What Happens To Our Deposit If We Can't Get The Loan?

Worried about a probate purchase.

I got a call from a buyer who was in a probate sale with court confirmation. She was very worried about the deposit.

Her: What happens if someone outbids us in court?
Me: You get your deposit back.

Her: What if we can't get the loan?
Me: Did you remove your contingencies?


Her: There were no contingencies.
Me: Well then your deposit is at risk.

Her: We own another house.
Me: OK.


Her: Well we might not qualify for the loan.
Me: That should have been determined by your lender when you were pre-approved.

Two things that should be pointed out here:

1. You can make an offer on a probate sale with court confirmation WITH contingencies. However, the contingencies must be removed before petitioning the court for confirmation. Removing the contingencies locks your deposit money in the transaction, like in a regular sale where you have removed your contingencies. It might be possible to back out if you've lost your job, or your getting divorced. Reasons like that might work.
2. The court confirmation means that you've gotten the house and it further obligates you to purchase the house. Getting out at this point is very difficult because now a court is involved and that means it's more complicated.
   

It's OK to bid on probate sales as long as your tolerance for risk is moderate to high. It should be OK if the situation is assessed properly and entered into with caution. Cash purchases are best as they don't require bank loan approvals.

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