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What happens when you back out of a Contract as a Home Buyer?
Dated: September 23 2019
Today we're going to be talking about what happens if as a buyer you cancel a contract.
Buyer's remorse is going to happen. Sometimes three days before the contract closes.
You might suddenly got a job somewhere else if you're not military.
Maybe you have cold feet, etc.
All kinds of things. So what are you going to lose? You’re going to lose your EMD, for sure.
Okay, for sure earnest money deposit is going to be gone.
That’s the promissory money that you threw out in the beginning of the contract. The Seller gets that.
So that’s not good. I mean, if you’ve got money to burn it may not be too big of a deal.
We've also lost anything else that you've done for the property, such as a home inspection.
You're also going to lose any money that you have paid to the lender.
Such as Appraisals, Surveys, Credit Reports, etc. We are looking at upwards of $2,000 at the lowest.
If not more depending on what your earnest money deposit was
because your earnest money deposit could be anywhere from a thousand bucks
or it could technically be $1 here in the State of Florida
all the way on up to 5% of the purchase price.
For example if you’re looking at a $500,000 home we are at 25 grand right there.
Yeah, so that's a big deal.
So don't get buyer's remorse.
And think very long
and hard about why you're doing it and if it's a good reason in your mind and you're at peace with it,
just know you're losing some money and let's talk about something else real quick.
I know we didn't discuss this before but if you get kind of forced out of the contract,
for you doing something silly. Let's say you buy a car.
If you're not over your financing contingency at that point,
you could lose all of the same things. So be smart.
Don't buy anything crazy. Don't get cold feet.
Right and you need to be very comfortable before you cancel the contract
because there are consequences.
Occasionally, the Sellers may give you some of your deposit back but very rarely is that the case.
On even more rare occasions they'll give you all of it back,
but it's super rare. So you do have some sellers that are like,
okay, I understand, yeah give them the money back.
Most of them are going to take that as damages for them being off the market during that time.
I think that's a wrap on our topic for today.
Andrew Iremonger started his Real Estate career shortly after leaving the United States Air Force in 2014. The qualities that the military instilled in him carried on in his work ethic. Just a few sho....
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