Last Updated on January, 2025
Buying a home is exciting, but it can also be stressful, especially if the home seller suddenly decides to pull out. You may wonder, “Can a seller really do this?”
Until a real estate contract is signed and exchanged, sellers have the right to walk away from a home sale for various reasons. This can include finding a better offer or even feeling seller’s remorse.
So, what should you do when a seller pulls out of a house sale? Let’s walk through your options.
Quick Summary
- A seller can back out before signing a purchase agreement, but once signed, it’s legally binding, and backing out can mean breach of contract. Buyers can respond by negotiating, delaying closing, or seeking legal action for signed agreements.
- If a seller breaches the contract, options include issuing a “Notice to Complete,” recovering deposits, or suing for damages. Buyers should include contingencies, consult an attorney, and stay flexible to avoid future issues.
- Preparation and legal support are key to navigating the challenges of a seller pulling out, ensuring smoother real estate transactions.
Can a Seller Legally Pull Out?
The short answer is yes. A seller can back out until both the buyer and the seller have signed a purchase agreement.
Once a signed real estate contract is in place, though, the real estate transaction is legally binding, and the seller pulling out could mean a breach of contract with serious consequences.
If a seller pulls out before the purchase contract is signed, home buyers have limited options beyond moving on.
But if the seller breaches the purchase agreement after signing, the buyer can potentially recover legal fees, monetary compensation, and other costs through legal action.
What Can You Do if a Seller Pulls Out?
Here are some steps you can take if a seller refuses to go through with the sale process.
Ask Why the Seller Backed Out
Start by understanding why the home seller changed their mind. Did a home inspection uncover issues? Did they receive a higher purchase price offer? Or are they experiencing emotional attachment to the property?
Sometimes, a listing agent can find out from the seller’s listing agents or during the attorney review period.
Make a Higher Offer
If sellers pull out because they got a better offer from another potential buyer, consider increasing your bid.
But keep in mind that the buyer’s ability to stay within budget matters. Going beyond your means can affect your secure financing and buyer paid costs.
Offer to Delay the Closing Date
Sometimes temporary housing costs or difficulties finding their next home make home sellers hesitate. In these cases, you could suggest delaying the closing date to give them extra time.
Be cautious, though, since this could mean extra costs for you, especially if you’re covering temporary housing expenses.
Request Compensation for Costs
While a seller isn’t obligated to cover buyer’s legal fees or other expenses if they back out before the signed agreement is in place, it’s worth asking.
Some real estate agents and real estate attorneys suggest that buyers try to recover expenses incurred up to this point.
What if the Seller Backs Out After Signing?
If the real estate contracts have already been signed, the seller’s decision to pull out could mean serious legal consequences. At this stage, the signed contract is legally binding, and backing out would likely be a breach of contract.
Serve a Notice to Complete
When a seller pulls out of a real estate transaction after signing, you can issue a Notice to Complete. This legally obliges the seller to finish the house sale within a set timeframe, often 10 days.
If they fail to comply, you could claim specific performance, which may compel them to sell the home to you.
Recover Your Deposit and Additional Costs
If the seller backs out after signing the purchase contract, you’re entitled to a refund of your deposit and may claim compensation for costs like buyer failing to obtain appraisals or home inspection fees. You could even sue for damages or legal penalties.
Reasons Sellers Back Out
Here are some common reasons why home sellers might walk away from a real estate contract:
- Personal Reasons
A seller’s circumstances, like job relocation falling through or an improvement in finances, can change.
- Chain Collapse
If they’re part of a property chain and another buyer fails to complete their deal, it might affect the home sale.
- Seller’s Regret
Sellers can experience strong attachment to their home and get cold feet.
- Gazumping
Sometimes, a home buyer offers a higher purchase price than what the seller accepted initially, making it tempting for sellers to back out.
Relevant guides:
Protecting Yourself in Future Real Estate Transactions
Going through a home sale only to have the seller back out can be exhausting. Here are some ways to protect yourself in future real estate transactions:
Include a Home Sale Contingency
One way to protect yourself is by including a house sale contingency in the purchase agreement.
This contingency may require the seller to cover certain costs if they pull out, deterring them from walking away too easily.
Get Legal Help Early
Hiring a real estate attorney from the start can make the process smoother. They’ll guide you through contract terms and help you understand your rights if things go wrong.
This can include pursuing a legal claim if a seller pulls out after signing the real estate contract.
Stay Flexible
Until you have a signed agreement, stay open to other properties. It’s tempting to get attached, but home buyers who keep options open often find it easier to move on if a contract falls through.
Conclusion: Handling a Seller Backing Out
When your best laid plans for buying a home fall through because of a seller’s decision, it can feel overwhelming. Remember, this isn’t unusual in the real estate world, and there are ways to protect yourself moving forward.
Focus on the next steps, whether it’s pursuing a legal practice option, filing a legal claim, or looking for your next dream home.
A trusted real estate agent and real estate attorney can help you handle the complexities and uncertainties, especially if many sellers are in a competitive market value situation where future buyers are offering more.
