It’s not uncommon for a seller to want to back out of a contract. Menlo Park real estate attorney Nancy Chillag agreed on the causes and cures when I interviewed her on this topic.”Sometimes the seller will put their house on the market; just testing the water” Chillag went on to say “It could sell in two days, then the sellers start looking around for a replacement home” “When they can’t find something they want, they want to back out of the deal.” “Sometimes it’s just that they assumed there will be a lot more houses on the market where they want to live” said Chillag, “But they are in contract to sell their home and literally have no place to go.” I asked her what happens when the sellers change their mind? She says they: “Go to an attorney to get them out of the contract and it doesn’t work that way.” Chillag added, it is “Very, very difficult when you’re a seller and you signed a contract.”
Chillag concurs that “Sellers need to have everything in place prior to entering into a contract and to include a Seller Locating Replacement Property Contingency form. This of course applies to any seller at any price range. This is what risk-management is all about.
Excerpted from the television program Kapowich on Real Estate, 1999 program #7
Pat – excellent blog but I have to disagree with your opening statement “It is not uncommon for a seller to want to back out of a contract”. Based on my 31 years experience, I do not believe this is an accurate statement. I would say it is VERY uncommon for a seller to want to back out of a contract. Maybe it was a “typo” – God knows, I often miss-type when trying to put out a post. When I work with a move-up buyer not only do we go over what their current home is worth but we also talk about what they want to buy and where – I take them out to look at houses in their desired area and price range. I want these clients to fully understand what they will have to pay for the next house. It is not enough to know that their current house is worth X if they do not know what their next house will cost – Y. It is the difference between Y and X that is critical, can they afford to bridge that gap by taking on a larger mortgage or putting more cash into the transaction. Honestly, in 31 years, I have never had a seller of mine try to cancel a contract. With proper counseling BEFORE they put their house on the market, this problem can be eliminated. Any agent who does not discuss the sale and the buy with a move-up buyer is NOT doing their job properly. But you are right once a seller signs that contract, the seller is legally bound to sell the house. The typical contract only provides an “out” for the buyer. Arn