The answer to the question posed in the title can be either, “yes,” or “no,” but that doesn’t mean that if you’ve submitted a purchase offer, you’re free or stuck. At this early juncture, however, it is possible to rescind a purchase offer, but, you must immediately contact your buyer’s agent to inform the seller that you’re withdrawing your offer. What’s most important is the timing and what the seller has or has not done. This is because if the seller has not yet accepted, there is no formal contract. Even an oral agreement generally isn’t enough to make it binding.
Is it Possible to Rescind a Home Purchase Offer?
Instruct your buyer’s agent to immediately email or fax the seller’s agent to have your withdrawal in writing and time-stamped. In this case, you’ll not only be let out of the deal, but also, should have your earnest money returned to you. However, this won’t be enough if the seller has accepted your purchase offer and signed on the dotted line, because it’s now a legally binding contract, and you can’t simply change your mind.
“Sometimes the unexpected can happen to a prospective home buyer, who decides he or she cannot go through with the purchase of a home. What matters is that if you have to cancel a home purchase, announce your decision as soon as possible, in order to avoid losing money and causing the seller unnecessary hardship.” —HomeFinder.com
The good news is, even at this stage, you aren’t necessarily trapped, though it won’t exactly be an easy task to pull-off. You can ask your agent or hire an attorney to write a purchase contract cancellation agreement. This is another way to back-out, but, it does have a large stipulation: the seller must willing agree to cancel the contract. What is in your favor are the common contingencies included in purchase offers. There are scenarios which can cause the contract to be nullified, but, you should know that you might lose your good faith deposit:
- The seller does not respond. In most purchase offers, there’s a time limit for the seller to respond, meaning accept and communicate said acceptance. If the seller hesitates too long, the purchase offer simply expires and you can walk away, with your earnest money deposit.
- The home inspection uncovers problems. Your purchase offer most likely contains common contingencies, such as the home passing inspection. Should the inspection reveal a problem, like mold, bad electrical wiring, plumbing issues, or another problem, your good faith deposit will be returned and the deal will be nullified.
- The seller is unwilling to make repairs. Another way contingencies can work in your favor is if there are needed repairs, but, the sellers are unwilling to pay for them. Some buyers try to use this contingency by inflating the magnitude of a small problem, or, by putting excessive demands on the seller. This is a mistake and can not only cause you to lose your earnest money deposit, but also, be accused of bad faith.
- The appraisal doesn’t back the agreed selling price. Your lender will schedule an appraisal to ensure the collateral asset is worth at least the purchase price. If the appraisal doesn’t align with the agreed selling price, the loan will be rejected and you can walk away.
- The financing is denied. There are other reasons financing is denied to otherwise qualified borrowers, such as: a change in employment, a large purchase on an existing credit line or new line of credit, or, a change of income.
If you are dealing with an empathetic seller, you might be able to get out of the contract without having to go to great lengths. Speak with your buyer’s agent as soon as possible if you really want to walk away from your offer.