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Comment by bitshiftfaced | Hacker News Reader

> Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out.

In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.

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This is only possible in a slow market.

Right now, in DC metro, all contingencies are being waived, bids are $100k+ over list on moderately priced homes, and the seller is demanding a 2-month free "rent" back from the buyer.

Both my home purchases have waived inspection. The second waived financing contingencies as well. This isn't uncommon, based on what friends and family have done.

I wouldn't say a "slow market." I'd say a "normal market." The market right now is anything but normal.

You can still back out of the deal but you will typically forfeit your deposit or earnest money (sometimes in the $10’s of thousands). But I hear you with the seller’s market - we just purchased a couple homes in the Austin area, bid significantly over asking price, waived all contingencies, and offered free 2-month rent back.

I discussed this with our realtor: forfeiting your full 3% earnest deposit is apparently rare. It’s not automatic, and when somebody backs out due to a non-contingent reason, it’s usually for a fraction of the full earnest deposit. (At least, that’s for the SF Bay Area.)

in really hot markets the seller often does BETTER if someone backs out and they move on to the next set of buyers. It's not worth the trouble to try and collect, which is not a gimme. The deposit is not a formula but more convention and an amount that demonstrates good faith. You want to get back on the market and not mess around to maybe capture 5 grand gross.

Yeah, I can imagine if it’s for a legit reason (especially in a hot market like the other poster pointed out), the seller would probably try to work something out. I would feel like a jerk if I took someone’s $10K and then turned around and sold my house the next day.

In Canada this is called conditional on inspection and it’s a permitted clause in a sale. The problem is the minute you have multiple buyers there is overwhelming pressure to remove conditions that can make the sale fall through because the seller is more likely to take an offer that gives them a guaranteed sale.

In Canada inspection contingencies only protect the buyer for major problems, and definitely aren't a "get out of jail free" card... I haven't seen anyone be able to back out after inspection in the last handful of years. Hell, we're having trouble even getting an inspection contingency to stick as people are more and more often foregoing that in hopes of getting their bid in.

Only time I ever used this was a wood foundation was found on inspection for a home we conditionally purchased listed as a concrete foundation. There was nothing wrong with it based on the inspection but I wasn't comfortable so we backed out. Every other case we've used the inspection to get concessions on mechanicals and roofs that needed replacing but I don't think we'd get the inspection or price reduction on an offer today.

As a buyer, you can try and write whatever contingencies you want into a purchase contract. In supplier markets like most right now they'll just refuse them. In a slower market where "simple" purchases are not so typical, offers with few or no conditions are often the difference maker, or even worth a slightly lower offer price to the seller. Even with a conditional home inspection "a hundred little things" typically won't disqualify the deal; the inspector will be looking for larger single issues that are up closer to 1% of the price. In reality sales don't often fall through unless something is extremely major or misrepresented; the inspection is used by the buyer to promote price concessions and help them deal with the stress of such a massive purchase. Inspectors miss important stuff all the time, which isn't surprising when they're spending only a few hours for an entire home.

> The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.

But that’s a very well known risk. An agent will have a whole checklist of things to look at before putting a house on the market to minimize that risk. Also, buyers lose at least some money if they back out, there’s a nominal sum put up that you don’t get back if you decide to not buy once the process is started.

In my NY suburb, you do the inspection before the contract is signed. No money has yet changed hands, and it can be a point of negotiation or just walking away.

That gets expensive at $400-800 inspection fees for any house you want to put an offer on.

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