Can a buyer back out of a purchase agreement?
Learn more about purchase agreements, if and when a buyer may back out, and the possible repercussions when that happens.
When you purchase a home, the sale can fall through for many reasons. There could be issues preventing the sale on the seller’s end, but buyers often have concerns or second thoughts, too. Learn more about purchase agreements and what can happen if you’re the buyer and need to back out.
Can I back out of an accepted offer?
When you put an offer on a home, and the seller accepts, you enter into what’s known as a purchase agreement. It’s a standard real estate contract that spells out the details of a sale. If you change your mind, you can usually back out of the agreement, but it gets a little complicated depending on when you do so.
Are there any repercussions from backing out?
Because it’s a binding legal document, there may be repercussions if you want to back out of a purchase offer that the seller has already accepted.
When you enter into this type of agreement, you are typically required to put down a deposit to demonstrate that you plan to follow through. This is called “earnest money,” and is usually 1–3% of the property’s price. If there are no valid reasons for you to back out of the sale, you will most likely lose that deposit. This money compensates the seller for the time the home was off the market.
However, if you withdraw the offer before the seller signs, you should be able to back out without any consequences. This is also the case if the seller doesn’t meet certain requirements or deadlines outlined in the original purchase agreement.