Can You Back Out of a Home Purchase?

I get this question all the time, especially from first time buyers, and it's an important one. What happens if I back out of a deal? And the truth is, it depends. I'm Amber Johnson with Pillar Real Estate, and today I'm breaking down the key protections in your purchase contract that can help you back out without losing your earnest money deposit.

Here's what protects you. Contingencies. These are the safety nets built into your contract that give you the time that you need to do your due diligence. There are several contingencies built into the purchase agreement, but let's touch on the three big ones.

First, the inspection contingency. This one gives you the time that you need to inspect the home. If something major pops up, you can attempt to renegotiate with the seller to get the issue resolved. This can be in the form of the seller remediating an issue during escrow. The seller can issue you a credit at closing or even a reduction in price may be possible if the renegotiation is unsuccessful. You can choose to walk away.

Next, the appraisal contingency. If the home doesn't appraise for the contract price and you and the seller cannot come to terms on a new price or a needed adjustment, you can cancel the contract. And then there's the financing contingency. If your lender cannot approve your loan despite your good faith effort, you're protected. You won't be forced to buy a home that you cannot afford.

That's the point of the contingency. But remember, every contingency has a deadline. Once you remove them in writing, your deposit is at risk. If you're unwilling or unable to close escrow. That's why it's so important to work with an experienced agent who can manage those timelines and protect your investment.

If you're still feeling unsure about how the contract works or what protections you really have as a buyer, join one of my upcoming Free Virtual Buyers seminars happening throughout the spring and summer. I'll walk you through the entire homebuying process in plain English, right down the contract, step by step, and show you how to buy Smart. DM me “Buyers Seminar” to get the list of upcoming dates or visit BuyWithAmber.PillarRealEstate.com. For more tips and tools to guide you home with confidence.