A home offer is a written contract signed by the buyer and the seller as a consensus to show that both parties agreed to conclude a transaction. It’s a legal document that binds both parties to the sale of the home. The home buying process is a bittersweet moment. Why? While the buyer is happy to buy one of the biggest investments of their life, the seller might be feeling otherwise.
According to a 2019 report by Zillow, one in three American home sellers cry while selling their home and 20% cry more than five times during the process. The report showed that the home selling process is more stressful than getting married or losing a job.
As shown in the report, nothing is wrong with being emotional about selling your home. The problem is how you handle the situation. This article will provide an answer to the question: How can a seller back out after accepting an offer?. The guide will show you ways to back out of a home deal after accepting an offer without consequences, the methods you should avoid, and the steps to minimize problems. So without further ado, let’s get to it!
Related: A comprehensive Guide on How to Sell Your Home
Reasons Sellers Want Out
So, why the sudden emotional changes in one in three of every home seller? Read on to know these various reasons.
Seller’s Remorse/Emotional attachment
A seller who has lived in a property for several years will find it difficult to let go. So instead of moving on, they’d like to stay on the property longer.
Disagreement with Family
If the property is family-owned, some members might be against selling the property. And if a consensus isn’t reached soon, the seller might also want an out to avoid further problems.
This 2020 report by Zillow shows that more than 70 percent of couples argue over buying and selling. So if you feel your partner is not ready for the process, you may want to back out.
Not finding a suitable home to move to
A seller can also decide to end the deal if they can’t secure a place to move to after selling their property. Because it’s one of the common problems sellers face, a contingency that favors the seller is already in place.
Can be more than a home to You
For most sellers, their property might be more than a home to them. For example, selling a property passed down from generations is like erasing your memory — and most people won’t do this.
How can a Seller Back out of a Home Deal without consequences
As you’ve learned, the only way a home purchase contract deal can fall through is: if one of the parties fails to fulfill their part of the contract. Here we’ll discuss the different ways a home seller can walk away from a deal without finding themselves in trouble.
Contingencies
A contingency clause is a loophole included in a contract document that allows either of the parties to back out if the other cannot fulfill their obligation. Like any other legally binding documents, the failure of a party to fulfill their obligation is consequential.
For example, if a seller walked out of the contract using none of the contingencies included, the buyer can sue the seller for breach of agreement and vice versa.
Generally, real estate contracts favor home buyers more than sellers. So, sellers’ contingencies are rare to find. Because of this, we’ll be discussing some ways sellers can easily back out of a deal.
- You can walk out during the Attorney’s review window. The Attorney’s review window is a 3-5-day review period where a lawyer reviews the contract before it becomes legally binding. During this period, either of the parties can decide to change or walk out of the deal without problem since it’s not yet legally binding.
- You can also walk out of a deal if you can’t find a suitable property to move to live. That also has a stipulated period. In California, for example, a seller has 17 days from the day of signing an offer to back out of a deal, to back out if they can’t find a suitable property.
Buyer Voluntarily Backing out
As you learned above, an offer is a legal contract between two entities. So if a buyer decided to voluntarily back out of a home contract using any of their contingency, the seller would be free from any legal obligation.
The question now is: what are the reasons a buyer can back out of a deal? Here are some reasons.
- If the home inspection result reveals a defect in the property and the seller is not ready to fix it, the buyer can balk.
- A buyer can also walk out if the appraised value is lower than the listed price and the seller is not ready to renegotiate the deal. This is because no lender will fund a home for more than it’s appraised.
Sign of Scam or Fraud And You can Convincingly Prove It
Another means of ending a home offer contract legally if the other two mentioned above fail is if you detect any form of fraud and you can convincingly prove it. A seller may pull out of an obligation if they feel the buyer is trying to exploit them.
For example, if you sign a contract with a fraudster posing as an investor and you have firm proof that they’re trying to manipulate you to sell your property below the market price, you can pull out of the contract.
Ways of Backing Out Every Property Sellers Should Avoid
By now, you already know the importance of an offer, the reasons sellers suddenly change their minds, and the different ways a seller can legally get out of a contract. In this section, we will discuss the other means of walking out of a contract that every seller should avoid.
Intentionally Aggravating issues with the Property
This is when the homeowner made a defect look more severe than it is. It’s a way to discourage buyers from proceeding with the purchase contract. Although intentionally aggravating the defect may not lead to any legal issues because the buyer may balk, it can be consequential in the future. According to rules in most states, once you disclose information about your home to a buyer, you are obligated t let every other buyer interested in your home know about the defect.
For example, if you amplify a roof defect more than it is because you want to discourage the buyer, you would need to reveal the same information to every buyer interested in your real estate property. And this information will also scare them away. With that, you won’t find someone interested in your home. And if you found someone ready to take the risk, they won’t be paying the market price.
Seller Intentionally Backing Out of a Contract Without Informing the Other Party
Advisably, you should avoid using this method of getting out of a deal. Why? Intentionally ghosting the other party is not only annoying, but it makes them feel cheated — they wasted time, money, and energy.
For instance, before a seller accepts an offer, the buyer is required to pay about 1-5% of the home price. Also, the listing agent undergoes all kinds of stress to list and market your property, hoping to get a commission when it sells.
With this, if you intentionally back out of a contract without informing the other parties, it might lead to the parties suing you for breaching the contract.
Consequences of a Seller Intentionally Breaching the Home Purchase Offer
To better understand why intentionally breaching a purchase contract isn’t worth it, here are some consequences. Without ado, let’s dive in!
Legal
Feeling cheated, the buyer might sue you. And most likely, the result isn’t usually favorable to the seller. Because real estate deals are generally favorable to buyers, the majority of legal cases usually end in the favor of the buyers. So, if this happens, you may be:
- forced to complete the deal
- required to pay the buyer’s legal fees
- required to refund the buyer’s 1-5% fee with an interest
- pay their temporary housing cost until they get a suitable property.
On the other hand, the listing agent can also decide to pursue a legal judgment. That means you may pay the listing fees and even the agent’s commission, which is about 5-6% of the property price.
Related: Effective Ways to Find Experience Listing Agents
The buyer placing Lis Pendens
Lis Pendens is an official notice to the public that reveals an ongoing lawsuit against a property. This notice is usually placed on the property’s title; it’s a red flag that scares buyers away. So while the case is still in court, the buyer can place a lis pendens on your property to temporarily render it worthless.
Steps to Take When Backing Out of a Property Sale
If you have a genuine reason to walk away from a contract, we’ll be discussing the steps you should take if you want to back out of a property sale.
Talk to an Experienced Legal Practitioner
If you have a genuine reason to back out of a contract, the first thing to do is: talk to a lawyer. And you shouldn’t just talk to any lawyer but an industry expert that knows much about the niche. That’s because not all lawyers have the mental strength and capability to walk you through the process.
Contact the Buyer
Another way to save yourself from stress is to contact the buyer. Instead of just backing out and annoying the buyer, you can inform them about what you’re going through. And if your reason is genuine enough, a buyer can voluntarily back out and save you the stress.
Add favorable seller’s contingencies
The stringent process of a purchase contract offer is not to make life hard for home buyers and sellers, but to ensure that both parties are satisfied with the contract. Buyer sending an offer and you as the seller countering it with an updated offer means that you’ve added your contingencies that make it easier for you to get out of any problem that occurs. This later will pay off as you can easily get out of a contract if you prefer to do so in the future using your contingency.
Final Words
As you’ve read above, sellers backing out of real estate contracts is not as easy as it allows for buyers. Although it’s possible, it requires patience and wisdom to navigate because any mistake can land you in problems with huge monetary and emotional stress.
Furthermore, if you need an easier way to navigate home selling, Mashvisor can help you tackle the process in an effective and efficient manner. To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.
