What Happens if an Arizona Home Seller Backs Out at Closing?
Given today’s volatile housing market, buyers and sellers alike are nervous when making major decisions. Purchasing or selling a home is a big transaction after all, and one wrong move could result in financial distress. So it’s not unusual that a seller might want to back out from a closing.
What do you do if this happens to you? If you’re a seller, what things can you expect if you do back out of a contract? At Andrew the Home Buyer, we’ve shared what happens if an AZ house seller backs out at closing. Read on!
If you want to sell your house quickly, request a cash offer today! We buy homes in Arizona.
Consequences of Backing Out of a Home Purchase
Let’s say that you’ve made a decision and are determined to walk away from a purchase contract for your home. What can you expect to happen? Here are the most severe consequences that might occur.
Backing out from a purchase agreement is technically breaching a contract. So a buyer has all the rights to sue the seller for damages. In court, a judge could order the seller to repay the buyer for various expenses like inspections and appraisals. In addition, they will need to return the initial deposit of the buyer with interest. While breach of contract will not lead to criminal charges, sellers could still shell out a lot of money.
Going to court is an unpleasant and tedious experience for all with legal proceedings racking up expenses for both parties. So a seller might negotiate with a buyer if they plan to break the contract in exchange for compensation. That way, both of them can leave the agreement without having to go through litigation.
Can a Home Seller Avoid Penalties?
Backing out from a contract doesn’t always have to end poorly. There are two scenarios that could help avoid penalties:
- Add applicable terms and conditions to the contract: You can ask your real estate lawyer or realtor to help add contingencies to the contract that stipulate fulfillment before a sale can happen. For example, you can make it so that your current home can only be sold once you’ve found a house to move into. You can also include timeframes and deadlines for offers.
- The buyer is unable to fulfill the contract requirements: You can break the contract if the buyer isn’t able to accomplish what’s required from them. For example, they might not be able to secure financing or their lender didn’t appraise the property high enough for them to provide funding to the buyer. In cases like these, you can break your contract without having to face any penalties as it puts the buyer in breach of contract.
How Can a Seller Backout of a Contract Legally?
Real estate purchase contracts are more for the protection of the buyer than the seller. However, there are certain circumstances in which the latter can walk away without facing legal ramifications.
- Scams: You can legally break a purchase contract if you’ve been deceived or swindled in some way. These rarely happen and are considered extreme cases. Nevertheless, you can still walk away from the contract when these occur.
- Sale Contingency: If one of the contingencies added to the contract fell through, then you’re legally allowed to walk out of the contract. So make sure that these conditions are explicitly on the document to avoid any issues.
Reasons Why a Home Seller Might Back Out
Putting a property on the market is not an easy task. It takes a lot of commitment and resources just to sell the home. So what are the factors that may convince you to back out while already this deep into the process? Here are some of the most common reasons.
- Can’t find a new property: With the shifting market, it might be difficult to find a home that fits your needs and budget. If you can’t buy a new home in time for closing on your own sale, you’ll want to stay in your current property and avoid being homeless. So make sure to ask your agent to add this sale contingent to the contract.
- Appraisal value is higher than expected: If an appraiser assigned a higher value to your home than what the buyer’s offered, you’ll want to sell it at that price. That means leaving the contract and accepting new offers.
- Personal reasons: You may be too emotionally attached to the property, or you lost your job and can no longer afford to move somewhere else. These are valid enough reasons for you to want to back out of the purchase contract.
Sell a Home Fast With Andrew The Homebuyer
So, what happens if an AZ House seller backs out at closing? A lot of inconvenience, to say the least. You can avoid all the hassle of buyers and purchase contracts by selling your home to us! We buy homes in Pinal and Maricopa County, Arizona, particularly in Phoenix and Mesa. You won’t need to put offers, make repairs or renovations, or stage your property. We’ll purchase it with cash so you can move on and move into a new home. Request a cash offer today!