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Cold feet? Don't be a runaway seller

Dear Steve,
As a potential seller, I signed a seller-and-buyer agreement on my home for a specific amount of money and specified closing date three months from now. My wife and I have decided not to sell our home at this time. Can the potential buyer force me to close the deal on the date previously agreed upon? -- Dean

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Dear Dean,
Seller's remorse is not an unusual occurrence in a home sale. Often it's caused by sellers feeling they've agreed to sell too cheaply or realizing their emotional attachment to the home is more acute that they thought. Signing a contract to sell can amplify these sentiments, at least temporarily.

But unless the buyer is having trouble with financing or not meeting some other condition of the contract, you may find yourself in an untenable position. Of course, there's always a chance that a buyer may find, or have found, another home to his liking and may consent to withdraw the offer. This isn't awfully likely, although it's not unheard of, especially if the buyer is feeling remorse as well or wants to avoid confrontation.

Even in that event, you may be obliged to pay all or part of the listing agent's commission, assuming you're using a broker, particularly if the agent or agents clearly found you a "ready, willing and able buyer" as spelled out in the terms of your listing contract.

The reality is that the buyer holds most of the trump cards in these situations. Upon informing the buyer of your intent to cancel the deal, you'd probably get a letter from an attorney explaining the consequences of not closing the sale. If you persist in your position, the buyer's attorney may then pursue actual recourse by filing what's called a "specific-performance" lawsuit against you and recording a "lis pendens" against the title of your home to prevent you from refinancing or selling to another buyer for some time to come. A suit for specific performance is a legal action aimed at enforcing performance of the terms of a contract. Lis pendens is a legal notice of pending lawsuit involving real property and notifying anyone acquiring an interest in the property following the date of the notice that they may be bound by the outcome of the lawsuit.

In other words, it could quickly get ugly.

I suggest you quickly consult with a real estate attorney to study your contract and explore your options. But before you make a firm decision to literally hold your ground, sit down and make two lists. The first should include all your reasons for deciding to sell in the first place. The second should include your reasons for not selling. The fact that you went as far as you did in the process indicates you may have more legitimate reasons for putting the place up for sale than not. Now, unfortunately, you can add "expensive legal challenge" to the first list.

Of course, you may be given -- or even suggest -- the option of a financial settlement with the other parties and could conceivably remain in your house, if it's really worth that much to you.

But it's probably best to not let facts and signed contracts take a backseat to impulse on this one.

Good luck.

Bankrate.com's corrections policy
-- Posted: June 11, 2005
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