Can a home seller back out of a contract to sell their property? The short answer is yes – under certain circumstances. In fact, it’s not uncommon for homeowners to get cold feet and want out of a real estate contract.
However, the choice to back out of a purchase agreement may come with added expense and potential legal consequences. Sellers who want out of an existing real estate contract are advised to do their homework up-front and recognize that time is of the essence if they wish to save on steep legal fees.
For example, some property owners may wish to backtrack for sentimental reasons. Others may sign a real estate contract only to determine in short order that deal terms and deadlines don’t seem as attractive as they’d initially thought at a second glance. Whatever the reason for these reservations, when faced with the prospect of selling their house, a property owner may ultimately be unwilling to part with a piece of real estate. Should you find yourself in this scenario and wish to back out of a deal, though, it’s important to act swiftly and maintain compliance with the terms of your agreement to avoid legal complications.
In effect, after signing a contract, both the home buyer and seller have a 5-day attorney review period to back out of the agreement without consequences. Select contingencies might offer a way out of the agreement for a limited time period as well. Afterward, canceling a real estate contract can be an expensive, drawn-out legal process – and with good reason.
After all, when buyers back out of a real estate contract, they face the potential loss of earnest money deposits paid to help secure the property, which often totals 1% – 3% of the total home purchase price – no small sum. As a similar show of good faith, sellers (who do not put down an up-front deposit on these contracts) instead agree to be bound by rules and terms which provide buyers with measures of equal security on the back end.
Reasons Sellers Want To Back Out
As above, on occasion, sellers may wish to back out of a signed real estate contract – and reserve the right to do so in select instances, provided that they legally comply with the terms of the agreement.
If you’re a home seller, perhaps several hesitations have already begun to cross your mind. Common reasons among many why home sellers may wish to back out of an accepted offer on a purchase agreement include:
- Emotional attachment: It’s not uncommon for sellers who’ve lived in a home for a long time, or experienced major life events while residing there, to get cold feet for sentimental reasons.
- Unexpected events: A sudden illness, a job offer that falls through, or any one of a number of other unforeseen happenings can derail even the best-laid plans.
- Appraisal concerns: Should a property appraisal come in under the expected offer price, a seller may not wish to lower this price, or negotiate its terms, and prefer to cancel the agreement instead.
- Lack of housing: Sellers often list properties before they’ve identified and purchased a new home that meets their individual household’s needs – and may have trouble finding one in time to meet the terms of the accepted offer.
Posted by Guy Amato on