Repercussions of Backing out of a Deal
In real estate sales the responsibility is on the buyer to beware, and to ensure they know what it is they are buying. However, the risks for both the buyer and seller in a volatile market can be very real and some buyer/sellers just want to back out of their deal.
Know the Risks!
Buyers should know the risks they are taking by waiving conditions on their offers of purchase, but that presents a problem for some when it comes time to confirm financing. Sometimes the real estate market can soften after the presented offer to purchase but before they sale actually closes. Other times, the new mortgage rules come into play at the time of closing which means the borrower may no longer qualify for as large a mortgage as they would require.
Know the Reprecussions
Knowing what repercussions may be can keep buyers from over bidding on homes. Therefore it is important to know that you can lose out on a lot more than just your deposit. If a buyer chooses to back out of a deal they could be responsible for the deposit they provided, the loss in value of the home they wanted to purchase (since the buyer now has to sell their home for less), and if they caused the collapse of another deal due to backing out, they could be sued for the costs involved in that deal falling through as well. All in all, it could cost hundreds of thousands of dollars if the matter winds up in courts.
If you are using a reputable Realtor and Mortgage Agent, these are matters that will be discussed in detail before putting a bid on any home, to make sure you understand the risks. However, it is important to always be within your financial abilities and avoid extending yourself too far when purchasing a home.
If you have any questions, or want to find out what mortgage amount you qualify for based on today’s guidelines and rates, please feel free to contact me any time.