There are many reasons someone may choose to back out of a real estate agreement, but all parties must be aware of the ramifications of pursuing such action. A signed real estate contract is legally binding and whichever party chooses to back out can suffer legal consequences, both from the other party as well as the real estate agents.
Reasons a buyer or seller may wish to cancel a transaction can vary greatly, and so can the reaction of the opposing party. If a member of the agreement falls gravely ill, is suddenly in financial hardship or becomes deceased, it’s likely the contract can be voided and parties can determine what happens to any earnest money and related expenses. However, if the seller no longer wants to close because of seller’s remorse, or the buyer is no longer interested because the kitchen is suddenly too small, these reasons can lead to expenses and headaches no one anticipated.
Once a purchase agreement is signed and all obligations have been met by both parties, there should be no reason, other than something tragic, that could prevent closing. Most agreements give buyers approximately two weeks to inspect and appraise a property, as well as get money in order. The time period is negotiated by both parties, but once it passes, it also marks the end of the contingency period where a buyer can signal their removal from the deal. The same holds true of the seller. It is during this timeframe when either party should voice their concerns and feelings, because no one wants to get to the closing table and be told the deal is stalled.
When a buyer backs out they will lose their earnest money as well as expenses related to inspecting the property, and the realtor may choose to redefine what the buyer’s want in a home. If a seller decides to cancel the transaction without cause, the listing agent can sue for marketing expenses and loss of commission; however, most agents will simply move on, but not all.
The best advice is to enter a real estate agreement seriously, and if there are any questions or reconsiderations, to discuss those with the agent as soon as possible. It could be that the idea of change is nerve wracking, or the idea of renovations. However, it could also be that the home is truly not the best fit and its time to move forward. Either way, don’t go too far down the path of purchasing a property if the intentions are not committed.