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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
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