Can I back out of a home purchase before closing?

Question

I have had an inspection of the home about 4 weeks ago and that was where my concerns started. The home owners were home so I was not able to to tour the entire house with the inspector. The inspector noticed that the siding will need replacing in about 5 years. After walking throught today I noticed that there is a hole in one door (that was not noted on the inspection or by myself earlier) and that the siding is in bad shape (starting to rot and peel away in areas - much worse that I noticed before.) The siding is a type of board. The insurace company says a step has to be placed on the front of the house within 60days on the purchase for them to cover home owners insurance. Can I back out of the purchase for the items I noticed? And at what cost if any? I feel as if I was pressured by my agent to purchase thsi house for the price. I can afford it, but I feel like I could have offered less, but my agent told me that I should offer more "no one writes offers back and forth anymore

The inspection is past the point where amendments can be made (so I am told) since closing is in two days! I noticed these things as I walked through today. Eventhought the mortgage has been approved and everything is set for the closing can amendments be made yet? Or more negotiations? I was not aware that the insurance would not cover the house unles the step was paced in until today. The step is onl $300 but still, that money was not a planned investment at the moment. Thank you for your responses, they are very helpful.

The inspection went well, accoriding to the person who performed the inspection. But I felt rushed since the home owners were at the home. I noticed that the siding is in worse condition than (satisfactory) today. I wonder if there is another inspection that could be done for a second opinion? (The house has appraised at $1000 more than what we are paying. We did make an offer and then there was a counter offer but we were never informed that we could counter the counter offer (sounds funny but this is our first home purchase)

Answer 1

Check to see if you have an insurance contingency. In PA we have this in the agreement of sale. And, if checked, the buyer can back out if they are unable to obtain homeowners insurance. Plus, if you can not get the insurance, there is no way you will get the loan ... in which case you should be able to back out if you had a mortgage contingency. Check your agreement and see if you have these.

Also, the house should be in the same condition it was in when you placed the offer. If there is a hole in a door that was not there before, they should fix it. I do not think this is something you can use to back out of the deal since it is a fairly easy fix.

Like someone else mentioned, you can always back out, but if there is no legal reason for it, you can lose your deposit money. Hopefully you also had something in your agreement that limits the seller to deposit money so they can not sue you.

If you do manage to get out of this, find another agent. Two of my last 3 deals were back and forth for about a week .... with many lines through crossed out and re-written ... so we do go back and forth on offers. Why buy if you are not happy with the agreement? Not all agents are like the one you have, it is just unfortunate you had him or her for your first home buying experience.

Hope this helps, and good luck!

Answer 2

First of all your agent sounds like a turd. Are you aware that she makes a COMMISSION on the sale price (higher she can get you in at, the more she makes....)
You can back out at any time. Worst case scenario, you lose your deposit. Double check your contract (that you signed) for any other stipulations. It should also say on there that your contract is contingent on the inspection, the appraisal (to make sure the house is worth what you are paying for it) and you getting financing.
If your agent was any good, she would try NOT to lose the sale and speak with the selling agent on the seller kicking back some $$ to you outside of closing or covering your closing costs at closing (called a concession which you can usually get up to 6% of the sales price as a credit towards your costs) OR reducing the price to make up for the work that needs to be done.
I would consult with her and tell her you aren't happy with the service. Tell her what you want. She should be there for YOU, not the seller (unless she is representing both and that is no good for anyone). I WOULDN'T pay for the step or the hole in the door. Tell her you would like to "add an addendum to the contract which states that the seller will add the step prior to closing and repair the damaged door". You and the seller will sign it and you will be off the hook for it. You can add an addendum for anything you would like.
If you decide to back out, then get a new agent. She shouldn't be pressuring you nor should she be telling you that no one negotiates anymore.

****in regards to your additional comment****
Your contract may give you a certain time frame to amend the contract. Take a peek at it. If it doesn't say anything about requests in a certain time frame that you can ask for an addendum at any time.
As far as the step. Does your LENDER know your insurance won't be valid without it? Try letting them know. 9 times out of 10 they will NOT allow it to close without the step!! The lender needs to know the property is insured. If it burned down the day after you close, how would they be sure they would be reimbursed for the mortgage, or that the property would be rebuilt.
If you just have a bad feeling about the property you CAN back out!! Until you have signed the mortgage, and closed on the house, you are NOT obligated for anything. Like I said, the only thing you would lose is
1. The money you put down (earnest money, deposit, etc)
2. The money you paid for the appraisal and the inspection.
It is a buyers market. Don't settle!! They are a TON of great deals out there!!!!! (if your agent had half a brain she would tell you this)

If you find another property in a short time, you may still even be able to use the mortgage approval you already have pending the appraisal for the new place and the contract for the new place (and your insurance wold need to be updated as well) but over all an easy process.
DON'T buy it if you think it will only cost you more in the long run and get no compensation for the seller!

Answer 3

I can't believe that everyone is informing you that you can "back out of a contract"!

A contract is a legal and binding document and if you do not perform on the contract you can be sued!

You had a "subject to" or "contingent on" a home inspection clause included in the Offer To Purchase And Sale Contract and this clause you would have removed with an addendum if you were satisfied with the results of the inspection. If you removed this clause then you were satisfied with the condition of the home. You can't come back afterwards and say "Hey I missed something".

If the home inspector missed something and was negligent in the inspection and has E and O insurance then you can sue the inspector.

If the REALTOR was negligent in their duties to you, you can sue the REALTOR. They have E and O insurance as well.

IF YOU have removed all subjects on your offer and do not complete on the contract then the Seller will most likely SUE YOU!

They can sue for specific performance (force you to buy the house) and will most likely win if you can afford the house. A $300 step that you knew about is not a reason for not completing on a purchase - as well as the siding (you say it looks worse than what you noticed before).

If you have not removed the home inspection subject then you can definitely negotiate!

It sounds like you have removed all subjects if it is completing in 2 days!

I would open up dialoge with your REALTOR and they will advise or suggest how you should proceed.

P.S. someone mentioned that the REALTOR makes more commission the more you pay for the house. The commission of 3% on $10,000 is $300...I don't think a REALTOR is going to try and squeeze you to pay $10,000 more for the extra $300! Come on - no one is that hurting for money!

Answer 4

No time to spare. Read that contract. If your contract reads like mine there may be a paragraph that says something to this effect. The subject property must be in equal or better condition, than the time the offer was accepted. I ad libbed but that's the jest of it. Negotiations can happen at the settlement table. How much does it cost to replace the siding and other items of concern for you?

I add buyers get the jitters prior to settlement. If those items are concerns get them worked out asap.

Finally the bottom line is you can not be forced to make a purchase you don't want. Thank damages. Typically if you've cost the sellers any damages that would be your financial responsibility. On the same hand if the seller said they don't want to sell you the house they will likely only be held liable for damages you incur. Don't sweat it. Have your agent negotiate on your behalf and you buy it or not.

One more thing, don't fall for that they'll sue your pants off stuff and "I worked so hard for you on this deal" crap

Answer 5

You have every right to back out if the house is found to be defective. The agent is probably desperate to sell. The house may have been sitting in inventory since forever. Years ago my parents had a contract on a house that they backed out of. The agent would not return their deposit. My parents sued. The agent lost - both the case and his real estate license. Don't get jerked around. Threaten to consult an attorney and have an attorney's name handy when you do. You'll see how quick he backs off. And by the way, it is not unusual for the buyer to force the seller to fix any defects before the sale or to reduce the price by the amount required to fix the defects - so if you really like the house, you can demand this as well. And as far as negotiating price is concerned, it's a buyer's market - you have them by the throat and can make any offer you please.

Answer 6

Not true, my boss writes offers back and forth all the time on houses we own.
And I do believe you can back out before closing, under certain conditions.
From:
http://www.bankofamerica.com/financialtools/index.cfm?view=DETAIL&tools=homebuy&product=HOMEOFFER#closing

The offer you make to the seller should include a clause that says the purchase is contingent on the home passing inspection within a certain number of days and that the inspection must be satisfactory to you. The clause should also state that if the inspection is not satisfactory to you, you can withdraw from the transaction and get your full deposit back, or the seller can make the required repairs.

I think you can still back out without these stipulations, but you will probably lose any "earnest money" you put down. Please consult an attorney ASAP!!!!

Answer 7

I could be wrong but if on the contract you put "home inspection" as one of the conditions of purchase/sale, and the inspection has revealed serious issues with the house, then you can pull out. All conditions laid out in a contract have to be satisfied and waived in order for the contract to become legally binding...that's what I was told when I purchased my property. It seems that you waived that last condition and therefore passed the point of no return already! But I don't think it's worth dwelling on what could have been...The fact of the matter is you now own a property... and that is amazing...Congratulations!

Answer 8

Where did you find your agent- offers back and forth- its called counter offer- i just expect counters in any contract I write. I am really just shaking my head reading this comment. As for backing out of the contract- yes you can however you had better read the contract and what it says about the earnest deposit money . This will be your deciding factor - you may loose it. So, my best advise is get out of this contract- FIRE your agent and start looking, asking for a referral for an agent that really is willing to REPRESENT YOU.

Answer 9

Yes, you can. You may lose earnest money but that beats buying a junker. Your agent could lose licensing for telling you that you can't negotiate. There will be a ruckus heard around the world if you do but it happens more than you would think. You'll probably need an attorney if they choose to sue but usually that doesn't happen. I only know really about my own state but most are similar so that you can sell in neighboring states. Although I've had to retire for health reasons, I've kept my license up. Good Luck and God Bless

Answer 10

until you sign on the dotted line you can back out. If you gave a check for a deposit, depending on the contract you started with you may lose that. You have the right to put into any contract that the current owners fix the problems or lower the cost significantly to cover the costs you will incur to fix them your self