Can You Back Out of a House Offer Once it’s Been Accepted?

When you’re in the process of buying a home, a sale can fall apart for various reasons. But what happens if you simply change your mind? If you’ve already entered into a contract to purchase a home but are reconsidering, pulling out of the deal can be tricky. The question many homebuyers face is: at what point is it too late to back out of a home purchase?

Although it’s not impossible for a buyer to withdraw from a signed real estate contract, doing so might come with consequences, especially if there are no specific terms allowing for an easy exit. Knowing your legal and financial obligations as a buyer is key when contemplating the decision to cancel an accepted offer. Here’s what you should keep in mind if you’re thinking of backing out after committing to a home purchase.

Is It Possible to Withdraw After Your Offer Has Been Accepted?

The short answer is yes, you can back out of an accepted house offer. However, when you sign a purchase agreement, you’re entering into a legally binding contract that includes specific terms. Typically, you’ll be required to make an upfront payment known as an earnest money deposit. This deposit signals to the seller that you are serious about moving forward with the purchase.

The earnest money serves a purpose beyond showing your commitment. It usually gets placed into an escrow account and, later on, helps cover part of the closing costs. One of the key points is that the seller takes their home off the market after accepting your offer. This action reflects their trust that you are serious about completing the transaction.

Some real estate professionals emphasize the importance of this commitment, noting that it’s not reasonable for a seller to take their home off the market if the buyer isn’t fully committed. However, backing out is legal if certain contingencies—specific conditions set within the contract—aren’t fulfilled. These clauses allow buyers to cancel the deal without penalty, such as losing the earnest money deposit.

In most cases, if you decide to back out due to an unmet contingency, you are likely to receive your earnest money back, as long as it’s clearly stated in the agreement.

Backing Out Using a Contingency

Most real estate contracts come with built-in contingencies—these are conditions that must be met for the home purchase to move forward. These real estate contingencies are designed to give both the buyer and seller a clear understanding of specific tasks that need to be completed within a set time frame.

Common contingencies include those related to the home inspection, securing financing, selling an existing home, or ensuring the property appraises for a value that aligns with the sale price. If you decide to walk away because one of these agreed-upon contingencies isn’t met, the process is usually straightforward, and you can typically expect to recover your earnest money deposit without issue.

Buyers often benefit from the extra protection that contingencies provide. Take, for example, a home inspection contingency. If the inspection reveals significant problems, like a roof that requires replacement or foundation cracks, you can legally back out of the contract without penalties. This is especially true if the seller refuses to address the issues or offer credits to help with the repair costs. Similarly, a financing contingency offers protection if your mortgage loan doesn’t get approved, which can happen despite pre-approval, giving you a legitimate reason to exit the deal.

To ensure you’re fully protected, it’s important to carefully review the contingencies in your contract and be aware of the deadlines associated with each. For example, a home inspection might need to be completed—and any requests for repairs or credits submitted—within 14 days of signing the agreement. Likewise, you might be required to meet the terms of a financing contingency within 30 days to secure final approval for your loan.

If any part of the process seems unclear, or you feel you need more time to complete a contingency, it’s crucial to consult your real estate agent. They can help you request a contract extension by filing an addendum, which the seller must agree to, in order to adjust the timeline.

Backing Out Without a Contingency

If a buyer decides to pull out of a home purchase for reasons not covered by the contract’s contingencies, the situation can become complicated—and potentially costly. Backing out for a non-contingent reason could mean forfeiting the earnest money deposit. This deposit is made as a show of good faith that you intend to follow through on the agreement, so if you cancel without a valid reason outlined in the contract, the seller is legally allowed to keep that money.

The financial consequences of this can be significant, especially if you’re still planning to purchase another home. Earnest money deposits typically range from 1 to 2 percent of the home’s sale price, although they can sometimes be higher. For instance, with the median U.S. home price hovering around $400,000 (according to data from the National Association of Realtors), walking away could cost you anywhere from $4,000 to $8,000. On top of that, legal fees might further add to your expenses.

However, losing your deposit isn’t the only potential consequence if you back out for non-contingent reasons.

Can a Seller Sue You for Backing Out?

The short answer is yes, a seller can sue if you back out without a valid reason. In addition to losing your earnest money, the seller might pursue further legal action. Backing out after signing the purchase agreement or after the contingency deadlines have passed makes it much harder to withdraw without facing serious financial or legal repercussions.

In some cases, the seller could sue for what’s known as “specific performance.” This is when a court orders the buyer to complete the purchase and buy the home. While it’s a rare outcome, it is a possibility. Courts are more likely to force a seller to go through with a sale than a buyer, but it’s still something that could happen.

In some states, real estate contracts include a clause that requires both parties to go through mediation in case of disputes. If this applies in your state, you’ll have the opportunity to present your case directly to the seller with the assistance of a neutral mediator. This process can often resolve the disagreement without escalating to a courtroom battle, which is generally in both parties’ best interest.

Bottom Line

Buying a home is a major commitment, and it’s important to approach it with serious consideration. While it is possible for a buyer to back out of a signed real estate contract, doing so can have significant consequences. The best way to safeguard yourself is to include contingencies in the contract before signing. Having the guidance of an experienced real estate agent, and possibly a real estate attorney, can be invaluable in this process.

If you do find yourself needing to withdraw from an accepted offer, it’s crucial to be upfront with the seller as soon as possible. Communicate your reasons clearly, with the help of your agent and attorney, who can ensure that the explanation is put in writing. While losing your earnest money deposit may be a reality, the cost of buying a home that you either don’t want or can’t afford would likely be far greater in the long run.