Reader question: We have an accepted offer on a home. The home we really wanted has come down in price, and we would love to get it. Can we do this?
Monty's answer: The first consideration is to accept that going down this road will involve a cost to you to determine if it is even possible. Quickly escalate to a sharp real estate attorney (today wouldn’t be too soon). If you have no attorney, here are some tips about finding one.
Here are 3 scenarios
- A legal review of the contract that determines you can cancel the contract legally without the risk of deposit forfeiture or a specific performance action by the seller.
- If scenario one is not possible, go to the seller and ask them if they will agree to negotiate a cancellation agreement with a payment of "x" dollars, subject to you securing a contract on "Home B." The real estate agents must agree to waive their right to their commission if the seller agrees. Be prepared for a "no" answer. They may have made other financial commitments, or have other reasons. On the bright side, people have "seller remorse," or could relate, and say "yes."
- If you can and will take on the additional financial risk of owning two homes, and a lender will grant you another mortgage on the home you missed earlier, you may be able to buy it, and sell the home you are in the process of buying. Before proceeding, even if you have the financial ability to do so, read about the risk of owning two homes. A variation on this scenario is to turn the current home under contract into a rental investment if it makes economic sense.
Be careful what you wish for
Real estate transactions can get complicated when one of the participants wants to change direction. The "Home B" price reduction may produce additional buyers. Your attorney can advise you on the correct order to proceed.
Lastly, hindsight is always raising its head in real estate. While it may be that you now believe the other home is better suited for you, it may not turn out that way. At some point, your quest may dry up, and in the future, you will exclaim "Are we ever glad we stayed on course."
Richard Montgomery is the author of "House Money - An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home." He advocates industry reform and offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty.