So it seems just two days after the whole leaky situation and the offer to purchase, the seller has decided to back out. Interestingly, I thought the likelihood of the transaction not going through would be due to the purchaser not wanting to proceed. But turns out it’s the seller who decided that with the extend of work needed to fix the place up, the sale would not be profitable, plus due to some turn of events, the seller decides they may now want to personally use the unit.
Now of course we have to remember that the offer to purchase has already been signed, and if one party or the other decides to back out, there should be a penalty. But in this case, this offer letter had two main clauses that needs to be seen through. One being the acceptance of the purchaser of the unit’s condition, and secondly, the ability of the purchaser to get 90% margin of financing.
As it turns out that the purchaser was also having second thought on proceeding with the transaction. Of course the purchaser has the prerogative to see the condition of the unit and then decide if he wants to proceed, but that would take time. And that step would be unnecessary if he has decided he doesn’t want to proceed. The purchaser then asked me if they have any claims from the seller.
I explained that there are two main clauses that they need to fulfil to be able to make claims. They need to agree to accept the condition of the unit, and then to have the loan approved with a margin of financing of 90%. Only if the seller refuses to sell after that point, can claims be made. But on the flip side if once the loan has been approved and they decide not to take the unit, their deposit will be forfeited.
Both parties finally decided not to proceed with the transaction, and a letter will now be drafted to indemnify both parties from any claims from each other and to have the deposit returned to the purchaser.
I was thinking if I made a wrong decision to encourage or to facilitate the offer to purchase. If I had not, I wouldn’t now have the trouble to undo the transaction, and so quickly too. Yet what’s done is done. And I know there is much to learn from ‘failures’ as well as successes.
Ideally every offer to purchase would lead to the signing of the S&P with full consent from the relevant parties, leading to the release of commission. But not every situation is ideal, and sometimes we just have to close the deals one step at a time. One thing for sure, if there was no offer to purchase, there would definitely be no further steps. So no regrets, sometimes things just don’t work out. But one thing I’m glad is that both parties could come to an agreement with no ill feelings. And that alone is something to celebrate.