Orlando Real Estate, Orlando Buyers Agent, Orlando Homes, Orlando Buyers Broker: How to cancel a Real Estate Contract

How to cancel a Real Estate Contract

How to cancel a Real Estate Contract.

Are you all tied up in a purchase contract that is a mistake? What can you do?

First of all, it is always better to protect yourself in your Real Estate offer with contingencies than to try to untie yourself from a contract after you are knotted up to with no escape route...not that I think you should go to contract if you have reservations. If in doubt, do not sign.

But here are some strategies for cancelling a contract that you could use:

Contract contingencies are simply a way a buyer can back out of a contract within a set period of time if certain conditions specified are not met in a timely manner.

Home Inspections: Make the contract subject to approval of your house inspections and do not box yourself into a tight time frame...give yourself at least 15 days to inspect for anything and everything you want. If unsatisfactory to you, you may have the option to void the real estate contract as long as you are within the time frame indicated.

Mortgage Financing: If you do not qualify for a mortgage under the terms specified under the contract, you may be able to cancel the contract, but expect to provide proof. You should not need to seek alternate financing.

Appraisal: Even if you are paying cash, make the contract subject to the appraised value being equal to or more than the purchase price. Do the appraisal after the home inspection and after you have your financing scrutinized.

Attorney Review: Make the contract contingent on your attorneys approval. If your are stuck, discuss with your attorney.

More Escapes: Last but not least, did the seller perform in a timely manner per the contract? Did everyone sign and initial all the changes? Does the title have clouds? Were there non-disclosed HOA capital contributions? Are there encroachments on the property? Did the seller hide some defects? These are all issues that could allow a buyer to cancel the contract.

No one can force a buyer to close on a property, but depending upon how the real estate contract was written and the buyers performance, the seller may be entitled to keep your deposit. If you are serious about voiding a contract, it is always advisable to seek a legal opinion from a real estate attorney.

Copyright @ Buyers Broker of Florida 2011 "How to Cancel a Real Estate Contract"

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Representing ONLY the best interest of the Home Buyer...never the seller.

 Eve Alexander Orlando Buyers Agent

 

Comment balloon 45 commentsMike & Eve Alexander • July 13 2011 06:21PM

Comments

Mike & Eve - Thank you for the detailed quality information on how to cancel a real estate contract.

Posted by John Pusa, Your All Time Realtor With Exceptional Service (Berkshire Hathaway Home Services Crest) over 7 years ago

Eve, what about if the contract isn't really effective? Places where it should be initialed, etc. It seems simple, but if it's not buttoned up, it's not totally effective.

Sharon

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 7 years ago

Good morning, Eve.... buyers in your area would be wise to hire you as their buyer's agent.... the best representation, along with being well-versed on preparing a real estate contract that protects the buyer, is what you provide...not many buyer agents can live up to your standards.

Posted by Barbara Todaro, "Franklin MA Homes" (RE/MAX Executive Realty ) over 4 years ago

A knowledgeable agent knows how to advise their buyers accordingly.  There is a "forever hold your peace" time when it's just too late to back out without subjecting earnest money deposit forfeiture.  You're a great agent who knows the time frames.  A big suggest on this one Eve!

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 4 years ago

There is almost always a way out.  It is wise to delay giving up contingencies as long as possible.

Posted by Jeff Jensen (The Federal Savings Bank/Lending in 50 states) over 4 years ago

 

John: You are welcome

Sharon:  Good point

Barbara:  We sure try, so much appreciated.

Carla:  Thank you!

Jeff:  True, but something many agents don't realize

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago
In Arkansas, a cancelled contract by a seller means the agent still gets paid. However, most brokers are fraidy cats to demand their money. this broker had three instances last year where sellers wanted to back out. When I told them to write my commission check RIGHT NOW, they went ahead and sold. One seller waited til listing expired, then sold the house to the renter. My attorney sent them a demand letter and I got my $3,200.00. In Arkansas, all a list agent has to do is present an "acceptable offer" and the commission is earned.
Posted by Marvin Shelley over 4 years ago

You had me scared for a moment when I read your headline.  You are correct, contingencies are the escape keys for a contract.  

I once had a buyer ask to get out of a contract AFTER the contingencies were all met and passed.  I said to them, "Get a really good lawyer".  "I am in the business of getting folks into contracts, but it takes a lawyer to bail you out of a contract when the kick-out clauses are gone".

They shook off their case of buyer's remorse, closed the sale, and now they are happy they bought the house.

Erick Blackwelder
Washington DC Suburbs
703-677-1120
Exit Choice Realty
Equal Housing Opportunity

 

 

Posted by Erick Blackwelder, Text or call Erick now at 703-677-1120. (Cell: 703-677-1120) over 4 years ago

Good list. I've had to cancel a few, but all with good reasons, except one (packed up & moved off with new hubby who spat out a buncha lies for the reason to cancel with no papers to verify - not worth the trouble to pursue).

Posted by Travis "the SOLD man" Parker; Associate Broker, email: Travis@theSOLDman.me / cell: 334-494-7846 (Team Linda Simmons, Enterprise, AL 36330) over 4 years ago

very good information

Posted by Ron Aguilar, Mortgage & Real Estate Advisor since 1995 (Continental Mortgage) over 4 years ago

One of the best tricks is to have a "come to Jesus" meeting before the contract is executed.  I have had a lot of offers come in on my listings and then the buyer "changes their minds".  Commit people!

Posted by Jeanne Gregory, The most important home I sell is YOURS! (RE/MAX Southwest) over 4 years ago

Marvin:  I am with you on this one...commission earned needs to be paid.

Erick:  When it comes to possibly shelling out more money or loosing some, buyers and sellers usually stop the nonsense and close.

Travis:  A bummer when that happens.

Ron:  Thank you.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago

Jeanne:  I find that surprising, because I don't have buyers changing their mind...but then I choose to work only the committed ones.  I agree that you have to set the buyers expections (your come to Jesus meeting) and then manage their misconceptions.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago

Good information for all agents..make sure your contract is an enforceable contract. On a side note..If a buyer wants out of contract, they will find a way. 

Posted by Margaret Rome, Baltimore Maryland, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) over 4 years ago

Our CT real estate contracts offer several areas where a buyer can escape from a contract and receive their escrow as well. Time-lines being followed by all are critical, however

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (RE/MAX Professionals, CT 203-206-0754 ) over 4 years ago

There are lots of outs and if you do things right very little chance of loosing a deposit. 

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 4 years ago

This is very good information! Thanks for sharing.

Posted by Diana White-Pettis, GRI, CDPE, CNE, WHC Upper Marlboro Homes for Sale (Bennett Realty Solutions) over 4 years ago

You bring back memories - I can't think how many purchase and sale agreements I've seen where the buyer's agent didn't fill in the financing terms that would be acceptable to the buyer.

Someone back in real estate school should have taught them that all those little places that look like ____________ need to be filled in.

Posted by Marte Cliff, Your real estate writer (Marte Cliff Copywriting) over 4 years ago

 

Good post but do you have any suggestions how to cancel a contract when the buyer's attorney insists on original death's certificates for the title insurance which the seller will never get because seller is not a family member. The seller tried everything to fix the problem and has already offered three times the cancellation without claiming the earnest money but the buyer or maybe buyer's attorney refused to do so.

 

That is one of my cases and not fiction.

 

Greetings from Fort Lauderdale, FL

 

Posted by Andrea HoffDomin, - in Real Estate always on your side! (Florida Dream Homes Realty) over 4 years ago

I had a buyer cancel a contract the afternoon before closing.  Just decided he didn't want to live in Mineral Wells.  Of course he lost his earnest money, but to him, it didn't matter.  He left as soon as he signed the earnest money release.  From what I know, he was off to South Carolina.  

Posted by Carolyn Shipp, Mineral Wells Texas Real Estate (Source 1 Real Estate) over 4 years ago

Margaret:  Where there is a will, there is always a way.

Ed:  Sound like a balanced contract...most are in favor of the seller.

Gene:  Yes, at the end.  But sellers can make the buyer miserable when they refuse.

Diana:  Thank you.

Marte:  You are so right!  I hired agent that had been in the business for years and I still had to re-teach them to fill in all the blanks...Where are their brokers?

Andrea:  I think in your case the seller needs to hire a hard nosed attorney to tell the buyers attorney what they missed in law school.

Carolyn:  Bummer...sounds like he got a bad case of buyers remorse...he should have at least paid you your commission.

 

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago

Great post to help anyone who isn't sure how to handle the cancellation of a contract. Of course each state is different, but those in your state will look to you for guidance!

Posted by Jan Green, HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN (Value Added Service, 602-620-2699) over 4 years ago

Jan:  True each state is different as some have these contingencies built into the contract.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago

Great post for those buyers jumping in and then having a reality moment!

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373) over 4 years ago

Will chime in and say all special clauses should have timelines.  Would add to attorney review...as to legal content only, approval or disapproval should be sent in writing within xx number of days.    Buyers should check their attorney calendar in  advance of filling in this blank.

Suggest utilizing a timeline sheet for all parties concerned and distribute to all parties in the transaction for access and notice of default purposes.  I am suggesting a feature here Eve and Mike!

 

 

Posted by Eileen Burns, FL Probate Agent, Hotel & Land Specialist (Trans State Commercial RE Ft. Lauderdale/Miami/Palm Beach) over 4 years ago

A well written contract should be the number one priority for a buyer's agent. If they don't have their clients back who does?

Posted by John DL Arendsen, Crest Backyard Homes "ADU" dealer & Contractor (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) over 4 years ago

as for #20, the question about the death certificates, the deceased had to have been buried or cremated, has anyone contacted the funeral home? or looked for an old newspaper notice? Unfortunately, we attorneys do need to know that "dead" guys are really dead!  If it was back in the chain, did the current owner have title insurance? then that company should indemnify. If it is the current seller, that person has some connection with the deceased, as PR or heir, that should allow them to get death certificates from the state.

Posted by Kunni Biener (First Class Title, Inc. ) over 4 years ago

It's really not that easy for a seller to keep an earnest money deposit in California. Some sellers may be delusional in thinking it's a way to make some extra cash if a buyer decides not to buy. It's like a judge told me once, no one can make a buyer buy a home or an owner sell one. If a buyer decides not to sign the escrow release, then what? Seller can't sell and will have to pursue the deposit in arbitration. Good luck with that.

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) over 4 years ago

I recently had to get a buyer out of a contract. It was not pretty. They could not close because the home they were selling fell out of contract. This was after spending the money for inspections, appraisal and the mortgage application.

Somehow they convinced themselves I should repay them out of my pocket. They can take it out of the commission I lost when they lost the deal.

Posted by Jack Fleming (Weichert, Realtors) over 4 years ago

Had a buyer back out of closing on a home 4 days before closing and he WAS a real estate attorney with the US Coast Guard! Imagine that!

All contingencies met, no issues from inspection, loan approved, appt set to close. Turns out he put in for a transfer (told no one), transfer was granted and that was his excuse for walking away. Sellers rec'd earnest money deposit, but it cost them additional hardship. By contract they had 4 days to deliver possession and were moving out of state, so the wheels were already in motion to make the interstate move. Stuck with 2 homes, 2 property taxes, 2 homeowners insurance policies, 2 sets of utilities, and had to hire someone for lawn maintenance. They could have sued for damages, but luckily I found a cash buyer within a week that bought it for more than asking price. Sellers settled for just the earnest money.

Posted by Jamie King, Sandusky, OH (Hoty Enterprises, Inc.) over 4 years ago

 

Eileen:  Yes, timelines are always important.

John: That's for sure.

Kunni: Excellent points

Pamela:  If escrow is with a title company they do not have to follow the rules of arbitration.  They can just release the funds and hope the other party does not sue.

Jack:  Of course you should have paid...look at all the commission you got .  Sure, just blame the agent.

Jamie:  Hard to imagine. Real bummer for the sellers, but I have found that most contracts today consider the escrow as liquidated damages.  Good thing for them that they had you to pull it together with a new buyer.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago

How many sellers would accept an offer with every listed contingency? Today's market commands that buyers are already approved for a loan so why would a contingency be required in the contract? Buying "as is" is another issue, so inspection, repairs and appraisal issues shouldn't be a contingency either, so it really depends on the terms and conditions of the sale, doesn't it?

 

Posted by Kimo Jarrett, Pro Lifestyle Solutions (WikiWiki Realty) over 4 years ago

Kimo:  It would probably not be prudent for a seller to accept every contingency in a contact, but they sure do accept some.

Buying a property "AS-IS" only means that the seller does not want to make repairs, it does not mean that there is no inspection contingency.

Buyers are only Pre-Approved for a loan.  A true approval only comes after the buyer is under contract for a specific property, the property appraises for purchase price and the underwriter approves the file.

Depending upon what is important to the home buyer, contingencies are not dead and there is at least one in every offer.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago

I like this, I think it's reassuring to buyers to know that if they really want out, there are ways to make that happen.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 4 years ago

Whenever possible, I try to submit contracts with no contingencies at all - other than a clear title.  So many of these weasel clauses end up causing your contract to get rejected.  A buyer can actually get sued for specific performance or damages above and beyond a deposit.  But that seldom happens on small residential deals because the cost involved is not worth it.  

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) over 4 years ago

Exactly use the contingency.  I have never lost a deposit for a client.  In California the limit of damages is generally speaking the deposit and even then the seller has to document they lost money by a buyer backing out.  

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 4 years ago

 

 

Karen:  Where there is a will, there is always a way...

Rob:  The Florida FarBar contract was revised last year and if a buyer defaults and the seller agrees to keep escrow deposit, that is considered liquidated damages. Of course anyone can sue...

Gene:  I used to keep an escrow account years ago, and there were always demands on the buyers escrow.  I never lost a deposit, but had to negotiate with angry sellers.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 4 years ago

Good reminder post. Contingencies, Contingencies, Contingencies.

Posted by Aaron Jay, -Keepin' it Real...Estate!- (City of Trees Realty) over 4 years ago

I would recommend to my client to not accept a contract from a Buyer who has a clause in it that the contract needs Attorney approval....that should already have been done if needed. If it was in there...it would need to have 48 hours or less for that contingency to fall off.  

Posted by Mike McCann - Nebraska Farm Land Broker, Farm Land For Sale 308-627-3700 or 800-241-3940 (Mike McCann - Broker, Farmland Broker-Auctioneer Serving Rural Nebraska) over 4 years ago

# 33'scomments are ridiculous!  He's saying buyers should just take the house - defects and all the rest of the things sellers know about and are trying to hide!  And, for the generosity of the sellers even taking the time to put their precious signatures on the contract, they'll up the price by $25,000.  

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 4 years ago

Contracts are complex documents that protect both buyer and seller.  Working with a knowledgeable agent and title company is essential.

Posted by Sharon Parisi, Dallas Homes (United Real Estate Dallas ) over 4 years ago

There are some contingencies already built into our Arizona purchase contract. A good buyers agent should be able to explain what the buyer is getting into prior to writing the contract. Like Sharon (#42) said, there are things within a contract to protect both the buyer and seller.

Posted by Troy Erickson, Your Chandler, Ahwatukee, and East Valley Realtor (Diverse Solutions Realty www.ChandlerRealEstate.weebly.com) over 4 years ago

This is great news for the buyers, but not really for the sellers.  I have been asked many sellers, "why is it like that?"  The answer is a rather simple one, the seller knows everything about the home and really has no surprises, but the buyer initially knows nothing about the home, which may have a lot of surprises.  Bottom line is if the seller discloses everything, there should be no problems with closing.

I understand what Kimo is saying, but if the home is being sold "as-is," that is all the more reason to have the contingencies in there.  All "as-is" means is most likely the seller will make no repairs.  The potential buyer will want to know what is all wrong with it and know how much money they will have to spend to get it repaired to see if it is worth it.

Posted by Deleted Account over 4 years ago

I want to send this BLOG on and on and on! Great information on a a common issue.

Have a fantastic week Mike & Eve.

Posted by Brian Olsen, Cooper Jacobs Real Estate Group | Keller Williams (Portland, Lake Oswego, West Linn & Dunthorpe Neighborhoods, Waterfront, Luxury & Floating Homes) over 4 years ago

There are always ways out for the California buyers, from contingencies to some legal tricks of the trade to make certain they receive their EMD.

Posted by Pete Xavier, Outstanding Agent Referrals-Nationwide (Investments to Luxury) almost 4 years ago

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