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In today’s competitive housing market, available homes fly off the shelves if you don’t act fast.
Nearly half of homes were on the market for as little as a week before going into pending status in the Spring of 2021, according to Zillow. Fueled by high demand and low inventory, that momentum is expected to continue as we draw closer to this 2022 Spring homebuying season.
With offers flying in, buyers and sellers often don’t have a lot of time to think about the terms of complicated contracts. There’s pressure to sign agreements to get a house sold, and sometimes, things slip through that cause a buyer or seller to reconsider their offer.
What happens if a buyer or seller changes their mind about purchasing a home? It depends on how far you’ve gotten in the process — and what contingencies are in place. Therefore, thinking about your possible exit from the beginning is wise — whether you’re on the buying or selling side.
After all, deals fall apart all the time, especially in real estate.
Key Terms
Before we begin, let’s review some key terms that are standard in every real estate deal.
Home Purchase Agreement: A legally binding agreement between a seller and buyer for the sale and purchase of a property that defines the terms of the real estate transaction.
Earnest Money: Funds made as a deposit to a seller to represent a buyer’s intention to purchase a home. Also known as a good faith deposit.
Escrow Account: An account managed by your mortgage servicer or title company where funds are kept for your real estate transaction.
Contingency: In a home purchase agreement, a contingency is a clause with certain conditions or actions that must be met by the seller or buyer to become legally binding, such as getting an inspection or securing financing.
Can a Buyer or Seller Back Out of Buying a House?
The short answer is yes, a buyer or seller can back out of a home sale. Usually, the buyer has more ways to back out of a deal, as it’s rare and more difficult for a seller to change their mind. When a house is for sale, buyers are the ones who present offers to sellers — and their offers …….
Source: https://time.com/nextadvisor/mortgages/back-out-of-home-buying-contract/
