It’s a scenario few people consider until it happens to them: you find the home of your dreams, you make an offer, and then—for whatever reason, be it an out-of-state job opportunity, change of heart, or family crisis —you can no longer move forward with the purchase.
It happens! And as is the case with any complicated situation, proceeding thoughtfully and strategically will ensure the best possible outcome. Below, some helpful tips to take into account no matter what stage of the home-buying process you’re in.
WITHDRAWING WITHIN A CONTINGENCY PERIOD IS EASIER
Once the seller has accepted the offer and the contract is fully executed (meaning both parties have signed), the deal is official and binding—but ideally, the contract outlines a handful of contingencies that must be satisfied before the transaction can move to close. Standard contingencies include the home clearing inspection and appraisal, but you can also negotiate the contract so that the purchase moves forward only when your current home sells, and/or when you receive mortgage financing. In the event that any of the contingencies are not met within the agreed upon timeframe, you’re at liberty to back out of the contract free of penalty, and you’ll recoup your earnest money in full.
OUTSIDE OF A CONTINGENCY PERIOD, IT’S MORE COMPLICATED
Withdrawing your offer outside the contingency period described above is where things become a bit more complicated. If the contract is fully executed and all contingencies outlined within it have been met, you’ll most likely forfeit your earnest deposit, whose main purpose is to protect sellers in instances like these. It’s not an ideal situation to be in—but if you find yourself in a predicament that requires you to default, a seasoned real estate agent will provide the guidance you need to navigate the situation as strategically as possible.
WHATEVER YOU DO, DON’T PROCRASTINATE
When you find out that you won’t be able to follow through with your offer after all, the absolute worst thing you can do is nothing—especially if you’d appreciate the possibility of recouping your earnest money! So, if you must back out, don’t delay—let your agent know as soon as you possibly can so that the necessary paperwork can be submitted and the sellers can find another buyer. Don’t be shy with the information, either.
This situation is obviously an uncomfortable one, and you likely feel terrible about it, but being forthcoming with why you’re unable to move forward will, at the least, help the sellers to understand. Given that you’re backing out of a commitment, being communicative and transparent is not simply the right thing to do from a strategic perspective—it’s also the ethical way to proceed.
DON’T UNDERESTIMATE THE VALUE IN WORKING WITH AN EXPERIENCED AGENT
If you find yourself in this situation, there’s no doubt it will feel stressful—but a seasoned real estate professional has likely seen clients through it many times. But when utilized properly, an experienced real estate agent may also be able to prevent this scenario from becoming an issue in the first place. Proper utilization of the relationship means getting answers to any and all questions you may have, so that you gain a complete understanding of the home-buying process before you make a single move.
Reach out and we’ll connect you with an experienced agent who can help you through any situation you encounter during your buying process.
