Believe it or not this happens much more frequently than expected. It is the day before closing and the Buyer is all of a sudden stricken by terror about the prospect of purchasing a home and gets cold feet. There is some good news and bad news in this scenario (depending on your perspective). As the Buyer, the good news is that they haven’t actually purchased the home yet and, if it’s the day before closing, have an opportunity to calm down and talk through their concerns with an attorney or other real estate professional or friends/family. The bad news? At this point in the transaction there is likely no turning back.
In recent years it seems that contracts and the terms of the real estate contract are taken less and less seriously. It should be no great surprise that in recent years, we have seen litigation relating to breach of contract on real estate on the rise. Most often the cause of the pre-closing terror is because a customer is unfamiliar with the process of buying and selling real estate or uncomfortable with the terms of the transaction. While at this point it is really too late to fix any of these issues, the customer may benefit from reviewing the transaction and what rights they do have.
Calming a Buyer down in this situation is no small feat and may take several calm discussions by various parties involved with the closing. It is important to remind the Buyer that the Seller has depended on their promise to close on the property and that there are significant legal ramifications that likely outweigh their concerns for not wanting to close. Keep in mind that a Buyer losing their deposit is not the upper limit or worst case scenario for a Buyer that breaches a contract. A Seller can decide to sue the Buyer for monetary damages (money) or specific performance (forced purchase of the property) and such lawsuits could result in the Buyer being found responsible to pay up to the purchase price of the property to the Seller PLUS attorneys’ fees and costs. While it is not too often that we see this level of litigation, it certainly does happen.
If a Buyer does decide to cancel the most vital thing you can do is to have the Buyer speak with an attorney PRIOR to submitting a release/cancellation of contract to the Seller. A real estate agent’s role in this instance is to advise the Buyer to seek legal advice. Luckily, this isn’t an occurrence that happens too frequently for any one agent but it is important to take the proper steps if it does.