When to consider backing out of a real estate transaction

Let me just preface this blog by saying that you should always consult a real estate attorney prior to signing any contract you are not comfortable with or you have questions about.  In Illinois, a real estate contract has a clause written in allowing for five days for an attorney to review a contract prior to it becoming finalized.  However, this is not a reason to say you no longer want the property.   As a buyer, once you sign that contract you should want to move forward with it.  There may be some reason to consider calling off the deal.
 
1. Home inspection issues.  After your home inspection, you may find some items that are in need of repair.  Some could be as simple as replacing an outlet, fixing a stove burner, or replacing a light bulb in a closet.  However, you may run across some larger issues such as a damaged roof, broken furnace or water heater, or even structural problems.  If you’ve asked the seller to repair the items you want fixed and the seller refuses, this could be a reason for walking away from the deal.  Especially if there are items that are considered unsafe or unsanitary.  Some sellers will choose to offer a credit in lieu of a repair so that you can fix it yourself.  Consider this option if it works for you.
 
2. Liens.  When conducting a title search on a property, you will find out if the home has any liens against it.  This can happen because a seller refused to pay a contractor’s bill or taxes haven’t been paid.  Make sure that someone conducts a search for all liens prior to closing.  You don’t want to move forward with a deal to later find out that it’s your responsibility to pay the debts because you now own the house.
 
3. Permits.  Another important item to research is whether the seller obtained all permits for any renovations or remodeling they did on the home.  This can be found out with a call to the City or Village Department.  This could hurt you if you sell down the road and the buyer asks the same question.   You would be responsible since you are now the owner of the house. 

4. Mortgage problems.  In Illinois, you’re guaranteed to no longer be responsible for purchasing a house if it turns out that you cannot obtain financing.  You won’t be required to buy the house if it turns out that you can’t get an approval for the amount you’ve requested.  It’s always important to have a pre-approval prior to writing a contract so you don’t spend unnecessary time and money.
 
Sellers should think twice before backing out of a contract because they get a higher price from another buyer.  I’ve seen too many of those deals fall apart and then the seller comes back seeing if the first buyer is still interested.  By this time, they’re usually long gone and under contract on another property.  Definitely consult with your Realtor and attorney prior to doing this.
 
Another important thing to consider is that if you follow the rules of your contract, you should be able to obtain your deposit back if you do choose to back out.  If you walk away for another reason, you might forego your monetary deposit.  Again, it’s imperative that you consult a real estate attorney to help you through your transaction. 

Noah Seidenberg

Coldwell Banker Evanston

Toll Free (800) 858-7917

Office (847) 316-8529

Fax (847) 939-5636

 

On the web:

http://www.coldwellbankerevanston.com/

http://www.noahshomes.com/

Real Estate Specialist Chicago-land and Suburbs

Licensed Illinois real estate broker