After months of searching for the perfect property, followed by weeks of price negotiation and mortgage applications, youre finally ready to sign on the dotted line and take possession you new home. Most homebuyers look forward to closing day with eager anticipation. However, unforeseen circumstance may make it necessary for some buyers to look for a way out.
Buying a home is a big financial commitment, one of the biggest youll make in your lifetime.
Its perfectly natural to feel nervous about the purchase. If nerves alone are the cause of your second thoughts, take a deep breath, and wait for them to pass. However, if your reasons for questioning the purchase decision are more concrete than cold feet alone, its wise to examine your options further.
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Most home-purchase contracts contain contingencies, or requirements, that both parties must meet in order for the real estate deal to close. Common ones protecting the buyer include those pertaining to the home appraisal, inspection, homeowners insurance, and qualifying for a mortgage. The contract may state, for example, that the purchase is contingent upon the property appraising at a particular price. If the home is valued for less than the agreed-upon price, the contract will be void. In most cases where a deal falls through due to a contingency, the losses are fairly minimal. The seller will return the earnest money
to the buyer, unless otherwise stated in the contract.
Sometimes the unexpected happens job loss, major illness, company transfer
and a buyer must
find a way out of the home-purchase contract. If your agreement did not contain contingencies covering changes in finances or employment, your next step is to explain the situation to the seller. If you can convince him that it will be impossible for you to complete the deal, he may let you out of the contract. Whether you have to forfeit the deposit or not will be up to him.
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Breach The Contract
If the seller refuses to let you out of the home-purchase contract, your last resort will be to breach it. If you take this path, youll forfeit any earnest money, and risk a bad faith or breach of contract lawsuit brought by the seller. Theres also a possibility that your real-estate agreement contains something called liquidated damages, which compensates the seller for lost opportunities while the property was off the market. Liquidated damages may allow the seller to claim your down payment as well as your deposit.
If youre unsatisfied with the findings of the home inspector, the appraised value of the property, or fail to obtain financing, the standard contingencies in the agreement should cover you. However, if youre still looking for opportunities elsewhere, fear you may lose your job, or may possibly be transferred, reneging on the contract can be complicated. Its best to hold off on making any real estate offer until youre certain of your circumstances.