FORFEIT YOUR DEPOSIT WHEN YOU CANCEL AN AUCTION PURCHASE
We received the following email asking for advice.
Desperately need help!
I'll avoid the REDC like the plague in the future, but I recently 'won' a bid on a property.
The typical 20 day phone call upping the price: Is the buyer under contract to pay a higher amount at REDC's request? Or can I insist I get my earnest $ back if they try to up the price?
To make matters worse, I 'inspected' the property before the auction but didn't get an official inspection done - didn't realize REDC would try to stop an inspection after the auction. I thought it was standard procedure to have the inspection done during the financing phase.
Is there any way to get this after the auction or will I just end up losing my earnest money?"
It seems that at least one time each week, we are contacted by an unhappy real estate auction purchaser that wants to be released from a purchase agreement and would like to receive a refund of the deposit. In this case, we responded that he should be seeking this advice from his buyer agent. Then, he advised that he did not use a buyer agent.
When you plan to be a bidder at a real estate auction, you should carefully read the terms and conditions of the sale. And, for most, it is a good idea to be represented by a buyer agent that is familiar with the auction process. The REDC auctions require a 5% deposit. That can lead to a substantial loss if you change your mind when you obtain more information on the property you have purchased. If you did not have all of the knowledge that you need before the auction, it may be much safer not to be a bidder.
We do not know what will happen in this case. We do know that this situation could have been avoided with advance research and planning.
We represent home buyers and sellers as their exclusive agents in the Maryland suburbs of Washington DC.
Roy Kelley & Associates
Associate Broker, RE/MAX Realty Group
Client Assistance: 301-670-8996
Recipient of the RE/MAX International Lifetime Achievement Award - 2008