can seller back out after contract signed?

Question

Can a seller back out of a signed deal if they don't like the home inspection report details? I settled on a price which was good but at the top of what I considered a "deal" (only by a few thousand dollars). Sellers realtor says they paid way too much in 2008 and needed to bring cash to the table at closing.

Now the home inspection has turned up a few things that I'd like the seller to meet me in the middle with. I'm super handy and can complete all the repairs pretty much myself but I'm reluctant to go much more out of pocket without a very good appraisal. Can the seller back out of the deal if they don't like the home inspection report? Is there a valid reason on their part to void the deal if the needed repairs are obvious and a little more than just cosmetic? Is not having the ability to make a concession at closing a valid reason to not close the deal (otherwise seller may have negative or zero equity at the agreed price)??

Overall the house has great bones but it will take a few grand to complete the punch list of items needed to remedy: radon mitigation, surface mold in attic, slight leaks at a few easily accessible spots in the roof, electrical service work. Like I said I'm more than capable of clearing all of these issues up, just wondering if I push the seller to work with me more does that give a reason for them to try to get out of the contract? Should I push for the appraisal and see how much meat is on the bone and then use that as a gauge of whether I should push for a concession??

Josane Cumandala · Answer

It's not your fault that the seller/listing broker is using the seller's buy-in price from the top of the market to justify their selling price. That is not how real estate works. The market does not care how much you paid for the property or how much you overspent on the renovation. It's about what other people in the market are paying currently for a similar property or how much income the property can produce right now.

Honestly, I don't understand why the seller's agent is disclosing how the seller overpaid on acquisition. Is that a guilt trip on you? Agents are supposed to honor their client's privacy and work in their best interests. Telling the potential buyer that the seller made a mistake in the past seems silly to me at best and potentially a breach of trust at worst. That said, it wouldn't be the most egregious thing I've seen a New York real estate agent do.

Whether or not the seller can back out depends on the contract you signed but honestly it's a free country and it's still their property, no one should force somebody to part with their property if they don't want to. The question is how motivated is the seller? No need to beat them over the head in the negotiations. Try to build rapport with the seller and the agent as much as possible and come to a win-win. But definitely do not feel obligated to overpay because boo hoo the seller had to bring cash to closing.

Russell Brazil · Answer

Our local contract states that when you request repairs/credits after a home inspection the sellers first response can not be to void the contract.  Their first response can be anything else included a flat out no.  On the 2nd go around the seller can void the contract.

But as a general rule if the contract does not mention they can not void, then they can void the contract once you open the contract back up for negotiations, because now you no longer have a ratified contract, but you are now negotiating again.

Randi Plevy · Answer

Whether or not a Seller can "get out" of a contract comes down to what the contract says, period.  What does the inspection clause in the contract actually say?  Contrary to previous opinion, you can force a Seller to sell if they are defaulting by simply chainging their mind.  You must have a lawyer on this deal.  Please talk to your lawyer.

Wayne Brooks · Answer

@Russell Brazil That’s interesting law there, if I interpreted that correctly.

How about an example where, after inspection, the buyers communicates:

“We have found additional blah blah blah, if the seller is willing to reduce the price by $5k we will continue with the contract.  If not, we will/May have to cancel the contract within our inspection period, as per the inspection clause”.

Here in FL, that would not give cause for the seller to be able to cancel the contract, since the inspection clause is unilaterally only the buyer’s right. Until the buyer actually submits a signed cancelation under the inspection clause, the seller is stuck with the contract, no matter how the buyer attempts to negotiate a reduction.

In fact, a buyer can submit an addendum for acceptance with a price reduction or repair credit, without triggering any cancellation of the contract, since the Buyer has not actually canceled the contract.

Peter Arroyo · Answer

Thanks everyone, so far so good. The seller accepted the concession at closing so that I can apply the funds towards repairs that were identified in the inspection report. Look like the closing will be coming up soon.

I was concerned that after all the time and effort and expense that went in so far to get up to this point that the seller was going to be able to pull some excuse on me about how they couldn't work with me due to 2008 purchase price, or just not respond to my request for concession and make me have to fold up and walk away.

I'll keep everyone posted on the final outcome mid October

Bob Floss II · Answer

@Peter Arroyo I agree with @Randi Plevy, it all depends on your contract and how you treated the inspection contingency. You can always withdraw your request and inform the seller you would like to move forward. However, at the end of the day, you cannot force the seller to give you a credit or reduce the price.

Russell Brazil · Answer

@Wayne Brooks Also an interesting little line in our Montgomery County/DC form is a clause that the seller retains the right to at any time accept the most recent terms proposed by the buyer.  This trips up a lot of people who dont know that line is in there. So buyer and seller are negotiating, cant come to terms, buyer sends notice to terminate the contract...but oh wait, seller instead decides to accept the most recent proposal from the buyer, now buyer is stuck in a contract that they want to get out of because they are just pissed off...and their agent never told them about that clause because they didnt know it existed.

Russell Brazil · Answer

Communication is different than serving notice or an attempt to create an addendum to the contract.  So anything along the lines of an email or phone call, is just a conversation outside of the purview of the contract.  Once its on "paper", on some sort of addendum or notice, then that can open the contract back up for negotiation.  For example, buyer sends notice on proper form saying we want $5,000 seller subsidy. Now the contract is no longer ratified and has been reopened for negotiations . (This is assuming the buyer has the right to reopen negotiations per the contract).

We actually have 2 separate home inspection addendums to the contract.  The one used largely in Montgomery County MD & Washington DC states that the sellers first option once the negotiations are opened can not be to void the contract.  The one commonly used in the rest of Maryland does not have that language, so the seller at any time can void the contract when the MR (Maryland Realtors) form is used.  We had that changed in the Montgomery County/DC form specifically because too many sellers were voiding the contracts when buyers would come in with unreasonable requests.

But the reopening of negotiations I thought was a universal thing, as it's the case in 3 out of the 4 states I do business in. The 4th state Massachusetts, while they dont necessarily refer to it this way...operates more on a letter of intent type of system (they call it a contract, but it's not), then a purchase and sale contract, that is not standardized is drafted up by lawyers after the home inspection.

Peter Arroyo · Answer

Thanks @Michele B. and @Mike McCarthy

I think I'm just going to wait the extra day or so until the report can be viewed by both sides and then see what they come back with and can give towards the repair list. The problem with me being handy is that almost all repairs seem pretty easy to me which is why I'm willing to make the repairs myself for a smaller concession from the seller than a typical buyer that has to hire everything out. But I also agree with the emotional part of it since this sellers realtor has used the 2008 price that they originally paid (which I believe is way too much) as a basis towards our negotiations and the current resale price limits. I am hoping that they see these as repairs they would have to make anyway and just splits the difference with me, but you never know.

can seller back out after contract signed?

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