Buyers typically want to get out of a contract to purchase property because:
- They’ve found another property they believe to be a better deal.
- They realize values are declining and come to think that they are paying too much.
- They find out that they aren’t qualified to get a mortgage.
- They just get cold feet.
What buyers don’t understand is that the contract is a legal agreement and there are serious consequences to breaching these contracts.
As a buyer if you do not complete the purchase when you have entered into a binding contract, all of the following may happen:
- You immediately lose the earnest money deposit.
- You become liable for $ commissions owed to the real estate brokers involved. Not just the agent working with you as a buyer but also the sellers’ agent. The brokers may pursue all legal means available to collect these moneys.
- The seller may pursue all legal means available to enforce the contract.
- The seller may sue you for compensation for other damages and losses incurred because the sale did not close in a timely manner.
- If the brokers and/or seller pursue legal action, you will likely also be responsible for all legal fees incurred.
With these consequences, walking away from a contract is not a viable option for most buyers!
What are the options? Don’t get into a bad deal in the first place. Work with an experienced agent who knows the market where you are shopping. First you must enter into a contract with the broker/agent so that they are legally bound to assist you. Then, they can help you see all the available properties that meet your criteria; work with you to establish a price and terms that are appropriate to the market; and be sure you have the appropriate safeguards in the contract to protect you from appraisal and mortgage issues.
Already in a contract and you want out? Seek legal council. It’s your only alternative.
