No one likes a late stage exit. Especially if that last minute exit effects the transaction of a new home you were about to purchase! Selling a home is already a complex process and if you have a buyer who backed out last minute, things could become that much more complicated. In some cases, that break in your housing chain can ultimately mean that you may lose out on your dream home.
In California, a standard contract allows 17 days inspection period in which a buyer can cancel or back out of the contract at any point and for any reason. But, the most common reason is actually just the fear of buying a home in general or “cold feet.” We get it…buying a home is a huge investment and risk, it can be scary. But, your cold feet affect the sellers who are waiting for you at the alter AKA closing as well.
Legal Ways for Buyers to Back Out of a Sale
While your home may be under contract, the deal isn’t done until it’s DONE and closed. The most common contingencies that support a buyer in backing out from a sale are:
- Loan Contingency – The buyer must be able to qualify and obtain a mortgage loan for your home. During this phase, lenders may uncover debt or other financial skeletons in your buyer’s closet, thus making it harder for your buyer to qualify for the loan needed.
- Home Inspection Contingency – Your home has to pass inspection. If it doesn’t, as the seller, you may be required to make necessary repairs. Depending on the scope of repairs, your home not passing inspection may be enough to scare your buyer away.
- Sale Contingency – Your buyer may be in the exact situation you are in that their current home needs to sell in order for them to purchase yours. If their home doesn’t sell (or the sale is delayed), then they may not be able to execute.
- Appraisal Contingency – The sale price of the home must meet or be less than the value it’s appraised for. If there is a large gap between the two and you aren’t willing to budge on the sale price, you could be in trouble.
Usually when a sale falls apart at the last minute, it could be because the buyer has a change of heart. That, or you aren’t following through with items discussed during the initial contract. But, any of the situations above can warrant a buyer backing out from the purchase of your house last minute.
Here are some warning signs that your buyer may be considering a quick exit:
- Lack of communication and not returning phone calls
- Missing scheduled appointments
- Not signing all necessary paperwork on time or in the right fashion
- Requests for numerous contract changes
Sometimes, there is only so much you can do. Even if you are willing to bend over backwards to push the sale forward, your buyer’s can ultimately still choose to wait and back out at the last second.
What to Do as a Seller When Your Buyer Retreats
First, check your contract. Did they pull out due to one of the legal contingencies and within the allotted time-frame? Or, are you at fault for not performing on agreements made in the contract? No matter the situation, there are a few routes you can take after a buyer backs out of the sale. If the buyer is completely in the wrong, you can attempt to file a suit to force the transaction’s completion. But, this will not work if the buyer doesn’t have the approved financing to fund the deal. Another common step a seller will take is to hold the flaky buyer’s earnest money deposit.
The problem still remains no matter how you address the buyer that skipped out. Your house is now back on the market and without a buyer! Without the sale proceeds, you can’t purchase your next home and now you’re in a panic.
Don’t Risk Losing Your Dream Home & Sell Fast Today
Don’t wait to put your home back on the market and endure the sales process all over again. If you need to sell quickly to unlock equity for your next new home purchase- you have a buyer who is ready and willing to purchase. We can buy homes in as little as 7 days. For you, that could mean that the contract for your new home remains completely intact, and you don’t have to stress about missing the closing date for your new home. We also pay cash and don’t require any repairs. Unlike a traditional buyer who can default due to the contingencies mentioned above (inspection, loan qualification etc.), we leap over all of those hurdles. We have the cash to fund the purchase and there will be no unexpected turn of events or “cold feet.”Views: 16