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When Can A Home Seller Back Out Of A Sale?

When Can A Home Seller Back Out Of A Sale?

You and your realtor have found the perfect home after a long search and you're now ready to make an offer. The Offer to Purchase paperwork has been prepared and signed by yourself and the seller and it is now in the process of Attorney Review. You're this close to being able to close the deal and move into your dream home and you're wondering to yourself if the home seller can back out of a sale. There are certain steps in the process where a home seller can legally cancel a real estate contract and it's important to understand these times in order to protect yourself as a home buyer.

Attorney Review

As specified in legal statutes regarding real estate, both the home seller and the home buyer have a three-day window, while the Offer to Purchase (PDF) is being reviewed by legal counsel, to back out of the deal. This is primarily a means to protect the home seller in the event that additional offers are received at a better price than what is currently on the table. While the home seller has no legal obligation to provide the current home buyer an opportunity to make a counter offer, it is often a common courtesy. This is an important aspect of purchasing a home and requires a home buyer to make a sufficient enough bid stave off competing offers.

Mortgage Contingency

Most homes are financed through lending companies who issue a mortgage to a home buyer to finalize a purchase. As part of a sales contract, a specific date is required for the home buyer to have financing lined up via a written commitment from a mortgage company. This is the prevent existing offers from sitting in limbo for an indeterminate period of time and forcing a home seller to wait while a home buyer tries to lock in financing. Other offers may be a possibility, so it is always best to lock in a mortgage commitment prior to searching for a home. The date however is arbitrary so have your realtor specify a reasonable amount of time for you to qualify and get approved for a mortgage.

Inspection Period

The final stumbling block where issues can arise and where the home seller may decide to back out of the sale is during the home inspection phase. Most home owners will have a good idea of what condition their home is in and what possible issues may be reported. It's not so much that a home seller will decide to turn down an offer as a result of a home inspection. It's more likely that the home buyer will take the results of a home inspection report and use it as a negotiation tactic. If defects are found in the home the buyer may ask for repairs or a reduction in the asking price. At this point the home seller may decide that they won't or can't make repairs and that the price is fixed in place. A stalemate may be reached at which point the home seller may decide to back out of the sale.


As you can see, there are very specific steps in a home transaction which create situations where either party may decide it is not in their best interest to finalize the sale. Some parties get cold feet right after signing a contract while others have financing fall through creating a significant delay and yet others fail to reach agreement on repairs or price after a home inspection. These are legitimate milestones which affect negotiations and financing which may leave either party worse off. This is why it is important to higher a reliable and professional realtor to represent your best interests when selling your home.

Image by: Keith Treder