Adding Contingencies To Your Offer Contract May Make Your Home Buying Process Easier
If you really want to see what happens when you add dynamite to an already delicate situation, try backing out of an accepted home offer. This is a situation that can get very ugly, very fast. First of all, there's a lot of money at stake. In fact, your home is likely the largest purchase you've made thus far. Perhaps this is why it's also the most difficult one to make (and stick to). But this is also why it's critically important to be working with a good real estate agent. A good agent can prepare any offer you make with the proper contingencies in it right from the start.
Your realtor can help you successfully navigate making an offer on a house that has protections in place called contingencies. These are clauses included in the contract that give either the buyer or the seller the right to cancel the agreement if certain requirements aren't met. For example, if financing cannot be secured by a certain date, both parties agree that the seller has the right to terminate. Or the buyer might request a contingency regarding the appraisal that says if the house appraises for less than the sale price, they have the right to terminate the agreement. These are contingencies, and they're very important in this whole scenario.
Possible consequences for your actions
The main thing that's important here is whether or not you have the right contingency in place to back out of the deal unscathed. Worst case scenario is, if you don't, you could not only lose your down payment or earnest money, but you also will leave yourself open to litigation from the seller. If the whole thing gets ugly, this is definitely something you'll want to avoid. Having the right contingencies in place will save you from most potential reasons you could encounter that would make you want to back out of the deal anyway.
If you do need to back out of the deal for reasons not covered by any contingency, do so as early in the process as possible. Be prepared to lose your earnest money to cover the costs of backing out of the deal at the least. Remember, the seller takes their home off the market because they trust that you are going to honor your end of the commitment, so they could lose any number of potential buyers during that time frame. This is not to say that life doesn't throw all of us the occasional curve-ball, oftentimes out of our control. Luckily, most of these can be at least somewhat prepared for.Â