If you can not get a loan, don't make an offer.  Gosh I am cold.
Here is a discussion with the Queen of the Poodle Ranch.  We discuss the Commercial Financing Addendum of the Texas Promulgated Real Estate Contracts.
It stipulates the criteria and terms, which might dictates if  buyer gets return of the earnest money due to the financing terms.
The other parts discuss issues regarding
institutional third party loans,
Assumable loans
Seller financing.
It also stipulates issues regarding credit worthiness.
Commercial Financing addendum
Similar to the Residential addendum.
Paragraph A (1)
states the amount of financing. Be sure to have the same amount as the main contract Paragraph 4 which states the amount of financing,
the years of interest to be paid
and maximum % interest rate
and the years of amortization
Paragraph A (2) states maximum number of days for buyer to notify seller of buyer inability to get a loan with those loan conditions and criteria.
Therefore if the bank will not loan enough funds at a rate specified by the buyer, then the buyer can terminate get refund of earnest money.
Keep in mind that seller does not care about the buyer loan terms, but wants to know quickly if buyer can borrow the money.
If buyer does not notify seller, then the earnest money is not refundable under the terms of the Financing addendum.
For unique properties with
few comparable properties or
when buying a property with low occupancy and high vacancy or
Properties needing repairs or remodel or
Reasons not yet discovered,
It may be wise to NOT make the contract subject to nor contingent upon buyer ability to get a loan. It is a box to Not check is Paragraph 4 of the main contract. My attitude is …. If you can not get a loan, do not make an offer.
I contracted to build a one story home on two acres and the appraiser for the bank loan had to compare to homes which were two stories on smaller land.
I presented a seller of a 4 plex which did not have a kitchen in one unit and did not have a bathroom in another apartment.
I represented a seller of a commercial 5 plex and buyer tried to get a loan for a residential four plex.
Know that if a party should rightfully received the released earnest money and the other party refuses to sign the release of earnest money …. The party can file lawsuit and get the earnest money plus damages plus legal fees.
After appro one year, the title company will send the disputed earnest money to the State of Texas…. Which will release it to the buyer, upon reasonable request. Yes, it happened to my buyer client.
Paragraph B deals with assumable loans and states the lender, amount to be assumed, and date of the loan.
Para B (3) states that the earnest money if refundable if the loan to be assumed is greater than “X”.
It also says that the earnest money is refundable if the “Assumption fee is larger than “X”.
Assumption fees are normally between ½ and one percent.
Normally, the lender will require that the buyer qualify for the assumption, thus it is called a “Qualified assumption”
The amount that buyer must come to the table with is the sales price minus the balance of the assumable loan and maybe the assumption fee, if negotiated.
Paragraph C stipulated the terms of seller financing. Normally a lender will not allow together both an assumptions and seller to financing of the down payment.
It stipulated if the borrower will be personally liable for the loan.
IT stipulates who is responsible for the property taxes and insurance.
Paragraph D discusses credit approval of the buyer for loan assumption or seller financing.
And the number of days seller has to terminate if buyer is not credit worthy.