Home buyer: What if I change my mind about buying a house? Can I Back Out?
You just found your new home and after few round of negotiation, the seller accepted your offer. You slept on it, then you change your mind about the purchase and ask yourself: Can I back out from the purchase? Whether you’re suffering from buyer’s remorse, you found another home you like more or any other reason, this is a common fear, especially for first time home buyer. Back to the question Can I back out if I change my mind? The answer is, “it depends.”
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Financing contingency
When you fist start shopping for home, you already had loan pre-approval. Until the underwriter clears your file, you really don’t have a loan commitment, just a promise to try to get you one. In order for final approval, there are some conditions need to be met, such as proof of employment and income as well as others. This is why there is a loan contingency clause in the Arizona purchase contract. This way, should you not get final approval for a mortgage, you can walk away from the purchase without penalty.
Appraisal contingency
If the appraiser (hired by the lender) finds that your home is worth less than what you had agreed to pay for it, they won’t approve your loan. There are, of course, ways to mitigate this disaster such as Ask the seller to lower the price, come up with the additional money required or walk away from the transaction. The appraisal contingency allows walk away if your home is worth less than the appraised value.
Inspection contingency
Home inspection is highly recommended when buying a home. If there are issues found during inspection that the buyer can’t accept, negotiations can reopen to convince the seller to take care of them. If the home issues are completely unacceptable to the buyer, the inspection contingency allows buyer cancel the deal, without penalty.
Other conditions
There are other conditions, built right into the purchase contract, that will allow you to get out of the purchase. Often, this includes a return of your earnest money deposit, but not always. These conditions even have a name: Contingencies. Here are common contingencies when buying a home in Arizona.
Conclusion
Backing out of a property purchase is not a decision to be made lightly. If you have a change of heart about the home you are buying and there is no problem with the property or the financing or other contingencies, you likely will not get your earnest money back. The earnest money serves as protection for the sellers when they take their home off the market. If late in the game you decide that you no longer want to make the purchase, they get to keep it as compensation for the time and money they have to spend on listing their home again and looking for another buyer. However, if you do change your mind, you may not be limited to losing the deposit only. The sellers could sue you for specific performance and all the tertiary costs that go with that, including their legal fees.
If you have any questions about anything in the home purchase agreement, don’t hesitate to ask. We’re happy to answer them.
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Swee Ng, Realtor and Resident in Phoenix East Valley specializing in win-win real estate transaction through great communication and fighting for his clients’ best interest. After all, this is more than real estates, this is about your life and your dreams.
If you are looking to buy or sell your home in Phoenix or surrounding area, I would the the opportunity to be interviewed for the job. Contact Us today for complimentary and no obligation consultation. I hope that you will put my experience, knowledge, service and professionalism to work for you.
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