Q: When I tried to buy a vacation home in Westchester County, I was surprised at what appeared to be a common practice that the seller would not sign the contract until the buyer had signed it and paid a deposit. I view this as the opportunity to lock in a deal with the seller by signing the contract – or buy the offer to get a higher purchase price. The agent even relisted the property at a higher price 72 hours before transferring my deposit. That doesn’t seem fair. Is there anything buyers can do to avoid this?
A: The seller has a lot of power in these transactions, and sometimes it can go wrong for the buyer. Of course, a contract that is only signed by the buyer does not mean that the transaction is a done deal.
“As surprising as it may seem, this is the practice,” said Richard Klein, who practices real estate law at Dorf Nelson & Zauderer in Westchester.
While sellers have the right to cancel before signing a contract, Mr Klein said most sellers move forward with an accepted offer and that it is unusual to re-list the same property at a higher price. “I agree it doesn’t seem fair,” he said. “Why would you risk losing a buyer who you know is moving forward?”
Mark Siwiec, owner of upstate real estate brokerage Elysian Homes, agreed that it is common for buyers to submit an offer with their signature. The sellers then respond by accepting the offer or contradicting it verbally or with their signature. If buyers accept the counteroffer, the deposit – which proves their intent to purchase – is usually due within 48 hours of both parties’ written acceptance of all terms and conditions, Mr. Siwiec said.
However, there are some protections for buyers, including contingencies that allow the buyer to walk away without losing a deposit and consequences for the seller’s lawyers not refunding a deposit if a deal falls through. “If the seller hasn’t fulfilled the contract but the buyer has paid the deposit, the buyer should get the full deposit back,” Mr. Klein said.
Under New York state law, if the buyer signs a counteroffer and an agreement is reached to buy out the seller, the buyer’s attorney still has the right to back out of the deal within the number of days specified in the contract, Mr. Siwiec said.