Buying a home is exciting, but it is also a major commitment. And for most people, it will be the single most expensive transaction in which they are ever involved. Considering what is at stake when it comes to buying a home, buyers should feel informed and confident before they finalize a sale.
This can be especially important if, at some point, a buyer wants to back out of a deal.
Why buyers back out
There are several reasons why potential buyers may decide they want to terminate the sale. Often, buyers may want to back out if:
- They cannot sell their own home
- They do not get the funding they anticipated
- An inspection reveals serious problems with the property
- The property has been significantly damaged since the buyers made their offer
- Buyers divorce or break up before the sale is final
- They found a more desirable home
- They have buyer’s remorse
The reason for backing out is important, as it could determine whether there will be any financial losses for the buyer.
Conditions and why they matter
A buyer’s offer can include conditions. For instance, they may offer to buy a house on the condition that their own home sells or the new house passes inspection. If these conditions are not met, the buyer may have the right to back out of the offer. And unless the contract says otherwise, the buyers can often get their deposit back.
However, if buyers waive these conditions in an offer, which can happen in competitive markets and with aggressive buyers, they lose this protection.
Under these circumstances, backing out of a signed agreement will typically cost buyers their deposit. They could also be on the hook for damages, which could be substantial.
Protecting yourself from the beginning
Understanding these risks can help you make informed decisions that minimize financial and legal repercussions from the beginning.
Buyers should know that making an offer on a house can be far more complicated than people realize, as it involves more than just a purchase price. And many first-time homebuyers are not sure how to create a competitive offer that also provides some protections. Because of this, it can be helpful to consult a lawyer when making an offer.