The morning had started out simply enough - or so I'd thought. After a weekend of transporting plants and dusty flea market finds in the family wagon, I was heading to the car wash in need of a thorough vacuuming and a professional cleaning.
What I hadn't anticipated was that the street would be under construction and as a result, the route was jammed with heavy machinery and post holiday commuters, all inching along at a snail's pace. I turned the corner hoping to beat a hasty retreat, only to find more of the same. Ugh. Abort, abort, abort, ABORT!
Exit left. The car would have to wait another few days. I wasn't meeting clients and I would happily let someone else drive on Broker's Tour, content to be a passenger today. Time to regroup and reboot.
Of course, a change of plans isn't all that uncommon in the world of Real Estate either - it's just that the stakes are usually much, MUCH higher. Once Buyers and Sellers are in contract, we like to see them stay that way, but if not, then there is an established protocol for getting out properly.
"We've had second thoughts," my Buyers texted me, "We want to cancel the sale. Please call us immediately!" (No surprise, the house hadn't been right form the start.)
"'I'll Docusign the 'Release of Escrow' form right away," I responded. "Sign and return it as soon as you can." Exit right.
I had originally dismissed this particular home out of hand for these Buyers as being far too small and inadequate to meet their family's needs, so the change of heart wasn't exactly unexpected . . . in fact, it had come as a bit of a relief. Luckily, these Buyers hadn't yet wired over their good-faith deposit, nor had the out-of-town Sellers signed the agreement, so in this case, the rescission was fairly simple.
However, canceling a home purchase can get much trickier as time goes by, especially if the Buyer's contingencies have already been lifted.
Standard contingencies typically include an inspection period and an appraisal and loan condition, outlining rates and points. These are your safety nets against rapidly rising interest rates, unexpected appraisals that come in too low, or NEW DISCOVERY. Less typical in our area, are contingencies to sell your current residence, or identify the next, before going through with the deal.
If a thorough disclosure package isn't available, invest the necessary dollars to do your own investigations (it's the wisest money you will spend). Earlier this year, I represented young Buyers on a hillside home in Orinda, only to learn during their inspections that the entire hill was "creeping" and that the foundation would need to be replaced to the tune of almost $200,000! (Exit right AND left!) If substantial defects are uncovered, this is often a legitimate reason for voiding the deal and moving on.
Do I need a "legitimate reason" to exit the deal?
That's up for interpretation; however you do need to act in "Good Faith." (Defining "good faith" is what keeps lawyers in business I suspect.)
Paragraph 14 of the California Residential Purchase Agreement provides a fairly wide avenue for reconsideration: "By the end of the time specified . . . Buyer shall deliver to the Seller the removal of the applicable contingency or cancellation . . .". Understand, a hasty retreat won't make you popular, but that's beside the point. While an explanation is expected, it isn't legally required - a cancellation IN WRITING is!
Less justifiable for cancellation, is fear. Sadly, fear has felled many a good opportunity and when doubt creeps in, there is very little any Agent can do to keep the train on the track (regrettably).
Clarifying your intentions upfront, making sure you and your partner are on the same page, and understanding the macro-market in a meaningful way, will all help keep retreat at bay.
Finally, there have been a few occasions when I didn't agree with the purchase my Buyers had identified (and said so) but at the end of the day, this isn't my home, my risk, or my future - it's yours. At that point, my job is to set aside my personal opinion, help you achieve your goal, and then assist in gathering all pertinent information. What I think about your choice is beside the point; what I bring to the process is far more relevant.
So proceed with care and due diligence. Define your criteria, your timeline, your price point, your motivation, and your objectives before signing the contract. If you do have second thoughts, talk through them with your Agent before hastily pulling the plug. Your objections may constitute challenges that are easily negotiated or mitigated (or not) but let's discuss them first. And if you do decide to walk away, do it within the body of the contract (or risk losing your good-faith deposit!) Once done according to the letter of the law, we can now regroup and reboot.
Here's the happy ending . . . those darling clients who walked away from the house in Orinda, found a much better (and healthier) home on this side of the tunnel, and are now happily ensconced AND, rumor has it, expecting their first child . . . While I can't take credit for the baby on board, I like to think I helped considerably with acquiring their first home together.
How can I help you?
Julie Gardner, has been writing The Perspective for 18 years and has published more than 725 humorous but always informative, essays on life and real estate.