Backing out of a home purchase
You can almost always back out. The question is whether you get your earnest money back. That depends on your contract’s contingencies and their deadlines.
How contingencies protect you
A contingency is a condition that must be met for the sale to go ahead. If it isn’t, you can cancel and keep your deposit, as long as you give notice the way the contract says, before the deadline.
- Inspection: cancel or renegotiate over the home’s condition, usually within 7 to 14 days.
- Financing: cancel if your loan is denied despite a good-faith application.
- Appraisal: renegotiate or cancel if the home appraises below the price.
- Home sale: cancel if your current home doesn’t sell in time.
- Title and HOA documents: cancel over problems that can’t be cleared.
Deadlines decide everything
In many contracts a contingency disappears when its deadline passes, even if you never signed anything removing it. One day late can cost the whole deposit. Put every deadline on your calendar the day the offer is accepted.
After the contingencies are gone
Cancelling is a breach of contract. Most contracts let the seller keep the earnest money as their remedy; some allow the seller to sue for more. Sellers often agree to a release for part of the deposit so they can relist quickly.
State differences
Some states have an attorney review period after signing, some use a paid option period, and some use a non-refundable due diligence fee. Your agent or attorney knows which applies. More detail is in backing out of a home purchase and contingencies, explained.
Questions buyers ask
Can I back out of buying a house after my offer is accepted?
Yes. If you cancel under a contingency in your contract and before its deadline, you usually get your earnest money back. Without one, you can still walk away but will likely lose the deposit.
Do I lose my earnest money if my loan is denied?
Not if your contract has a financing contingency, you applied in good faith and you give notice before the deadline. Without that contingency, the seller can usually keep it.
Can I back out of a house at closing?
You can refuse to sign, but by then your contingencies have almost always expired, so you would lose your earnest money and could face a claim from the seller.