You’re happy you’ve finally landed a serious buyer, the contracts are all ready, everything seems to be going well, and the buyer even signs the contract.
However, suddenly, things change, and you’re thinking twice about the sale. You want to withdraw from the contract but are wondering whether it has any legal implications or consequences.
What should you do? Can a seller accept another offer while under contract? Read on to find answers.
Can a seller accept another offer while under contract?
What can make a homeowner change their mind? A seller can pull out of a sale at the last minute. Reasons can be:
A better offer
Understandably, a seller will incline more to the one giving a better offer when buying a house. So right from the time you put the house on the market, you’ll try as much as possible to land the best offer that will leave you with more cash in your pocket.
A better offer makes you halt any current sale proceedings and determine whether you can jump on to the new deal.
Life changes for you
Life-changing circumstances that significantly impact your finances may force you to do away with the sale.
A sickness, death of a loved one, or job loss can affect your financial stability threatening your ability to proceed with the sale.
You might realize you don’t have enough money to move out and start another life.
You can’t find another house fast
When you can’t find another house as quickly as you wish, you may want to hold off the sale. Unfortunately, finding an ideal home might not be as easy as you expected.
You can consider waiting until you find the right house instead of rushing through the sale.
The buyers appraisal came back low
You can cancel the buying process or sale agreement when the buyer’s appraisal comes back low and they don’t have the cash to make up for the difference.
Alternatively, the buyer might want you to lower the cost to accommodate the low appraisal.
Usually, property demand is rising, which means that most sellers have multiple buyers eyeing the property. So it’s just natural to opt-out of the sale for a better deal.
When can you back out?
As earlier noted, you should know when to back out of a sale safely. It means that you don’t have any legal implications for breaking the contract. Here are circumstances where you can get out of the contract safely.
The contract not signed
Both parties have to sign the contract for it to be binding. If the buyer signs the contract but you haven’t, you can decide to cancel it.
Making an offer or a verbal agreement is not binding. Thus, you might want to take some time before signing the contract.
It ensures that you’re sure it’s what you want rather than regret it later. Also, understand the sales agreement and any signed counteroffers.
Understand that signing the contract or sales agreement is committing yourself to everything highlighted in the document.
When you’re not too sure, you may want to make provisions that give you the leeway to exit a contract safely. These can include:
- Inserting terms that allow you to accept other offers
- Make provisions for backup offers
- Enable the buyer to make counter offers or match any higher offers
However, in a state such as New Jersey, the law allows sellers to cancel a contract within the attorney review period.
After signing the agreement, the law allows both parties to have a lawyer read the contract terms within three-five business days or longer as stipulated in the contract.
Either of them canceling the agreement within this period will not incur legal implications.
Even though it doesn’t seem ethical, a seller can accept another offer and even let the buyer make a higher counteroffer to match the price.
Can a seller accept another offer while in escrow?
An escrow protects the interests of the buyer and seller. Besides, the lawyers ensure that all legal procedures are followed to ensure a smooth sale process.
You may be wondering whether you can accept another offer while in escrow. But, since it entails an immense amount of money for both parties, you must follow specific steps to avoid legal implications.
However, if you have not signed any contracts or it’s in the reading period, you can still walk away safely.
Backing out when in escrow still has to follow the stipulated contract terms. When can a seller accept another offer?
A seller can accept another offer when the buyer doesn’t meet the demands
A low appraisal, not meeting the agreed terms such as buying a home as it is, or a delayed process can force a seller to look elsewhere.
A breach of contract means the buyer doesn’t stick to the terms agreed upon. As a result, the seller is free to revoke the sale and accept another offer.
Sometimes, getting ideal financing for sale might take time which delays the process. But, a seller doesn’t have to wait until the buyer receives the required money.
When the buyer asks for repairs, you’re not willing to make
A seller may want to sell a home as it is, while the buyer may wish to include some repairs or improvements at the seller’s cost.
When you cannot agree on this, you can cancel the contract as the seller. Mostly when buyers get the home inspection report, they may have concerns they’d want the seller to look into or offer a credit.
It can lead to a disagreement that destroys both parties’ confidence, forcing the seller to accept another offer.
Remember that home repairs are not included in the sales price unless agreed on during negotiations. Sellers can either pay for repairs themselves or include them in a new contract with the buyer.
When the seller has a backup offer?
As earlier mentioned, a seller can include a backup offer in the contract. A backup offer is an alternate offer the seller reserves in case the primary bid falls through.
Another buyer can make a counteroffer higher than what you initially accepted. Having an option to receive a backup offer gives you a safety net should the worst happen.
Your interests as the seller are met. You don’t lose your sale because of an issue with the buyer.
A backup offer gives the seller the confidence to stick to their preferences, especially when buyers want to change the terms or include other issues such as repairs.
When a seller can’t back out of a contract
Breaking a contract comes with its share of penalties or repercussions. However, if you know the circumstances under which you can safely back out without penalties, you’re safe.
The first thing is that most contracts contain provisions that explicitly state that exceptional circumstances allow an individual to cancel the contract without penalty.
As earlier mentioned, once you sign the sale’s contract or after the reading period elapses, you can’t back out.
You’re legally bound to the terms you both agreed upon. If your buyer backs out, it’s at their own risk. At this point, the buyer puts up a commitment that indicates their seriousness.
If you decide to cancel the contract at this stage, the buyer can sue, forcing you to uphold your part of the bargain.
The court process might take a long time, and it’s an added cost, making some buyers accept their fate and move on.
However, they may opt for legal intervention when they’ve much to lose, such as when forced to look for a temporary shelter or pay storage fees.
Can you accept parallel offers and negotiate two contracts?
As a seller, you can accept parallel offers and work through them until the contract signing stage, when you have to choose the most favorable one.
Although it’s not ethical to lead on two buyers, the idea of having more than one offer gives you some leverage.
However, it can create a situation where you have to negotiate with two buyers simultaneously.
It becomes problematic, especially since they’re both serious buyers who don’t want to back out of the sale.
It also creates confusion which makes negotiations draw out longer than expected.
However, when buying a home, one can look into multiple similar listings. It means that you’re never sure if a buyer will go through with the contract.
They, too, might be looking for the definitive sale agreement. To protect themselves, some sellers accept multiple parallel offers and even negotiate separate contracts simultaneously.
You can sell your house fast
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It might delay other plans you have, such as closing the sale of a new home. To avoid stress, walk with an expert.
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