Have you noticed that some houses are still been sold in multiple offers, while others are still sitting on the market?
With the recent government announcement planning on implementing policies, increased listings and potentially lending changes have slowed the market down.
This is a serious problem for people who have purchased a home without any conditions while the market was very hot early in the year and now they cannot sell their home for the price they were expecting.
What if the buyer cannot close the deal? The buyer will probably lose their deposit. In addition, the seller may decide to sue the buyer if the seller ends up selling it for a lesser amount than originally sold. The seller may bring legal action to the buyer for the difference in price.
Another option is that the buyer may request an amendment in order to extend the closing date in order to sell their property. The seller would have to agree to the extension to the date change.
The other possibility is to assign their agreement of purchase and sale (basically selling the contract) to a third party. The new buyer would pay them back their deposit and close directly with the seller. Under the Ontario Real Estate Association (OREA) no permission is required from the Seller. However, it is always best to inform the seller of the issue as soon as possible. There may have been other buyers that the original listing agent may know that could be interested in purchasing the contract. Especially if it went into multiple offers at the time of the original sale. If a buyer who has never viewed the property would have to get permission from the seller, as they have no right to show the home.
The real estate commissions will still have to be paid on both transactions. So, in order for the original buyer to break even, they would have to sell the property for a higher amount to cover the additional cost. It would be probably best to inform the seller that buyer is not looking to make a profit, but only cover the costs to take over their purchase obligation.
The new buyer who actually will be closing the deal is the only once that will have to pay the land transfer tax.
Whenever a potential problem may arise, it is always wise to seek professional help immediately. Whether it’s financing, real estate agent, legal advice etc.
Working together to resolve the issue will help everyone in the long run. There may be other ways that a professional may help in settling any problems.
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