wrote: Some people could lose their jobs inbetween the purchase agreement (after all conditions waived) and closing date. Some situations are beyond the control of the buyers, and completely unintentional.
OK. That's the risk people take, isn't it? Did OP say what the reason was? Again, people are trying to get out of purchases because they just don't want the home anymore. I don't want that to be a trend.
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JayLove06 wrote: For sure which is why you don't buy without conditions. Right?
Most conditions expire relatively quickly after the offer is made. Like financing and inspection (the two most common ones), it's typical to have them expire within a week or two because that's a reasonable amount of time to get the paperwork done. But stuff still continue to evolve over the period between the agreement completing and handover of the keys. Especially these days, when people thought their jobs were stable, but suddenly they're collecting CERB for an unknown period. And suddenly the approved mortgage (which allowed the buyer to waive that condition) is no longer so approved...

C
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JayLove06 wrote: OK. That's the risk people take, isn't it? Did OP say what the reason was? Again, people are trying to get out of purchases because they just don't want the home anymore. I don't want that to be a trend.
Yes it's always a risk, but if someone does lose their job and literally couldn't close on the home even if they wanted to, it's not them being wishy-washy in asking sellers for a mutual release.

The OP didn't state what the reason was.
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CNeufeld wrote: Most conditions expire relatively quickly after the offer is made. Like financing and inspection (the two most common ones), it's typical to have them expire within a week or two because that's a reasonable amount of time to get the paperwork done. But stuff still continue to evolve over the period between the agreement completing and handover of the keys. Especially these days, when people thought their jobs were stable, but suddenly they're collecting CERB for an unknown period. And suddenly the approved mortgage (which allowed the buyer to waive that condition) is no longer so approved...
Did OP state the reason? Anyways, this is only a happy ending because the seller accepted, but what if they didn't? What do you think would be an acceptable outcome?
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JayLove06 wrote: Did OP state the reason? Anyways, this is only a happy ending because the seller accepted, but what if they didn't? What do you think would be an acceptable outcome?
If the seller didn't want to cancel the deal, they could sue the buyer. The seller would usually be entitled to the full deposit amount, regardless if they re-sold the home later for even more money. If they sold for less the buyer would also be on the hook for damages the deposit didn't cover.

Those are the only 2 possible outcomes when the buyers cancel a firm deal - the seller works with them and they come to an understanding, or the buyer gets sued.
[OP]
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CNeufeld wrote: I thought it was typical that even if a BRA wasn't signed before the agent starts showing a buyer properties, it WOULD be done when an offer was submitted. Is it possible your relative lost/misplaced/is confused on signing another document?
It's possible, all of the signing of documents was done through email because of COVID. I have reviewed the email correspondence between the two and don't see one. Do you have a link to an example of one so I would know what I am looking for?

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