What happens when you no longer want to sell?
You put your house up for sale and were lucky enough to get an offer. You even accepted it. But now you’ve had second thoughts, and want to back out of selling your home. You may be wondering, as a seller how to back out of a real estate deal. You do have options, but you should definitely proceed with caution.
Consider your decision carefully.
Like any other type of contract, a real estate contract is a legal agreement. That means it is legally binding. Breaking a contract of any kind usually has consequences, often of a financial nature.
Whatever the circumstances, be sure to give this a lot of thought before taking any action Understand that seller’s remorse is a common thing, even when selling is ultimately the right decision.
Check your timeline.
After carefully considering if learning how to back out of a real estate deal is the best choice, you’ll want to move as quickly as possible. Once the seller has accepted an offer and both the buyer and seller have signed a real estate contract, certain actions are triggered. Funds have been shifted around, likely placed into escrow, and the process of accessing and returning those funds may not be quick or easy.
Don’t yet have an officially signed and executed contract? Good news—you are still free to scrap any pending deals without penalty. If you have just signed a contract but are within the attorney review period—typically around three to five business days—you are still able to cancel and walk away.
Check your contract.
If the contract is signed, sealed, and delivered, you will now want to review your contract to see if it gives you an out for any particular situations. The most common escape clause is a contingency allowing a seller to cancel the deal if they are unable to buy another house first. Most contingencies allow the buyer to back out—due to a poor home inspection or financing issues, for example—so if you’re looking for a contractual way out, it could be a matter of waiting and hoping.
Use negotiations as your out.
One of those things you could hope for would be for your buyer to attempt to renegotiate after the inspection or appraisal. If they say you need to make a repair or lower the price, you can refuse and hope it breaks the deal.
Appeal to the buyer honestly.
You have made an agreement with the buyer, and they have every right to expect you to honor that. In this situation, the buyer has most of the power in determining what happens next. If you are lucky, and are open and honest about your reasons for wanting to cancel the sale, the buyer may be sympathetic to your situation. They could agree to let you cancel the agreement without any additional penalties. You will likely still be held responsible for any costs the buyer—and your listing agent—has incurred related to this abruptly terminated sale-in-progress. This expense could be substantial, especially if the buyer is forced to acquire temporary housing.
Be prepared for a possible fight.
Or, they may not be understanding. The worst-case scenario if you’re a seller who has had a change of heart is that your buyer refuses to budge, and insists on forcing you to honor the contract. They may even pursue legal action against you. (At the same time, your listing agent may also try to seek legal remedies for funds they are owed.)
This process isn’t pleasant for anyone involved, and it can be costly and time-consuming. That can work in your favor, as some buyers will decide it’s not worth the hassle to drag this through the court system. You can help sway the buyer away from court action by offering to reimburse them for any money they’ve spent so far. It means you will still take a financial hit, but that likely will be nowhere near what an extended court case would end up costing you.