House Hitch: The Real Estate Rollercoaster of Contract Backflip!
Published October 12, 2023
Attention home sellers, reluctant dealers, assertive aficionados, or just those who simply like to keep their options open: This is a love letter to you! My name is contract, home selling contract, and I am a notoriously tough nut to crack. Pardon me, but I can’t help it. I was designed to be almost as unbreakable as the Great Wall of China. But let’s get to the meat of the matter – what happens when you, as a seller, suddenly get cold feet?
Have you ever heard of the phrase “no harm, no foul”? Well, I hate to break it to you, but when it comes to home sales transactions, it’s pretty much the opposite. You see, once you – my beloved seller, sign up on our contract, backing out can lead to what we call ‘a teeny-weeny bit of a hassle’ which is just an adorable way of saying, ‘legal issues may arise’. Those can be as exciting as a thrill ride at a theme park, just without the fun and laughter.
“Why is it so complex?” you may ask. Well, generally, people like to keep their buyer happy and their contracts are designed to do just that. You must have heard about ‘protect the innocent.’ Here, we have ‘protect the buyer!’ You could back out based on certain reasons written in our divine covenant – contingencies, I mean. For example, if the buyer performs the famous disappearing act, and fails to reciprocate the love by not holding up their end of the deal, you’re free as a bird.
However, if a bigger, shinier offer shows up or you let the ‘could-have-sold-it-for-more’ remorse creep up, sorry to say, that’s not a “get out of jail free” card. You know what they often say – it’s easier to say goodbye as a buyer than bid adieu as a seller.
So why do home sellers occasionally feel the urge to back out? Here are the usual suspects:
1. Another buyer came strutting in with a higher offer. Temptations, temptations!
2. The replacement home that was ‘just right’ turned out to be as elusive as a unicorn.
3. No job or a family tragedy transformed the move into a financial Everest.
4. Emotional strings tied to the house got tangled.
5. The family’s symphony sounds discordant, especially about waving goodbye to the house.
6. The house poses for an appraisal and voila, it’s more appealing than the buyer’s offer.
However, just like biting into an apple can lead to Newton’s apple-moment, backing out of contracts can have consequences. A judge might give you the side-eye and tell you to make good on your promises. The buyer could either sue for damages, which in many cases, implies they want their dream house back, or you may end up rolling up those refund checks faster than sushi at a Japanese restaurant, returning the buyer’s earnest money, inspection fee, appraisal fee, or even lost equity. You might even end up footing the bill for both your own and the buyer’s legal fees! Well, the house always wins in casinos – not quite so here.
But wait! Here’s the saving grace. There are some cases where sellers can back out. How? Contingencies. Add these hidden golden tickets in your contract. Make the sale contingent upon specific conditions, like securing a new home. For instance, if the buyer’s lender appraises the home below the applicable value, you can legally back out citing the buyer’s “performance issues,” if the buyer isn’t willing to pay the difference out of pocket.
In sum, navigating the legalities of a home sale can be just as thrilling as a bestselling Hollywood suspense thriller, with a dash of adventure and full of unexpected turns. Your contract is your seatbelt in this rollercoaster ride, so buckle up, tread wisely, and make your every move count! A great Realtor should walk you through all of the steps and contingencies in the purchase agreement before you accept the offer. The Realtor should understand your needs when reviewing the offer and prepare the proper counteroffer to protect your interest, as a seller, you should have clear intentions when selling your home. Remember, a wise woman (or man!) once said – “A home sale regretted is a home sale not well vetted.” So, let’s vet well, shall we?