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Can you back out of a house offer?

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    You may have put an offer in on a home and are wondering what it would mean should you back out. While there are circumstances where backing out may be your best option, it may be helpful to understand your options clearly. Let’s explore what it means to back out of a house offer.

    Understanding the home offer process

    When you make an offer on a home, you’re submitting a legally binding document stating how much you’re willing to pay for a piece of property, along with other terms and conditions of the proposed purchase agreement. If the seller accepts your home offer without any negotiations, the sale will move forward accordingly.

    A lot of the work that goes into submitting a home offer happens before submitting to the seller. Oftentimes, the offer letter is drafted with the assistance of a real estate professional. The process can be broken down into a few relatively simple steps:

    1. Decide how much you’re going to offer.
    2. Establish the details of your offer, including contingencies and other specifics surrounding closing costs, appraisals, and home inspections.
    3. Decide how much your earnest deposit (the money put down with your offer) will be. This is typically 1-3% of the home’s total sale price.
    4. Prequalify with your lender.
    5. Submit your offer letter.

    Once your offer is submitted to the seller, they can either accept, reject or counter and the exchange will move on from there. If your offer is accepted, you are now “under contract,” a legal status that binds the buyer and seller to this deal.

    Can a buyer back out of a contract?

    The short answer is yes, a buyer is free to withdraw their offer at any time. However, depending on the contract, there may be penalties for doing so. Many purchase agreements typically include various contingencies meant to protect both parties from a deal that has gone wrong. As a buyer, these contingencies give you the right to walk away if the seller falls short on their end.

    What happens if you back out of buying a house

    If your reasons for backing out aren’t related to any of the contingencies in your contract, you may face the following consequences:

    • Losing your earnest deposit: Your deposit is refunded if the deal died due to a contingency-related issue. If not, you may stand to lose that money.
    • Possible legal action: If the seller feels they’ve been misled, their time has been wasted or they’ve been kept from a deal that would have gone through with another buyer, they may (in extreme circumstances) sue for damages.

    Valid reasons to back out of buying a house

    So, what happens if your offer is accepted, but you want to back out? While an accepted offer is typically legally binding, there are some valid reasons to back out of buying a house.


    Contingencies are clauses woven into a contract. If the clauses fail to be met, then the relevant party may back out or renegotiate the deal. Most purchase agreements come with a financing contingency that states that if the buyer is unable to secure financing, the deal is not binding. Some other contingencies include appraisal contingencies, where the home must meet an evaluation of a specified value, or a home sale contingency, where the buyer requires their own current home’s sale to close before this new purchase does.


    While most purchase offers also have an inspection clause, it’s worth calling out on its own. If a home fails to pass the home inspection, the buyer may back out of the deal and keep their deposit. If you haven’t included an inspection clause in your offer, there may still be grounds for renegotiating the deal. This might look like lowering your offer, requesting repairs, credits or that the seller contributes financially to the repairs you’d like to make.

    Your financing fell through

    As mentioned, most purchase offers contain a financing contingency giving the buyer time to obtain proper financing for the home purchase. If your financing falls through, you may not be required to purchase the home, even if the contract doesn’t contain a financing contingency but you may earn your earnest deposit.

    How to get out of house contract properly

    If you’ve decided you need to proceed with backing out of a home purchase, there are a few steps you may want to consider:

    • Contacting a real estate attorney as soon as possible to go over the details of your contract and identify potential avenues for a clean exit.
    • Acting quickly and decisively, as many contingencies have timelines with specific windows that may allow for an exit.
    • Trying to leverage contingencies wherever possible. This may help you back out of the deal with minimal negative consequences.
    • Being prepared to potentially cover the cost of breaching your contract. This may be unpleasant but may be a cost you’ll have to bear if you really want out of the purchase.

    In summary

    While you may have good reason to wonder, “Can you back out of a house offer?,” it’s best to understand what it means when you put an offer on the table. Being under contract is a legal commitment, so it helps to be confident this is the home you want and that you have contingencies in place to protect you in case you need to back out. Whether it’s covered by a contingency or not, do consider consulting a real estate attorney before moving forward.

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