Can You Walk Away From a Deal Just Because the Market has Shifted? - Market Tuesday EP_7
The John Papaloni Show
English - May 24, 2022 09:00 - 5 minutes - 4.81 MBBusiness Homepage Download Google Podcasts Overcast Castro Pocket Casts RSS feed
Can You Walk Away From a Deal Just Because the Market has Shifted? - Market Tuesday EP_7
You bought a house in February and Closing Date is this Friday, You bought the home for $1,000,000 with a $20,000 deposit. The market has been in a bit of a shift and now you think that the home will sell for no more than $950,000 so you want to either renegotiate or walk away from the deal. Can you do that?
Short answer is NO, doesn't mean that people haven't tried and/or some have been successful doing it. The danger goes beyond the 20K deposit, what can happen is that the sellers may be forced to resell the property, if they get less than your offer they can as a result sue you for the difference plus ask for compensation for damages.
My example in the video, if they got 950K reselling the property, they take you to court and sue you for the 50K loss plus 30K in damages, you can actually end up being out of pocket 80K and have no house to show for it. It's a scenario that has happened in the past, the damages and loss ended up being over 200K, that buyer ended up paying 200k and ended up with no house.
There has been scenarios where the seller actually sells the house, gets 1,040,000 as an example and actually made more because you walked away.
In the end you have to stop looking at a real estate investment as a "Today" decision and look in the eyes of a long term investment, 40+++ years of history shows that the market fluctuates up and down but averages a 6.5% annual return. This means some years the market will rise 10%, some years 3%, some years may lose 5% but when you take the average over the mortgage amortization, you generally get a 6.5% return year over year.
In general real estate doubles on average every 10 years. Close on the deal, hold on to it for 5-10 years and you will make unbelievable returns on your purchase. Obviously there's never any guarantees with investing, but looking at history over a long period of time, this has been the outcome so far.