Some Homeowners Are Wishing They Never Agreed to Sell
In this era of rapidly escalating property values, Chelsea T. saw opportunity when it knocked, and decided to put her home in Maryland on the market. She sold for an incredible profit, and as a remote worker since before the pandemic, put a bid in on a home in another state. Within a week, however, she got cold feet and regretted her decision.
“I realized I was still attached to this house, and that I jumped too soon based on the high offers I received,” says Chelsea, who asked to be identified only by her first name to maintain her privacy. Thanks to open-minded buyers, Chelesea was able to back out of the deal and still lives in Maryland.
It did cost her — she not only returned her buyers’ earnest money but sweetened the pot with additional cash to cover their expenses. Many sellers will not be so lucky.
Buyer’s remorse is fairly common and sometimes leads to the end of real estate deals. Seller’s remorse tends to be more rare, but in today’s fast moving market, it does happen. “There’s a lot of incentive to sell a house today, which can lead to hasty decisions,” says Jack Cooper, a Maryland-based real estate agent and lawyer. “It’s not all that uncommon right now for a seller to have second thoughts, too.”
While getting out of a contract from the buyers’ side of the table is usually doable — sometimes with penalties — doing the same as a seller is much tougher. In many states real estate contracts are written in such a way that sellers have limited options to cancel.
This is for good reason, says Sara Vaughn, a Colorado-based agent: “Once a buyer plans on buying your home, they usually end their lease or sell their current home. They may need to start a new job and have kids starting in new schools. If sellers had a right to cancel, it would make all of that planning very unsure and difficult.”
If you’re a seller and you find yourself regretting a contract, there are a few steps you can try, but you should know what you’re up against.
Think before listing
Of course, the best way to avoid this mess is to not list your home in the first place. “Think it through,” says Deanne Rymarowicz, associate counsel with the National Association of Realtors. “Listing a house is a big step and in today’s market, it’s tempting to jump in because of the prices you can get without realizing how you might feel after.”
One way to dip your toes in the water is to be upfront with your agent and ask that he or she use a “coming soon” listing. While the number of days allowed for “preview” listings varies from state to state, it gives you a chance to see your home up on the listing page. Your agent will likely receive multiple calls on it, too. Use all of this to weigh your emotions and get a sense of how much interest there is in your home. If it doesn’t feel right, you can pull back before your listing actually goes live.
Get familiar with real estate contracts
If you get to the offer stage, have a good hard look at the offer and through the contract before you sign it. “The contract always works in favor of the buyer,” says Pennsylvania-based agent Cherie Altsman. “All contracts have specific deadlines that the buyers must meet, and that’s going to be a seller’s best recourse.”
Keep in mind that the rules surrounding contracts will vary from state to state, but there are some commonalities you can usually count on. Your main avenue to back out of a sales contract is a contingency, or a clause that says you have the right to back out of the deal if certain terms aren’t met by specific dates.
“You will have deadlines in a contract for the buyer to deliver earnest money, potentially an inspection deadline, a mortgage deadline, a title commitment, and an appraisal deadline,” says Altsman. Most contracts have room for a seller to cancel if the buyer doesn’t come through on time.
“One of my clients wrote in a contract contingency that they needed 60 days to find a new home, which gave them breathing room,” says Cooper. “That way, if they were unable to find something they liked in that time, they could still hold onto their home.”
In some states, there’s also a very brief “cooling off” period, says Rymarowicz, which might be 24 to 48 hours. “Check with a real estate attorney immediately if you’re having regrets,” she advises. As a seller, once you’ve run through these options, however, the tides turn against you in almost all cases.
Get creative — and be realistic
“There are many reasons for a seller to want to back out, from loss of job to a health crisis,” says Rymarowicz. “Sometimes, explaining that to the buyer will gain you sympathy and they will allow you to back out.”
That worked for one of Vaughn’s clients, she says: “Our only course of action was to explain the situation and very kindly ask the buyers to terminate. My client offered to cover the buyers’ rent for a few months as a type of buyout, while they looked for something else, and it worked.”
In today’s hot market, however, many buyers have been in the bidding game for some time and may be extra reluctant to let an accepted offer slip away. “It’s common for buyers to have many offers rejected prior to having one accepted,” says Altsman.
At that point as a seller, you are left with the unappealing scenario of breaching your contract. “Sellers should know that breaching contract is not a pretty option,” says Rymarowicz. “You might end up with a lawsuit for performance, and the court will likely force the seller to go through with the deal.”
A seller in this situation may also face additional damages, such as paying the buyers’ rent or current mortgage, storage charges or attorney’s fees. “It can get expensive very quickly,” warns Rymarowicz.
Cooper, however, has seen sellers roll the dice and breach. “Everyone threatens to sue, but once it goes to that level, the buyers may not have the stomach to get tied up in what could be a lengthy and expensive litigation,” he says.
Still, the best advice is to see things through. “At the end of the day, the contract sets the rules of engagement,” says Rymarowicz. “If you’re having any second thoughts at all, the easiest thing is to wait to list until you’re absolutely sure.”
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