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Backing out of a home sale could be a costly decision. Read on to learn more. [[{“value”:”
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The decision to sell a home is a big one. After all, you’re uprooting your life and leaving the property you may have lived in for years. And it’s not always easy to let go of a home you’re attached to emotionally.
There can also be financial consequences to moving. It’s important to make sure you’re really ready to sell your home before you hire a real estate agent and start the process of creating a listing.
But what happens if you put your home up for sale, get an offer, accept that offer, and then change your mind? Can you back out without consequences? Or will you be setting yourself up for financial losses?
It’s all about your contract
Whether you can change your mind about a home sale without penalty will hinge on your reason for doing so and how your real estate contract is worded. Let’s say you simply get cold feet about moving. That may not be a valid reason for backing out as spelled out in the real estate contract you signed with your home buyer.
However, it is pretty common for real estate contracts to include a contingency that protects you in the event that you’re unable to find a replacement home. And that may be a particular problem today.
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As of late February, there was only a 2.9-month supply of available homes on a national level, according to the National Association of Realtors. For context, it can easily take a six-month supply of available homes for there to be enough properties to meet buyer demand in full.
So let’s say you accept an offer on your home and your contract contains a contingency giving you 60 days to find a new one to live in. If you can’t find one — say, because you can’t afford the mortgage on a potential replacement — and you back out of the contract, you should be protected.
It’s important to have a good real estate agent — and attorney
Sometimes, plans change and feelings shift. But in the context of selling a home, changing your mind after you’ve accepted an offer as well as a deposit from a buyer could lead to a world of problems if you’re not adequately protected. That’s why it’s so important to hire not just a great real estate agent, but also a savvy real estate attorney who can prepare a home sale contract that comes with built-in safeguards for you.
If you’re not sure how to find a good attorney, ask your real estate agent. It’s common for agents who help people sell homes to know of skilled local attorneys who can handle the legalese of the agreements that need to be signed.
Before you sign a real estate contract outlining the terms of the sale of your home, read it carefully so you know what you’re getting into. This way, you won’t face unpleasant surprises if you decide to stay in your home after accepting a buyer’s offer on it.
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