Is it reasonable to pull out of the contract?

[Vincent Gizzi]

We did a live-in flip and went under contract with a buyer on March 21st. Under contract for 119.9k. We haven’t closed on the house. It sounds like the bank has not approved the buyer’s loan for financing. They added a second buyer because they can’t get approved by the bank (speculation). Our realtor tells us the bank has been requesting more documentation from the buyers.

We are still paying the mortgage (which we should get back in equity), mortgage interest and utilities for the property for the last 2 months and we don’t have a closing date yet. Our realtor has been advising us to keep the utilities on.

My questions are. Is it best to only work with buyers who are pre-approved? Are there any laws against this? Are you allowed to request pre-approval documentation from buyers before going under contract? What can I do if this continues to carry-on for another month? What questions should I be asking my realtor?

[Wayne Brooks]

You should Never sign a contract with a buyer without a preapproval, even though some are useless. Your agent should have advised you of this....no legitimate buyer agent will even work with a buyer without one. 
As for your buyer....it’s a gamble whether to wait a little longer or cut bait.