Most real estate transactions go off without a hitch, but buyer’s or seller’s remorse has been known to happen at the final hour. While rare, these homebuying dilemmas can present a real challenge for the other party. So, what can you do if someone backs out at the last minute? We spoke to the experts to learn about last-minute homebuying dilemmas—and what your legal rights are. 

What if the buyer backs out last-minute?

First, can a buyer back out last-minute? In a word: yes. Most contracts have a period of at least 30 days, and if 2020 has taught us anything, a lot can happen in a month. Whatever the reason, a buyer can back out of a real estate transaction at any point before closing.

Usually, this is because of contingencies, like the results of a home inspection or a financing contingency (recently, there’s also been a new coronavirus contingency). These can vary state to state, so check your local laws. But if a buyer just changes his or her mind, that’s reason enough too. The seller, meanwhile, might be left reeling—but they do have a bit of recourse, says Neighborhoods regional sales manager Cameron Munro. According to Munro:

“If a buyer is past the contingency periods with the inspection or loan, the seller does have recourse to, at the very least, retain the earnest money deposit paid to the escrow company at the time of contract. Beyond that, if they choose to sue the buyer, they have that right, but it’s very rarely utilized by sellers. They’re more interested in putting the home on the market and getting it sold.”

However, Munro points out that if a buyer required the seller to fix significant items after an inspection and then backed out after those repairs were completed and paid for out of pocket by the seller, the seller can seek legal action against the buyer to recoup lost expenses.

While you may not get an answer, sometimes it’s helpful to sellers to learn about what’s caused the change of heart.

“It’s possible that the buyer decided to back out over a minor issue that could be negotiated,” says Denver-area real estate agent Grant Muller. “Your agent may know if something can be done to correct the issue and salvage the sale, but if a buyer backs out, your power to save the sale is minimal,” he says. Ultimately, “buyers have many ways to exit a deal throughout the entire purchase agreement."

So, in this case, buyers have the power. But what should sellers do if a would-be buyer bails last-minute? For Charleston-area Realtor Lindsey Martin, her advice is simple: “Try not to panic.” According to Martin:

“It’s far from the ideal scenario, but the best thing to do is regroup with your real estate expert and decide what the best next steps are. For example, if you’ve already moved out of the home, there may be a need to professionally stage it. Reactivate the listing, and remember: The elements that attracted a previous buyer will attract another.”

And if a buyer backs out early on in the process? Look at it as an opportunity, Martin says.

“If people are uncertain about your home from the start, let them go. The buyer who is worried about committing is one you’d prefer to walk away before you’ve moved through the process. It would be a much worse scenario to have them back out once they’re under contract. Hold your head up, and know the right buyer is coming!” 

I backed out last-minute. Will this affect my ability to get a future mortgage?

No matter the circumstance, if you’re the buyer you might worry that backing out on a transaction will affect your ability to move forward with a home purchase later on. It’s a valid concern, but it’s not likely, Munro says. 

“The contingency periods are in place to protect the buyer’s option to rescind their offer due to a specific issue with the inspection, or if they cannot be approved for a loan.” While theoretically, if a buyer backed out because they were denied a loan, that would prevent them from buying any house at all—“but that usually comes down to a qualifying issue rather than as a penalty for non-performance in a real estate agreement,” Munro says. 

What if I don’t want to sell my house anymore?

Sellers are held to a higher level of scrutiny compared with buyers when it comes to a real estate transaction, Munro says. “Ultimately, they have signed a legally binding contract to sell the property from day one, and there are very few options for them to back out of the deal.”

While there’s nothing they may owe a buyer from a compensation perspective, sellers who back out are putting themselves at “significant legal risk for breach of contract,” Munro says. Moreover, it could even go to arbitration, wherein a judge settles the dispute outside of public court.

For sellers who decide they no longer want to sell, it can be helpful to speak with the buyers as human beings. According to Muller:

“A seller doesn’t have any opportunities in the contract to terminate their home sale, but it may be worth negotiating with the buyers to see if there is an equitable way to mutually agree to walk away. You might be able to land on a deal that costs you in the short-term—but you might be able to keep your property.”

As for buyers, law varies state to state, but in Martin’s South Carolina, the buyer has very limited recourse, aside from taking a seller to small claims court to recoup costs associated with appraisal and inspection fees.

“But at the end of the day, the best thing is to get back out there and start looking for the next right home,” Martin says.