How to Back Down After Signing

Once the purchase contract is negotiated and both parties have signed, it’s legally binding. This is why the wise buyer wrote those emergency exits — the contingencies — into the offer. Because the only way the buyer can walk away from the deal now is if the contingencies can’t be met. Too many contingencies make sellers uncomfortable, your agent will advise you on their proper use in order for all parties to be protected and move forward to closing.

Typically, a buyer who wants to cancel a purchase agreement based on one of the contingencies it contained will give written notice to the seller prior to the deadline for removing the contingency. The buyer's agent could be the one delivering the news, or the buyer could do so directly.

For example:

1. You made the deal contingent on getting a 30-year, fixed rate mortgage for 80 percent of the sales price. But you weren’t pre-approved for a loan, and now realize you can’t get the loan. You can walk.
2. The inspector you hired just found rotten boards along the eaves of your dream house, an electrical panel that doesn’t meet code, and two leaky faucets. You can walk. 
3. You had a third contingency — that your present house sells by a certain date but it’s still sitting there. You can walk.
4. You wake up in the middle of the night terrified that you’re about to lose your job. You must have been out of your mind when you signed a contract to buy a house! What if you can’t make the mortgage payments? What if tomorrow you find out you have a terminal illness?

You are suffering from buyer’s remorse. This is normal. You cannot walk. The cure lies ahead.

Buyer's Tip: You can’t just change your mind. The ways out of your deal depend on the escape hatches you put in the contract.

Next article: Handling a Bidding War as a Buyer

Previous article: Making Counteroffers to the Seller

Related Links

• Contingencies Are the Buyer's Friend
• Home Inspection Guide