Buying a house is a lifetime investment, and most potential homebuyers want to do it right. Getting your dream home on the market is all about thorough research and luck. For sellers, receiving an offer on your house is exciting. If you get multiple offers, you are lucky. When this happens, sellers must consult with their realtors to choose the best offer and sign the contract.
However, what happens if you sign on the dotted line and receive a better offer? Is there anything you can do? Here are crucial things home sellers should know and do:
Review the initial contract
Firstly, if you are under contract, you can do very few things. Accepting an offer doesn’t mean that you cannot receive a better offer. If you have not signed the contract, you can accept a better offer because you are not legally bound. However, if you signed the contract, i.e., the home purchase agreement, you cannot back out of the contract. The home purchase agreement clearly defines the responsibilities of the buyer and seller, contingencies (if any), and deadlines. Once the contract is signed, either party can face legal action. The breach of contract, i.e., failure to fulfill your responsibilities, could have serious repercussions. Therefore, if you sign the contract, you can move to the second step to determine whether you can receive a higher offer.
Carefully check contingencies
The contract’s contingencies cover all the obligations or responsibilities a buyer and seller must meet before finalizing a real estate deal. The home seller can find a loophole if the contract includes any contingencies. If the contingency favors the seller, he can accept a better offer from another buyer. One of the contingencies is the fact that buyers must close a mortgage within 30 days (1 month). Although this can vary from one state to another, it is a contingency that can favor the home seller. If the buyer fails to meet the deadline, the home seller can legally call the sale or deal off and accept other offers.
On the other hand, one common contingency on the buyer’s side is the home passing inspection. If the home does not pass a professional inspection, the buyer has the right to back out without penalties. Alternatively, the buyer can renegotiate with the seller or have the seller pay for any repairs or renovations.
Accept the better offer as a back-up
Although this is not a good move, home sellers can accept the higher offer as a back-up if the initial deal fails. The seller can wait for the deadline or refuse to pay for the repairs to discourage the initial buyer. The main objective here is to make the initial buyers back out independently. Upon failing to fulfill the buyer’s inspection contingency requirements and the deal is off, the seller can accept a better offer. However, if the new buyer learns about it, they can ask for more repairs (costing more in the long run) or back out because they know the seller is desperate.
Inform the initial buyer
If the seller prefers the higher offer, he can inform the initial buyer. If the initial buyer is still interested, he can present a counteroffer. However, if the initial buyer is unwilling to counteroffer and accepts the deposit from the seller, he can take him to court due to breach of contract.
Seek professional advice
If the seller still wants to back out of the contract, seeking legal counsel is the best approach. Failure to fulfill his obligations could result in a lawsuit where the seller could be forced to sell the home to the initial buyer or pay a certain amount of money in damages.
Once home sellers sign the contract, it isn’t easy to back out of the sale. The best approach is to consult your relator before signing the contract to ensure you have the best offer or wait and see if the initial buyer will default the contract. Suppose you want to sell your home and have signed the contract; backing out results in wasting time, money, or getting sued.
