Profile picture for excursiaz

What can I do if a buyer backs out of a signed contract

I had a buyer contact me and made an offer for his buying firm. I accepted, we signed documents. Then I received news they were backing out. Can they do that? 
  • November 28 2013 - US
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Answers (9)

Profile picture for wetdawgs
@nanad1957:

You will need to evaluate whether or not it is worth your time to put it back on the market and pocket their earnest money, or to provide an extension.  While neither choice is as nice as closing on the original date,  I would spend some time investigating the reason for requesting an extension.  Is there is a missing doc?   Is the lender slow?   Is there an extremely high probability it will really close?  

If I were in your shoes, I'd have your agent actively advertising for backup offers.  
  • August 23
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Profile picture for nanad1957
I am half packed and have secured a place to live.  The buyer's agent in response to a message:  All set for next Friday, just let us know that the buyer decided to go to another bank for their mortgage. I don't have a committment letter and the deadline for the commitment is today at 5.  They also asked for an extension of 2-3 wks, which is an inconvenience and a huge financial burden. 

My agent says I will get the deposit of $5K and can put the house on the market again, but will take a long time to get the $5k.  My house sold in 6 days.  I am so frustrated.  

Any advice?
  • August 23
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There are multiple legitimate ways (with time periods) for a buyer to back out of a contract, including the three that were already mentioned - appraisal, inspection, and financing.  In our area, there are also limited "outs" for not agreeing with the Home Owners Association By-laws.  In Texas, also, there is a negotiated "option period" where the buyer can back out for any reason with minimal compensation to the seller.  Your agent should provide you with the reason that the buyer is backing out, and show you in the contract where it is legitimate.  Or, if it is not a legitimate reason, then the agent needs to advise you on your options.  (Often, this includes claiming the earnest money, seeing a mediator, or - last resort - suing for specific performance.)  If your agent is not giving you these answers, you can talk to the agent's broker, or to the title company or attorney that is closing the sale.  I would not sign anything until your questions have been answered.  Just know that as long as it's not signed, though, you are losing time for your house to be back on the market.
  • November 30 2013
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The contingencies in the contract can include an inspection contingency and a mortgage contingency.  Those are the most common.  If the buyer was unhappy after the inspection they can back out.  If they are  unable to secure finance they can back out.

Read your contract.  If the Realtor is giving you a termination document to sign it should specify what the clause is the buyer is using to terminate.
  • November 28 2013
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Hi,

Unfortunately on your end, buyers always have many ways to back out of a purchase agreement (the 3 most common being the appraisal, inspection and loan contingencies) while sellers do not. Did the buyers provide a reason for backing out? Your realtor should be able to check the contract and see how many days the buyers had to back out using that reason before losing their deposit. Sorry this happened but I would focus on finding another buyer rather than being too disappointed...

Hope you sell the property for the best price possible and Happy Thanksgiving!
  • November 28 2013
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Go over this with your Realtor. 
  • November 28 2013
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Profile picture for HighDesertAgent
Read your contract.  It will dictate what you're entitled to - more than likely the buyer will get his earnest money back.

Move on to the next buyer.
  • November 28 2013
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Profile picture for excursiaz
What contingencies? There was an inspection walk through. and they gave the go ahead. My agent or was agent was working for this firm and doesn't seem to have any answers..he just sent the paper work for me to sign. I feel like I'm stuck & I have no idea what to do.
  • November 28 2013
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Profile picture for wetdawgs
Were there contingencies in the contract?    Many purchase contracts include inspection and financing contingencies.

Please talk with your agent.
  • November 28 2013
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