Dear Real Estate Adviser,
We have accepted an offer on our home but didn’t sign the purchase/sale contract. Meanwhile, the price of our house seems to be going up based on offers that have come along. Is there a way we can back out of the accepted offer? What sort of financial damage or other problems could this cause?
— Dana Z.
Unless you and the buyers each have a fully executed and signed contract in hand based on the agreed-upon terms, you are clear to consider other deals in most instances. Your listing agent should be able to continue showing your home and is obliged to present all other offers to you.
Most offers and acceptances — verbal and even written, in most instances — are nonbinding in residential real estate with some exceptions, especially when earnest money has been proffered. In New York, for example, they’re nonbinding until signed first by the buyer along with 10 percent down placed in escrow, then signed by the seller and delivered to the buyer or buyer’s attorney. Usually, though, it’s that traditional sales contract that really counts.
Think of the would-be buyers’ expenses
However, if your unsuccessful buyers ponied up for an inspection, appraisal, mortgage application or other expenses based on your acceptance, they may ask you to compensate them for those. While it would be good form to do so, it’s not necessarily mandatory. Inspection and appraisal expenses, unlike earnest money, are seldom reimbursable in these circumstances where a contractual clause is absent. Realize, too, that the cost for buyers suing to recover such out-of-pocket monies would likely exceed the sum of their lost expenses.
When buyers make trouble
Most buyers who “lose” a home this way either realize — or are quickly advised — that this is how the often-bruising game of real estate is played, particularly when there’s heated competition for homes as there is at present in many markets. However, it’s not unheard of for buyers to take sellers to small-claims court in this event, especially if they’ve been greatly inconvenienced in their relocation timetable. But that’s typically a crapshoot for buyers, too.
Maybe throw ’em a bone
If you’re accepting another offer (for real this time) and the difference between the old and new offer amply exceeds the out-of-pocket expenses incurred by the jilted buyers, it might be wise to just settle with them if they threaten to make trouble. (Most won’t.) Keep in mind that real estate laws vary from state to state, so by all means ask your agent or a qualified attorney what the law states and how you can best proceed. Of course, if the buyers plunked down a deposit, that needs to be released to them posthaste.
It’s good to see you’re apparently going to do well on your sale. Next time, though, try to establish a more accurate price baseline from the start through thorough market research or a more price-savvy, up-to-the-minute kind of agent.
Ask the adviser
To ask a question of the Real Estate Adviser, go to the “Ask the Experts” page and select “Buying, selling a home” as the topic. Read more Real Estate Adviser columns and more stories about real estate.
More On Backing Out Of A Home Sale: