What happens if the buyer backs out of the sale?

On Behalf of | Dec 10, 2020 | Real Estate Transactions

Even when you have dozens of buyers beating a path to your front door, it may take some time before the right one closes the deal. Sometimes, enthusiasm gets the better of homebuyers and the bank ultimately refuses to extend a mortgage. Circumstances may also change that forces people to reconsider buying a home altogether. 

Provisions do exist to protect you in these cases. You may also put specific things in place to expand these protections. 

Determine who gets the deposit

When a homebuyer shows interest in your home, you may require a deposit as earnest money. Bankrate explains that more often than not, buyers get the deposit money back. This stems from the fact that most buyers back out of a deal during the contingency period. If the contingency no longer applies, you may get the opportunity to keep a portion of the deposit. 

Determine what went wrong

If one buyer backs out of a deal, another may soon come along. When multiple buyers back out, however, you may need to discover what the issue is. If the bank refuses to fund the loan, this may stem from a higher asking price than it values the home. Existing issues with the home may also deter buyers, particularly after an inspection. 

If your only potential buyer or several potential buyers back out, what is the next course of action? Will you keep the house on the market or try again later? Do you need to adjust the price or should you resolve existing issues affecting the home’s value? These are just some of the questions you need to answer when deciding your next step forward.