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by rlambo on November 12th, 2005

rlambo

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If a buyer and seller agree on a purchase price for a house and a contract is signed and a closing date established, is there any way the seller can back out of the deal?

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Answers. 2 helpful answers below.

  • by Blue World on December 27th, 2008

    Blue World

    Yes.
    That is why there are attorneys.

    Even if the Buyer has completed all due diligence and met all the terms of the purchase contract, the Buyer could negotiate to buy out of the contract for an agreed price without closing the original property deal. This happens more in larger commercial real estate deals, particularly as the Buyer's marketplace changes. The Seller usually has a claim for lost opportunity and carrying costs which is relieved by a cash payment. The Seller can then place th

    e unencumbered property back on the market. The Buyer will lose the cost of the buy-out. This is not always a bad deal as the Buyer has tied up the property for a period of time to be certain of the long-term value of the property to the Buyer.

    Buyers can have many valid reasons for not closing deals such as death, changing economic conditions etc. Even with good reasons, the contract is honored with negotiation.

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  • by Cyanotic Wasp on December 27th, 2008

    Cyanotic Wasp

    Usually not without a penalty of some kind, if then. It's possible that if a valid contract exists that the seller can sue the reluctant buyer for "specific performance". That is, he can sue for the buyer to execute the contract.

    But that can be expensive and time-consuming, and in practice there are often ways that unmotivated buyers can 'creatively fail' to meet the terms of the contract, such as failing to qualify for a mortgage, for one. So that's why the seller demands 'earnest money' which the buyer will usually sacrifice if he elects not to continue with the contract.

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