You might be interested in an article that I wrote in 2017. Why? Because, it could happen again, right now, in 2020.
In the Spring and Summer of 2017, the real estate market has been volatile, first sharply up, then sharply down. It would appear perhaps that the market has almost levelled out somewhat.
The Spring plateau appeared to run from 22 March to 22 April.
This resulted in several issues going forward.
Buyers who already bought, couldn’t close because, they couldn’t sell their houses for the prices they were expecting to receive.
Buyers also discovered that the value of the properties they had purchased had declined.
Now, they can’t close their deals.
What options are available:
- Borrow from the bank
- Borrow from a secondary lender
- Borrow from family or friends
Assuming that doesn’t work:
- Negotiate an extension of time
- Lower the listing price of the property you have for sale
- Secure short term financing from the Seller in the form of a Vendor take back mortgage
The significant consequences of not closing include:
- Losing the deposit (for sure)
- Picking up the Seller’s loss in the sale price
- Assuming responsibility for the Seller’s expenses arising from the sale
If the Buyer, in default, is responsible for everything, then, the Buyer might as well proceed to get the deal done whatever way they can.
Brian Madigan LL.B., Broker