Home buyers guide when can a seller back out of a sale

Posted: 02/09/2007--25/11/2008 || Rate this Article: 3 || Views|| Sign In || Register ||Hello Guest

So youve gone through the process of working with your Realtor to help you find the home of your dreams. After previewing several houses youve fond the one thats right for you. The Offer to Purchase has been written up, signed by you and the seller and you are now in Attorney Review. Now you ask yourself; can the seller back out of this deal?

A real estate sales contract, contrary to popular belief, is not ironclad. There are certain obligations a seller has to meet, and there are those you, as the buyer must meet as well. Below are some examples:

Attorney Review. By law, there is a three day period after both you and the seller have signed the contract in which both parties attorneys will review the contract. At any point during this three-day period, both the seller AND buyer can legally back out of a deal. This feature protects the sellers interest in the event a better offer is received. Although a seller should extend a courtesy by allowing the buyer to counter-offer, they legally do not have to. Therefore, make sure the offer you are presenting is a fair one. It would be a shame to lose your dream home over a couple of thousand dollars when, translated into monthly mortgage payment, can mean a simple additional payment of just a couple of dollars per month. For example, lets assume a seller has set an asking price of $200,000 for their home. You decide you want to offer $198,000, and you've locked in an interest rate of 5% with your mortgage company. The $2000 you believe you are saving would translate into an additional payment of only $10.73 per month. So ask yourself; is it worth losing a dream home over such a small amount? Again, make sure you offer a fair price.

Mortgage Contingency. In a sales contract, there is a specific time that is written into the contract that stipulates when the buyer has to have the commitment from a mortgage company. If you exceed this time period, a seller can legally back out of the deal. Therefore, when writing up a contract make sure you tell your realtor to allow enough time to obtain a commitment from your bank or mortgage representative. This is relatively simple and should cause no objections from the seller or their attorney, as long as its within a reasonable time period. Working with a competent Mortgage company should alleviate this dilemma.

Inspection Period. Okay, so the contracts have been signed, and the attorneys for both parties have reviewed the contact and have deemed it acceptable. The next step is to have a home inspection performed. Although this is not mandatory, you are buying a home, which in many cases is the biggest investment you will ever make. Therefore it is wise to have this done. Generally it only will cost the buyer anywhere between $300 to $500 to have the inspection done. If the inspection discovers defects with the home, it is up to the seller to repair these defects. In some cases, a seller will refuse to make the necessary repairs and can opt to terminate the contract. This inspection period also protects the buyer. If the repairs you are looking for arent made, and the seller is unwilling to reduce the asking price to help compensate the cost of the repairs you will inevitably have to make, then the buyer can also legally back out of the sale as well.

Once these conditions are met, it would be very hard for a seller to back out of a deal. In fact, you as the buyer can sue the seller for Specific Performance. This means that a judge would force the seller to close on the deal as agreed upon in the original sales contract. Therefore it is a good idea to work with a competent Realtor, a trustworthy Mortgage company, and an attorney who is well versed in real estate laws.