Can a Seller Back Out of a Home Sale Before Closing?
If you are a seller of a home and getting cold feet about the deal – read on to learn more.
As a seller, if you decide to cancel a deal when the home is already under contract, you can be either legally forced to close anyway or sued for financial damages.
Is a purchase agreement legally binding?
Yes, a written and signed purchase agreement is a legally binding document.
Reasons sellers walk away from closing
Seller’s remorse: You get cold feet, either because of your emotional connection to the home or because you’re afraid the new buyer won’t maintain the property.
Lack of adequate replacement home: You may have listed your home before finding a new one that fits your lifestyle and needs.
Lifestyle change: Your housing needs can change quickly if you experience a life event
Low appraisal: If your buyer’s bank-ordered appraisal comes back below the offer price and you’re not willing to lower the price, you may be able to refuse to negotiate and cancel the deal.
When can a seller cancel a purchase agreement?
Most states say any contract for the sale of land must be in writing to be enforceable. This statute is enforceable in most states, but as with any issues related to a legal contract, be sure to ask an attorney.
If the contract is unsigned: A contract isn’t enforceable if it hasn’t been signed.
If you have a new home contingency: This contingency allows you to back out if you can’t find a new home that fits your needs.
In an attorney review: An attorney review period is a three- to five-day period where sellers can cancel based on their attorney’s review of the signed contract.
If the buyer agrees to the cancellation: If the buyer sympathizes with your cause, they may let you out of the agreement without suing.
By sharing more negatives than necessary: Sellers sometimes tell the buyer more than is legally required in the disclosure process, even if the problems have been repaired.
By capitalizing buyer contingencies: Buyers often put multiple contingencies in their offer, such as a home inspection contingency or an appraisal contingency.
- Home inspection contingency: In this case, the buyer’s inspection comes back with some red flags related to home repairs or issues. If the seller refuses to either pay for some or all repairs or offer a credit so the buyer can complete the repairs, the deal may be canceled.
- Financing contingency: If the buyer is unable to secure the financing they need to purchase the home, the deal may be canceled.
- Appraisal contingency: Financing could also be denied if the appraisal on the home, which is ordered by the buyer’s lender, comes back lower than the offer amount and the buyer doesn’t want to or can’t make the difference in cash.
Source: https://www.zillow.com/sellers-guide/can-seller-back-out-of-purchase-agreement/
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