Thursday, March 31, 2011

Contingency & Good Faith Deposits

A fellow blogger is experiencing some issues with being on "contingency" and questions have come up about her good faith deposit.

Here's my experience with this. I never wrote about this in my blog prior to this because, well, it's kind of embarrassing!! We signed a contract with Ryan Homes and then walked away from the deal 7 days later. I got cold feet. The suddenness of the deal and range of emotions surrounding it had my head spinning. We weren't even looking for a house when my husband decided to spring the idea on me and drive to the development he had heard of. My GFD was not cashed. The check was promptly returned to me in the mail. It was for $1,000.00. Had we gone through with the deal we were expected to give them 3.5% of the current (before all the upgrades and changes you make) sale price 30 days later, which was an additional $5,600.

Almost exactly a month later we went back to Ryan Homes and resigned a contract and went through with the deal. We were also told about the "contingency" option, but we qualified for the loan and didn't fall into this category. To the best of my knowledge, contingency is when you and/or your spouse/partner/etc. do not qualify for the loan because of your current financial obligations (example, you currently have a mortgage so you don't qualify to have 2 potential mortgages). We actually took someone's lot who was on the contingency plan.That person then gets to pick another lot and could potentially be bounced from lot to lot until his/her financial situation changes and they are able to qualify for the loan.

Hope this helps!!

**Oh and my little surprise I mentioned a few posts earlier for our 1 year anniversary tomorrow in our home may be put on hold because of the weather here - check back!**

3 comments:

ACP said...

I was wondering if NVR had options for folks that don't get approve. This is good information.

lynnie said...

Hi Amy,

Great blog. So they were understanding and let you back out of the contract after seven days? I'm 21 days into my contract but am having some buyers remorse and was thinking about backing out. But I put a 10% deposit down already!

Mike said...

Hi Amy,

Great blog. So they were understanding and let you back out of the contract after seven days? I'm 21 days into my contract but am having some buyers remorse and was thinking about backing out. But I put a 10% deposit down already!