When should you walk away from an escrow?

I talk to many buyers who show some hesitation when writing an offer. I think they are worried that they will be stuck with this home, and are trying to make a decision about such an important purchase in the 15 minutes they were in the home. How can anyone be expected to do that?

Buyers need to understand that writing the offer is only the first step to determining if this is a good purchase. I like to tell my buyers that purchasing a home is a series of "yes" answers as we move through the process. As soon as we hit a "no" we close escrow and move on. My buyers and I are on the same side....we are both hoping this is the right home, but if it's not, let's go find the right one!! The fear is that the agent is so invested in making the sale that they will push you into a bad deal....if you think that about your agent, then find a new agent!! A great agent should be concerned about the well-being of their client and thus earn their business for life.

So as we enter the escrow, there are important discovery elements, any one of which could be a deal breaker. The two most important are the home inspection and the loan. In this market, you might add a third to tha,t which is the appraisal. The last thing we want to do is purchase a home for more than it's worth, and the appraiser will give us that information. If it comes back low, we can go back and renegotiate the price.

There seems to be a misunderstanding about the contingency period. With so many homes listed "as-is," many buyers are under the impression that they have to accept the condition of the home once they make the offer. This is not true. Regardless of whether this is a seller with equity, a foreclosure, or a even short sale...we can always ask for concessions based on what we find in the home inspection. What if the home inspection uncovers toxic mold? or a slab leak? or dangerous electrical wiring? Are we going to buy this home only to have major repairs when we walk in the door? Maybe, maybe not. The home inspection is to find out the condition of the home so we can determine if it's a project we want to tackle. Or not....if not, let's walk away. Most major problems can be addressed in escrow and we can get money or repairs done. If not...then let's move on.

The other major misunderstanding buyers have is concerning the loan. You are not obligated to ANY loan you can get. California purchase offers include loan conditions right on the front page. We tell the seller up front what kind of loan we want to get. They accept or reject these terms. While sub-prime loans are gone, loans do vary in interest rates and terms. You will work with your lender to find a program that fits your budget. If you can't find a loan you are comfortable with, we move on. Interest rates and loan programs change constantly, and interest rate available in the morning could be gone by afternoon. Until you have final loan approval on a loan you like...we don't remove the loan contingency.

Lastly....I would like to stress again...you are trying to decide if this is the perfect home for you and your family often with a 10-15 minute visit to the house, often after seeing 5-8 other homes the same day. A home you thought was perfect at 5pm on Saturday afternoon, might be wrong on Monday morning when the rush hour traffic races past the backyard fence. During the contingency period, we need to visit the home often. Find out if the afternoon sun is too hot in the kitchen, is the master bedroom dark in the morning, traffic noise? school noise? All situations that might cause you to reconsider the home. And there is always the panic attack....yep, it happens :).

There is alot to do after you have an accepted offer! There will be times when things just don't fit! I would suggest that you walk away when you realize you are forcing a deal! There is a lot of inventory right now and you don't need to settle.