AHH! The seller backs out of escrow! NO!! Usually, a home buyer has spent hours searching for the perfect property, submitting multiple offers, and time negotiating the terms of the purchase agreement that they had thought was finalized. If the seller attempts to back out once escrow has commenced, without a valid basis for doing so, then the buyer has at least a few options.
What Happens When A Seller Backs Out Of Escrow
Why would a seller want to back out?
Sellers may have a variety of reasons for trying to back out of an accepted purchase agreement.
Some of these reasons are:
- If the seller gets a higher offer from another buyer.
- If the seller has been unable to find suitable replacement home.
- If the seller loses a job or a family member dies, making it is financially difficult to move.
- If the seller has emotional ties to the house and can’t let go.
- If there is a disagreement within the seller’s family about leaving the house.
- If the property appraises for more than what the buyer has offered.
Be sure to get everything in writing
When it comes to real estate, it’s smart to protect yourself. All purchase offers, counteroffers, and acceptances should be in writing and signed by each party agreeing to the contract. Typically, when the seller accepts the buying party’s signed offer or counteroffer and communicates that acceptance to the buyer, a binding agreement has been reached.
Are there consequences for sellers who back out?
Most residential purchase and sale agreements are drafted using a real estate association form. This form usually requires that the buyer and seller participate in pre-lawsuit or pre-arbitration mediation before filing their claim to preserve their respective right to recover prevailing party attorneys’ fees and costs in the event they prevail in the lawsuit. Any demand letter should include a demand for mediation. If the seller is willing to give the buyer the deposit back, then some buyers decide to move on. While this is not required, if a buyer was hesitant about the property this can be a second chance for the buyer to back out of the purchase and sale.
Backing out of a home sale can have costly consequences. And legally speaking, it can be very difficult to do once a contract has been signed. The language of real estate contracts is typically written to protect home buyers. Legally, a seller’s best bet for successfully backing out of a sale is if a contingency written into the contract has not been met. For example, say a contingency is explicitly included in the contract that the seller is able to secure a new home, and then he or she is unable to do so. In such circumstances, the seller may have legitimate grounds to walk away from the sale.
For more information about the buying and selling real estate process in Snohomish County, contact our office.
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