Once your offer is accepted and the purchase contract is signed, you are bound to the terms of the agreement. However, you can still back out without penalty if you paid for an option period or have either an inspection or appraisal contingency. Just be sure to back out before the contingency expires.
It's possible to back out of an accepted home offer, but there could be consequences if you're not careful. Building the right contingency clauses into the contract upfront makes it easier to back out later without penalty.
As a home buyer, you can back out of a home purchase agreement. However, with no contingencies written in the contract, you may face costly consequences such as losing your earnest money deposit. As a buyer, the ability to back out of an accepted house offer is good news.
Until both parties have come to an agreement on all the contract terms and actually signed the purchase agreement, neither of you are legally bound to anything, and you can withdraw your offer without any problem.
The purpose of earnest money is to provide the seller with compensation in the event that the buyer backs out of the deal through no fault of the seller and in violation of the agreements in the purchase contract. If that happens, the seller gets to keep the earnest money.
Backing out without a contingency
If you don't have a contingency to protect you if that happens, you'll most likely lose your earnest money deposit and, in some cases, be subject to other penalties, however. If you back out for any reason and are not covered by a contingency, you'll most likely lose your deposit.
You can relist your house and look for another buyer. However, if your buyer pulls out after the exchange of contract, there will be some financial implications. First, the buyer may lose their deposit, and non-refundable costs can't be recovered by either side (including you).
While laws vary by state, in general, up until that contract is signed by both parties—even after counteroffers have been sent out—all new offers can be considered and accepted. Once both parties have signed it, however, the seller is pretty much locked into the deal.
How much should an earnest money deposit be? An earnest money deposit is typically between 1% and 3% of the purchase price of the property.
Bottom line. “Generally, a seller can't cancel without cause,” Schorr says. “You could build in some contingency, but absent that, you had better be committed to the sale.” Reneging because you fear you underpriced the house, or you actually receive a better offer, doesn't count as “cause.”
If the buyer simply changes their mind, they will most likely lose their earnest money. The deposit usually goes to the seller as indicated in the contract terms.
Depending on the circumstances, this money may be recovered through the legal system. In terms of refusing to close on a building contract, if the buyer defaults, the seller can sue for the difference in money damages that were incurred as a result of failing to close the contract.
If the buyer changes their mind for a reason that is not covered by a contingency, they may forfeit their earnest money deposit. For example, if the buyer simply decides they do not want to purchase the home, they will likely lose their earnest money deposit.
Explain Your Situation
After expressing gratitude for the job offer, briefly explain why you now have to turn it down. Give the hiring managers clarity about your decision. The company deserves at least a little bit of context as to why you're backing out of your acceptance.
If you've signed a purchase agreement and all contingencies have been removed, it's too late to back out of a home sale without consequences. Sellers who try to back out of a contract without having the proper contingencies in place can face legal troubles, and in extreme cases, be forced to sell the house.
If you discover material defects after the real estate transaction has closed, you may have an action for breach of contract. A qualified, local real estate attorney with experience in housing and construction defects can help you understand your rights and draft an appropriate demand letter.
If you back out of the contract for an approved contingency, you will get your earnest money back. You can expect your earnest money back if: The home doesn't pass inspection. The home appraises below its sale price.
With this in mind, most buyers will put down between $500 to $2,000 of earnest money on an MLS-listed property. However, in particularly hot seller's markets, it's not uncommon for buyers to put down far more to demonstrate that they're serious about a purchase.
The earnest money may be held by the seller's real estate broker, but the money may also be held in escrow by a third-party title company, lawyer, or bank. The purchase and sale contract specifies where the deposit is held.
So long as the seller is not bound by a sales contract, the seller may be able to change the asking price.
Acceptance of an Offer
Once the offer has been accepted, it cannot be revoked. In most instances, in what is referred to as a bilateral contract, the person accepting the offer promises to abide by the terms of the offer.
If a seller decides to go with a higher offer, she must communicate that to the original buyer immediately—and return any deposit presented with the initial offer. But here's another option: A seller could allow the original buyer to present a counteroffer. Granted, the buyer may not want to.
Breaking the chain means that your own sale and purchase will no longer be dependent on each other. Consequently, as chains only ever progress at the same rate as the slowest transaction, 'unchaining' yourself will speed things up and do everyone who's losing patience a favour.
Remember selling real estate is about real property and not about people. Avoid talking about people period, it leads to trouble. The best policy is don't talk to the buyers directly, let your agent be the conduit for information.
The seller can back out for reasons written into the contract, including (but not limited to) contingencies. The buyer is in breach of the contract. If the buyer is “failing to perform” — a legal term meaning that they're not holding up their side of the contract — the seller can likely get out of the contract.