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Can you back out of a home purchase after making an offer?

On Behalf of | Oct 21, 2020 | Real Estate |

Typically, you don’t make an offer on a home until you know that you want to buy it. However, there are things that could cause you to change your mind. Maybe you thought that you wanted that home but, as soon as you made your offer, your dream home down the street went up for sale. Your offer got accepted for the first house, but now you want to back out and make an offer on the dream home. Can you do so?

There are ways to do so, but it can be tricky. For one thing, you may have given the seller earnest money, and you may not see that again, even if you walk away. You can also run into legal issues if you back out for no reason — and wanting to buy a different home probably doesn’t count as a reason to that seller. 

However, you can get out of the deal if you have contingencies in place and the home doesn’t meet them. If that happens, you should even get your earnest money back. Common contingencies include:

  • The appraisal comes back and says that the home isn’t worth as much as the loan that you’ll need to buy it. 
  • The home inspector finds serious issues with the house and it fails that inspection. 
  • You need to sell the home you own before buying the next one, and you fail to do so. 
  • You are not given the financing you need to make the purchase. 

When setting up your offer — or any contract during this process — it’s very important to consider all of your legal options and the potential contingencies you can work into the deal.