It’s every seller’s nightmare: they’ve found a buyer for their home, the contract is signed, and a closing date is set. But then the buyer gets cold feet and decides to back out of the deal.
Does the seller have any recourse? The answer is, “It depends.”
Consequences for both the seller and buyer
A real estate deal is a complex and legally binding transaction, and there can be significant ramifications if a buyer decides to back out. For the seller, it can mean lost time and money spent on marketing the property and negotiating with other buyers. It can also cause emotional distress, as the seller may have already been counting on the sale to go through.
Most purchase agreements will include contingency clauses that allow the buyer to cancel the deal if certain conditions are not met, such as not being able to obtain financing or if the home doesn’t pass inspection.
However, if the buyer backs out without a valid reason, they may be required to forfeit their earnest money deposit. It is usually 1-2% of the purchase price, which could be a substantial amount of money on a more expensive house. Therefore, it is important for buyers to carefully consider all of the risks before reneging on a real estate deal.
If the buyer gets cold feet and decides to back out of the sale, the seller may have legal recourse and potentially sue the buyer for breach of contract. Sometimes, a court may order the buyer to pay the seller’s legal fees and any other damages awarded. If you’re in this position, it’s wisest to get legal guidance.