If you've ever had "buyer's regret" after making a $100 purchase, can you imagine how bad it must feel to have buyer's regret over a whole house?
Unfortunately, it does happen. Sometimes potential buyers get so excited over one aspect of a property that they totally ignore a huge problem. Sure, the home has the perfect yard -- but the commute for the buyer is grueling. Or, maybe the buyers absolutely love everything about the house -- until they realize that the crime rate in the area is awful. Maybe they just got so caught up in the quest to beat other potential buyers to what looked like a great deal that they overbid. Now, they can't get the loan they need.
Whatever the reason, people sometimes want out of a house deal almost as quickly as they make it. According to the National Association of Realtors (NAR), about 5% of real estate deals fall through because the buyer wants out, meaning about one out of every 20 sales never happen. Here are some of the potential consequences of a blown deal:
1. The buyers may lose their earnest money.
This is typically anywhere up to 10% of the home's total price put down to secure the offer on the house. Technically, the money is supposed to be forfeited to the seller if the buyer backs out. But that doesn't always happen.
2. The buyers may try to kill the deal through contingencies.
A contingency clause gives the buyer permission to cancel a house deal when certain conditions are met. For example, one common contingency clause is that the home has to be appraised for at least the value of the loan the buyer intends to take. A buyer determined to get out of a deal may try to exploit the contingency clauses in the contract until the seller lets the deal go.
A real estate deal that falls through can be a serious headache for the seller. They may have lost potential buyers, which could prompt them to respond with legal action. That's why it's so important for both buyers and sellers to make sure that they fully understand a real estate contract before they make agreements.