Consumers are more likely to back out of a home purchase when it’s a buyer’s market.
Whether it’s because they’re scared of soft prices or future market declines, these fears can kick-in right after the purchase offer and may continue up until the deadline. When this happens, some may decide to walk away from the deal entirely.
While it is legal for them to do so, those decisions can hurt both buyers and sellers financially.
Why some buyers decide to walk away
Ideally, buyers who want to back out of an agreement should do so during the contingency stage; however, everyone’s situation is different. These are a few reasons why they might:
- Complications with contract contingencies: Often, these contracts have the buyer state in writing that they will follow through with the home purchase but can back out under certain circumstances. If there is a low appraisal and the buyer cannot afford to borrow or discover there are issues with the property, they may not follow through.
- They get cold feet right before: For some consumers, maintaining a home can be demanding. When mortgage payments, property taxes and maintenance are combined, it can drain their finances over time. Unfortunately, some may realize they can’t afford to until the last minute and decide not to purchase.
- They decide to go after a different home: In some cases, prospective buyers may be comparing options, even if they’ve agreed to commit to a purchase. The next one they look at may be their dream home and cause them to drop their first selection.
- They have problems with financing: Issues with a buyer’s finances can come up after the contingency period. In some cases, a lender may issue a buyer a loan preapproval letter, but that doesn’t always guarantee they’ll meet the requirements to get the loan.
- Sudden life changes: Buyers may have to walk away if there are things that happen out of their control. For example, the buyer may have lost their job, gotten a pay cut, developed a severe illness or unexpectedly got divorced.
Buyers can face repercussions from leaving the table
Depending on the circumstances, sellers can obtain damages if homebuyers default on their purchase. Those looking to pursue them legally may want to contact an experienced real estate law attorney. They can help review the seller’s contract and address any concerns they may have.