.

SmartMoney Blogs

Real-Time Advice
Our real-time advice on how market shifts and news impact you and your money

Canceled Contracts Dog Real-Estate Recovery

A housing recovery may be underway, but there’s an obstacle that appears to be slowing down the rebound: the unusually high number of buyers who walk away from their contracts.

An average of nearly 18% of signed contracts on existing home sales were canceled during the three months ending July, according to data released this month by Capital Economics, an independent research firm. That’s the highest all year and the most since May 2010, when that figure reached 23%; in the five years before the housing slump started, the average never went higher than 10%. Separately, 36% of realtors are reporting some kind of problem with a contract, including cancelations, delays and renegotiations of the sales terms, according to August data by the National Association of Realtors. That’s up from 30% earlier this year.

The latest setback comes as home sales are rising. Existing-home sales increased 7.8% in August from a month earlier and rose 9.3% from a year prior, according to data released this morning by the NAR.

Ironically, the recent pickup in home sales is contributing to rising contract cancelations. As more buyers compete over a limited inventory of for-sale homes, some are bidding aggressively to get the seller’s attention, but not assessing whether they truly want the house until they’re in contract, says Bryan Sweeley, a real estate agent in Silicon Vally, Calif. with ZipRealty. This strategy could make it more likely that buyers will walk away from homes if red flags are raised in an inspection or the appraisal, he says. As we previously reported, appraisals have been derailing home sales in cases when the appraised value of the home comes in lower than the purchase price the buyer and seller had agreed to.

Tight lending requirements are also contributing to contract cancelations, says Paul Diggle, property economist at Capital Economics. As more buyers move off the sidelines to purchase a home, they’re finding they can’t qualify for a mortgage, he says. (Data from the Mortgage Bankers Association shows that mortgage applications for home purchases have been relatively flat most of the year with some increases posted in recent months.) While buyers are encouraged to get preapproved for a mortgage before making an offer on a home, it’s not a requirement. But skipping this step opens them up to the possibility of being denied a mortgage on a property that they’ve already entered into contract on.

To be sure, contract cancelations don’t necessarily mean those buyers are leaving the market, experts say. In some cases they’re making offers on other homes or working on a new contract with new terms on the same property in question.

Still, for sellers, canceled contracts can range from a slight nuisance to a major setback. In most cases, they extend the time sellers spend trying to unload their home. It may also set them back financially if the seller has moved out of the property in anticipation of the buyer moving in.

But it’s buyers who can incur the biggest financial setback when walking away from a contract—which can include losing the deposit they’ve paid on the home. Upon signing the contract, buyers typically put a small percentage of the purchase price down to be held in escrow. Paul Howard, a buyer’s broker in Cherry Hill, N.J., says buyers should ask their agents to include contingency clauses in the contract that state the buyer can walk away from the home if financing falls through or if the inspection or appraisal of the home isn’t satisfactory. (Some transactions might require additional contingencies.) In most cases if they abandon the deal based on a contingency clause in the contract, buyers should be able to get their deposit back.

Comments

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (2 of 2)

View all Comments »
    • By WebOsPublisher

      antiprism: Antiprism
      .ygrp-header .body a
      font-size: 11px;
      font-weight: 700;

      antiprism : Message: ico bit
      #yUnivHead divclear:none; Skip to search. New User? Register Sign InHelp Make Y! My Homepage Yahoo! Close this window To make Yahoo! your homepage, Drag the Yahoo! logo to the ‘Home’ icon on your Firefox Toolbar Notifications Help Mail My Y! Yahoo! .yuhead-logo h2 width:244px; height:32px; background-image:url(l.yimg.com/rz/uh/logos/nor/en-us/groups-092012-us.png); _background-image:url(l.yimg.com/rz/uh/logos/nor/en-us/groups-092012-us-484852.gif); .yuhead-logo a width:244px; height:32px; .yuhead-logo div.yuhead-comarketing width:244px; Yahoo! Groups Search Search Web Breaking News Visit Yahoo! News for the latest. ×Close this window
      antiprism
      .usrinfo-button
      padding: 1px 0.3em;
      text-decoration: none !important;

      .vertical_bar
      width: 1px;
      height: 15px;
      background-color: white;

      Home
      Messages
      Links
      Members Only
      Post
      Files
      Photos
      Members
      Calendar
      The Yahoo! Groups Product Blog
      Check it out!
      Info
      Settings
      Group InformationMembers: 65 Category: Geometry Founded: Nov 2, 2006 Language: English
      Already a member? Sign in to Yahoo!
      Yahoo! Groups Tips
      Did you know…
      Hear how Yahoo! Groups has changed the lives of others. Take me there.
      Messages
      Message #
      Search:
      Advanced
      Messages Help
      .menuContent
      font-family: arial; font-size: 11px !important; font-weight: normal;

      .msg-newfont
      font-family: arial; font-size: 11px !important; font-weight: normal;

      .msg-disabled
      color:#8A8A8A;

      .msg-bg
      background-color:#E7EFF7 !important;

      .msg-bd
      border-color:#E7EFF7 !important;

      .msg-button
      background-color: #E5E5E5;
      background-image: url(“l.yimg.com/a/i/us/cmty/ab_inactive.gif”);
      background-repeat: no-repeat;
      border: 1px solid #A6A6A6;
      color: #404040 !important;
      font-family: arial,helvetica,sans-serif;
      padding: 1px 0.3em;
      text-decoration: none !important;
      cursor: default;

      .msg-button-disabled
      background-color: #E5E5E5;
      background-image: url(“l.yimg.com/a/i/us/cmty/ab_inactive.gif”);
      background-repeat: no-repeat;
      border: 1px solid #A6A6A6;
      color: grey !important;
      font-family: arial,helvetica,sans-serif;
      padding:1px 0.3em;
      cursor: default;
      text-decoration: none !important;

      Topic List
      < Prev Topic
      |
      Next Topic >”);
      // –
      Next Topic >
      ico bit
      < Prev
      Next >
      Posted By:
      swdharmraj
      swdharmraj
      Offline
      Send Email
      Sun Jan 29, 2012 2:09 pm |
      Options
      View Source
      Use Fixed Width Font
      Unwrap Lines
      members.westnet.com.au/dharmraj/vrml/IcoBit.wrl
      members.westnet.com.au/dharmraj/jpeg/IcoBit.jpg
      Phi scaling is pleasing to the eye. This reminds me of a drill bit. Spin it in
      wrl.
      Believe this to be 1/12 of self generating star icosahedron.
      dharmraj
      < Prev
      Next >
      var ygrp_p = new yg_cookie();
      function set_gmp(p) if (p == “”) ygrp_p.remove(“GMP”);
      else
      ygrp_p.set(“GMP”,p);

      function clear_gmp()
      ygrp_p.remove(“GMP”);

      Expand Messages
      Author
      Sort by Date
      ico bit
      members.westnet.com.au/dharmraj/vrml/IcoBit.wrl members.westnet.com.au/dharmraj/jpeg/IcoBit.jpg Phi scaling is pleasing to the eye. This reminds…
      swdharmraj
      Jan 29, 2012 2:09 pm
      Re: ico bit
      Hi dharmraj … The mid sections are like 5/2-cupolas antiview cup5/2 Binding one of these onto a pentagonal antiprism, taking the convex hull and adding…
      Adrian Rossiter
      adrianrossiter
      Jan 29, 2012 7:02 pm
      Re: ico bit
      … v … Hi: Thanks. I was really delighted to see your expanded version. I did have the thought that such a sequence could be replicated quickly with a…
      swdharmraj
      Jan 30, 2012 10:01 am
      Re: ico bit
      Hi dharmraj … It is interesting that the stacked tapered antiprism construction crops up in several places. Holden has a model based on half-cuboctahedra in…
      Adrian Rossiter
      adrianrossiter
      Jan 30, 2012 2:41 pm
      Re: ico bit
      … I was reviewing the spidron program this morning. The Holden stack can be seen as involving one form of antiprism, the convex hull of the 5/2-cupola. It…
      Adrian Rossiter
      adrianrossiter
      Feb 8, 2012 11:24 am
      Re: ico bit
      … I don’t seem to have mentioned anywhere that the spidron units will pick up the colour of the edges on the base model, Which can make some nice coloured…
      Adrian Rossiter
      adrianrossiter
      Feb 8, 2012 1:19 pm
      Re: ico bit
      Hi Adrian, … I always thought the spidron program is an under rated program in Antiprism. If it is like my build, the src_extra goes into bin so spidron…
      Roger Kaufman
      vortexswirling
      Feb 8, 2012 4:34 pm
      Re: ico bit
      Hi Roger … I left the directory part in by mistake. I don’t have Antiprism installed but my PATH includes the development version ‘src’ directory, but I…
      Adrian Rossiter
      adrianrossiter
      Feb 8, 2012 4:40 pm
      Re: ico bit
      Hi dharmraj … It is also possible to bond these on the inside faces of a great dodecahedron, which is like having the base antiprisms as the central sections…
      Adrian Rossiter
      adrianrossiter
      Jan 30, 2012 3:56 pm
      Re: ico bit
      This was posted at the polylist: ____ I personally find it surprising that the regular pentagonal dodecahedron is one of the cells. I have shown with 3…
      David Koski
      dbkoski
      Jan 30, 2012 7:56 pm
      Re: ico bit
      Hi David … You might be interested in Desargues’ story. Even with Fermat praising his work his ideas were generally overlooked for a hundred years. The…
      Adrian Rossiter
      adrianrossiter
      Jan 31, 2012 8:42 am
      Re: ico bit
      … Hi: I like that graphic. My geometric vocabulary is primitive in this arena. I think what I am calling a star icosahedron is named stellated dodecahedron …
      swdharmraj
      Jan 31, 2012 11:37 am
      Re: ico bit
      - … Hi: Working on the graphic tonight and I see that there is some error in my description and thinking. It is not such a simple Phi jump from Icosa to…
      swdharmraj
      Jan 31, 2012 2:23 pm
      < Prev Topic
      |
      Next Topic >
      SPONSOR RESULTS
      Share Large Photos Fast
      sendyourfiles.com – Share photos up to 10GB with anyone. Its fast, reliable and fun. Try i
      Stock Information
      business.com – Search for the right source to help manage your company’s investments
      Virtual Reality Products
      VRealities.com – Huge selection of affordable virtual reality systems, headsets & more!
      Copyright © 2012 Yahoo! Inc. All rights reserved.Privacy Policy – Terms of Service – Copyright Policy – Guidelines NEW – Help

About Real-Time Advice

  • How breaking news — in the markets, Washington, and around the world — affects you and your money. Have a question about how current events may change your financial future? Email us at ask@smartmoney.com.

.