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If You Want to Back Out of the Sale
The buyer offered everything you asked for. So the wheels are in motion to close the sale. But all at once a wave of "seller's remorse" flows over you. You realize that you really don't want to sell the property. What can you do? And if you do back out of the sale, what are the possible repercussions?
Contrary to popular belief, a seller never has to accept an offer presented--even if it's for exactly what you told the agent you wanted. (The seller might be responsible for paying the agent's commission, however, depending on how the listing was written. This is because the agent has done what he set out to do--to provide the seller with a "ready, willing and able buyer.")
Secondly, while "seller's remorse" may not occur as often as buyer's remorse, it does occur. It often happens when the seller realizes how tedious it will be to find another home and to move there and then estimates the potential costs involved in both. Just as buyers with second thoughts need to rehash why they wanted to purchase a particular property, sellers need to remember their initial reasons for selling, then consider not only the time, effort and money already expended in the selling effort but also the downside of not following through with closing--including the possibility of legal action by the buyer.
What legal recourse would a buyer have against a seller who backed out on selling his property? That depends on how the purchase and sale agreement is written. For example, the agreement might state that upon any default, the defaulting party would forfeit the right to any earnest money and/or down payment (paid or received) and that the aggrieved party could seek legal remedies. Although not too common, a buyer could petition the court to force the sale of the property (a "specific performance" suit); perhaps the buyer could seek compensation for damages if he had expended money in anticipation of closing on the property. For the seller who declines to sell, a bottom-line, worst-case scenario might include: the buyer could sue the seller; the seller would perhaps need to pay legal costs to defend himself; and the seller could be required to pay the sales commission--all without the benefit of proceeds from the sale.
Just as gathering information was important before you accepted the buyer's offer, it's equally important to check and recheck the facts before making the crucial decision to call the sale quits.
Don't forget that if you do back out of the sale, it doesn't necessarily mean that you can jump quickly back into the sales arena on your own and without consequence. The listing agreement you signed previously will dictate the time period during which you'll be liable for the sales associate's commission. This provision is included to deter sellers from trying to become for-sale-by-owners late in the process in order to avoid paying the sales commission.
Julie Garton-Good is a syndicated columnist, author and international speaker and has been called "America's Home Affordability Expert", addressing more than 25,000 persons annually on the topics of real estate finance and home affordability. Her fifth book, "The Frugal HomeOwner's Guide to Buying, Selling, and Improving Your Home" was released in February. Julie is the founder of the National Association of Real Estate Consultants (NAREC) and the author of the C-CREC (Consumer Certified Real Estate Consultant) professional designation course for Real Estate Professionals. In 2000, The National Association of REALTORS® nominated Julie as one of the twenty-five most influential people in the real estate industry. CopyrightÓ 2000-2001, Julie Garton-Good. All rights reserved. For information about Julie's Keynote presentations, please contact the Frog Pond Group at 800.704.FROG (3764) or email [email protected]; http://www.frogpondgroup.com. |