What should sellers do if the buyer decides to back out and cancel escrow?
What happens if your buyer wants to cancel escrow due to complications in the home-selling process? When the market starts shifting, transactions don’t always close smoothly. Here are a few common problems that can come up.
One of the most frustrating issues is when the buyer wants to back out of the purchase and cancels escrow. The reason may be financial; perhaps they can’t get the loan, or the home doesn’t appraise for the purchase price. It could also be related to the property’s condition. The cost of repairs could be higher than anticipated, an undisclosed defect could be discovered, or maybe the buyer could take another look at disclosures and decide it wasn’t for them. If this happens to you as a seller, what can you do?
“It’s good to have a backup offer on hand.”
If the buyer’s reason for backing out falls under their contingency, they can cancel the escrow and retrieve their deposit. At this point, your home goes back on the market, and we find another buyer. If the buyer has removed their contingencies, things can get tricky. The buyer may be breaching the contract if they decide not to go through with the purchase, and their initial deposit may be at risk. The agents on both sides need to communicate what’s going on. The best way forward is to find another buyer quickly.
If we ever need to cancel escrow, we’ll immediately get to work finding a replacement and make sure the marketing is in place to re-energize buyer activity. It’s good to have a backup offer on hand just in case that first buyer does have contingencies in their contract.
If you have any questions, don’t hesitate to reach out to me by phone or email. I look forward to hearing from you.