I find it hard to believe, to be honest.
Aren't there any ways in Australia to make selling of a house "atomic", with ownership transferred the same moment the money are transferred? Or they just move there without having ownership?
I have no comment on the prevalence of this behavior, but I don't think it would be impossible. There's multiple levels of agreement (offer, purchase and sale, closing), many of which are conditional, and if a buyer backs out late in the process it can put your property back on the market for a long time and lower its price due to real estate magic, plus you could lose the new property. Selling my home to buy another while holding a full time job while my real furniture was in storage and replaced by staged furniture was one of the most exhausting things I've ever done in my life.
>if a buyer backs out late in the process it can put your property back on the market for a long time and lower its price due to real estate magic, plus you could lose the new property
Hopefully one would be able to sue and reclaim the costs of the renovations afterwards. But I have little knowledge in that area, especially in Australia. I was only commenting on how the situation was not atomic and how such a scam could happen in the first place.
How would you make it "atomic", unless you have a cash deal; which is rare and likely nets you a worse price (at least in the US).
In NY, the standard is roughly that after signing a contract the buyer writes a check for 10% of the purchase price to the seller's attorney in escrow. This is typically done after a home inspection, but you still have mortgage and potentially other contingencies. If the buyer backs out for a reason not stipulated in the contract, the seller is entitled to the 10% escrow as damages - but that is not going to happen without litigation. If the seller tries to back out, the buyer will have a lien on the property.
Every state and every transaction can be different, but once you get far enough along, it is generally in your interest to have the deal close. If not, you're going to start a months long process pretty much from scratch.
Someone asking for an addition though would be well beyond what is reasonable; and I can't imagine any seller actually agreeing to that.
In Europe we have laws that make it atomic in effect. The money the contract is signed, the deal is closed, the ownership transfer is made and the money is owed and can be demanded through the justice system if the other party doesn't pay up. Having evidence of the state of the house during the signing of the contract (ideally attached to the contract itself) is enough.
