Periodically, a seller thinks they want to sell their house and then gets cold feet, reasons for moving fall through or they just change their mind for whatever reasons and decide they don't want to sell. This remorse can occur during the middle of a contract with a buyer and/or during the listing agreement with an agent. Buyers and agents have very little empathy for a seller who waste a lot people's time and investment. Since, real estate is unique, seller's can be sued for specific performance by buyers in contract or their listing agent for commissions. It's best to avoid the situation all together. Don't list your home for sale unless you plan on selling it. It is pointless and rude to do otherwise.
I have yet to see a state real estate contract (this does NOT include builder or private contracts) that was not written in the favor of the Buyer. When presenting an offer to a seller I always ensure the seller understands that the odds of the seller ever keeping the buyer’s earnest money is low. It is at this time the Seller and Buyer should seek legal counsel in regards to their ability to keep the buyers earnest money and fully understand their rights per their specific contract. The law in regards to specific performance is in favor of the buyer since it’s the buyer who is truly at risk. (ATTN: Buyers do NOT assume this means the Seller will release your EM without a court battle and/or the Court will not side with the Seller in regards to buyer's specific performance obligations per the contract) What if you suspect the buyer isn’t being honest about why they are terminating? Good luck proving it.
In my experience most contracts fall out for 1 of 2 reasons. Either the buyer is unhappy with the inspections or the buyer is unable to secure financing. Either way most contracts (seek legal expertise on your state's contract) provide the Buyer a bonafide way to terminate and receive a refund of their earnest money and not be held liable to the Seller to specifically perform and complete the purchase of the home.
Ways to mitigate the sellers risk:
Work in due diligence to prove you have a bonafide buyer willing and able to financially purchase the home. Whether that be with pre-approval letters, bank proof of funds letter or other means of proof such as increased earnest money amount. The situation is still as such; a letter is only as a good as the paper it is written on. Buyers cannot deliberately cause their loan not to be approved but once again, good luck proving they did it.
Mitigate the length of time the buyer has for inspections. These should be done quickly. Allowing a buyer to have 3 weeks for inspections will result in your home being off the market that amount of time and result in the loss of other potential bonafide buyers if the buyer decides at their sole discretion the inspections are not satisfactory.
Accept back up offers; although very few buyers want to be 2nd it’s always a possibility.
Tighten up as many buyer contingency dates (inspections/loan application/appraisal/etc...) as possible including a closing date.
And, after all reasonable efforts are made to make it difficult for a buyer to back out, guess what; they back out. Welcome to the business. Many sellers feel burned when a buyer rightfully terminates per the contract and the seller has no recourse. However, if a seller goes into a contract with eyes wide open they can limit the feelings of resentment if they fully understand the risk they are accepting by assigning interest in their home to a buyer until the buyer terminates and or closes per the contract.
A good listing agent knows all this plus more tricks of the trade and can be invaluable when helping sellers beware of the pitfalls of buyers backing out and how prevent it from happening when at all possible.
, This blog and website is presented for informational purposes only. It is my/our opinion and perspective of this business and does not constitute any form of a legal relationship or contract between you and I or S. Walker & Co. I/We are not an attorney, CPA, engineer, architect, chemist or any professional that requires a degree and licensing we do not have. I/We are a licensed real estate broker and brokerage firm in the state of Oklahoma. Never disregard or delay seeking legal, tax and/or other expert professional counsel to your specific transaction or situation because of something you read on the internet. Legal, tax, engineering, construction and industry standards vary state by state in regards to real estate. I make reasonable effort to present current and accurate information but I make no guarantees of any kind. Any links to external websites is provided as a courtesy and is not an endorsement or guarantee of product, service or information.
One last time, WE'VE MOVED THIS SITE TO>>> swalkerco.com <<< please click there for up to date information
Copyright (C) 2010,2011,2012,2013,2014, 2015, 2016, 2017, 2018 Suzanne Walker and S. Walker & Co. Any of this website's content may not be used without written consent from Suzanne Walker Real Estate Inc.
© 2018 S. Walker & Co. S. Walker & Co., the S. Walker & Co. logo, the Real Estate. Reimagined slogan, and the S. Walker & Co. sign are all registered trademarks of S. Walker & Co.