When a buyer backs out of an offer for a home or real estate property, they may have some good reason for doing so. In the event the buyer withdraws from an offer on a home, the earnest money deposit may still have to be given back if there is no contingency included in the contract that the buyer can exercise. If the seller accepts the offer of the buyer and deposited the earnest money, the agreement becomes a legally binding contract. From this point the buyer has responsibility to complete the home purchase. However, the contract must indicate any and all possible reasons for which the contract can be cancelled officially. Here are some reasons why home buyers back out of from home purchase.
One of the top reasons home buyers back out of an offer has something to do with the home inspection report and its details. As a buyer, you want to ensure the protection of your family in case the property has serious damages which could put your family’s security and the property’s structural integrity in jeopardy. The contract should be dependent upon the outcome of the home inspection. The content of the home inspection report sometimes reveals the damages and flaws that cannot be seen during the actual visit to the home. You might be extremely concerned with details, but only a professional will know the important sections to inspect during the inspection. In case safety and structural integrity becomes an issue, this will have negative effect on the agreement and buyers will use those as reasons to withdraw from home purchase.
If the inspection report indicates the cost of repair would require a substantial amount of money, buyers may lose interest in the property. Buyers will also withdraw from an offer to a home if the owner refuses to repair any serious problems that appeared on the inspection or if the owner refuses to negotiate after the outcome of the home inspection. If both parties will not compromise, it is more likely that the deal will not be completed.
Others back out of an offer because of issues in financing. It is essential to get pre-approved for a mortgage loan to secure financing. However, you have to make sure that there is a financing contingency if you have not obtained mortgage pre-approval. This will allow you to get your deposit back when you back out of the offer.
Sometimes the buyer finds out that the house has many liens or encumbrances after making the offer and this would be another reason to withdraw from the offer. The title company will usually provide you details whether the house has tax issues and loan liabilities. See to it that the contract has an out clause in case any of these possible issues surface at some point. Making sure of this will provide you protection and avoid losing the money you deposited.
You will not be able to get your earnest money back if you try to withdraw from an offer without a good reason. Much worse, the seller can sue you to return the expenses he/she incurred when you withdraw from the home purchase. Make sure you cover yourself through contingencies in the contract so when something comes up during the home purchase you have valid reasons that you can use to withdraw of an offer on a home.