Cancelling or Voiding Contract Can Come with Hazards for Buyers

Sometimes you get to the end of a transaction and you feel like I don't want to go through this. It could be either the buyer or the seller. And many times that's gonna cost not only just bad feelings with each other, it's gonna cost some people some money.

BUYER'S CONSEQUENCES

Usually we hear this happening on the buyer side, and so the buyer is the one that's gonna be on the dime, and many times they have an earnest money deposit on the table. When a buyer wants to get out of the contract, they think "I'll just lose my earnest money deposit." In Virginia, that's pretty expensive actually the whole DC market,

Earnest money deposit in our area is anywhere from 1% to 3%. So if you have an average price house of $800,000, you could be losing upwards to $15,000 just to back up. Also, you do have damages that you may be causing for the seller. Storage, moving costs, hotels, anything that they spend at your direction to sell the house to you, including prepaids, they made to all the title company and other vendors such as that.

Also, you may have caused them to lose marketability and or value. Now that you've taken time for them to be off the market. If the market is shrinking, now that you've reached the time of year when. houses are not flying off the shelf. It's the end of summer. It's the beginning of fall. Everyone's going back to school. They're not buying houses.

So there's the loss of marketability as well that they may go after you for, besides just your earnest money Deposit for sellers.

IF THE SELLER DEFAULTS

Sellers can also default. It's rare, but they can. If you do, you need to take into account what the buyer's options are.

They just don't say, oh, okay, no problem. Walk away. They could sue you for performance and if they sue you for performance, not only do you have to sell the house to them if you lose, but now you've gotta pay legal fees, both yours and the buyers to get across the line.

They could also sue you for actual damages, much like what the buyer would have to pay up for moving storage, transaction cost.

And for buyers, they've done home inspections, they've got an appraisal. They may have title costs that they have to absorb because they were getting ready to go to closing, and then you have a domino effect backwards. So maybe they had a house on the market and now they can't sell it. They have to put it back on the market and deal with the contract issues there that could be costing them money.

So you wanna get out of a contract, at that point, you need to talk with an attorney because now you've entered a legal minefield instead of just a real estate transaction.

0 comments

Broker 911 Network

skool.com/broker911

Our mission is simple: to transform agents from uncertain and under-producing into confident, client-focused professionals who lead with excellence.

Leaderboard (30-day)