Canceling Your Real Estate Contract – What to Expect When Backing Out of a Deal

Canceling Your Real Estate Contract – What to Expect When Backing Out of a Deal

As a buyer who has gotten an offer accepted
on a house, can you back out of the deal at the last minute? And if so, what might the
consequences be? Roeleen recently posted this question on the
Trulia Questions and Answers board and I saw some good answers but I thought I might chime
in on this one so here’s my take on it. When you, as a buyer, are contemplating whether
you can back out on a deal after the contract is already been signed, you can pretty much
rest assured that answer most likely is “Yes”. It is rarely the case that a seller is going
to try to take you to court to force you to buy their house. Their main objective is to
actually make a move which mean that it’s just easier and faster to go ahead and place
the house back on the market want to move and it’s just easier and faster to put a house
back on the market and find another buyer than try then to try and sue for performance.
The contract that you signed may actually specifically exclude them the ability to sue
you for this anyway. How you go about exiting your contract is
going to come down to a few things. The fastest and easiest way that most people do so is
by exercising what is known as an inspection contingency. Most contracts are written in
such a way that you are given a provision that if the house for whatever reason doesn’t
measure up to your quality standards then you’re going to be able to go ahead and exercise
your right to exit the contract um without penalty. There is usually a time window associated
with this though and that means that you’re gonna want to make sure that you fall within
that time frame when putting in the request to exit based on your contingency. So also
you’ll want to talk with your agent that you were working with because there might be some
other things in there that you need to do in order to fulfil the requirements like possibly
um hiring a home inspector and basing your decision to back out of the deal specifically
on what the home inspector said about the house or what they discovered in the house
or something like that. If you did not include an inspection contingency
to begin with or if you a the time period has passed when you can exercise that contingency
or if you’ve already gone ahead and signed off saying that “Yes we’ve inspected the home
and it met our standards and it’s fine” but now something in your life has changed and
you decided that you still need to go ahead and exit the contract then once again the
best route to go is to speak with the agent that helped you submit the offer initially
to find out if there are any other contingencies that you can that you can exercise like a
mortgage contingency possibly or um you know whatever else might be in that contract that
they can help you to use. In the worst case scenario though you may be able to back out
of the contract unilaterally. And what this means is basically that you breach the contract.
I don’t really suggest this unless it’s a last resort because there are consequences
associated with that. If you do not have any type of “get out of
jail free” type of contingency that you can rely on then you’re pretty much going to need
to make a decision about whether or not you are just going to go ahead and purchase the
home or whether or not your are going to walk away and wave your right to the earnest money
deposit. You see the earnest money deposit is there
to demonstrate your sincerity and your seriousness about buying the house at the time you made
the offer. After all, when you initially made the offer, what you were basically saying
was, “I want to buy your house. I’m serious about it. Here’s an offer and some money to
back it up. And if I decide not to buy the house in the future then you can keep the
money as recompense for your time and trouble.” While your loss will most likely be limited
to the earnest money deposit itself, the actual details about what you are liable for will
be spelled out in the contract itself which is why I, once again, I suggest as soon as
you can, go over that contract line-by-line with the agent who helped you submit the offer
so that you can find out what all you are on the hook for. Thanks for watching this video and I hope
it was able to give you some perspective on the issue at hand. Remember that anybody can
go ahead and give a thumbs up to any answer they thought to be helpful so don’t forget
to vote. And Roeleen, once you’ve had a chance to review all the answers make sure that you
stop back by and select one of them as the BEST ANSWER. This actually goes ahead and
encourages other members of the community to continue to answer questions and put forth
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search for the perfect home.

3 thoughts on “Canceling Your Real Estate Contract – What to Expect When Backing Out of a Deal

  1. If you have 21 day contingencies still & its past like 4days only and loan hasn't gone tru yet but soon will per lender. If seller cancels can buyer get earnest money bck or if seller ask to remove contingencies mean you automatically loose your earnest money?
    CA state

  2. If I have signed a purchase agreement with the intent of putting 5k in earnest money in but I have to back out a day after signing the agreement and before I have paid any earnest money. Do I have to pay and lose the earnest money?

  3. I have a dumb Question, a friend of mine backed out of buying a home because of certain circumstances, but now would like to buy the same home. Can he still go back and buy it?

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