When a buyer wants to purchase a home, he usually makes an “Offer to Purchase”. The offer contains, amongst other things, items included and not included, the deposit (earnest money) amount, the possession or closing day, and conditions of purchase.
If the seller accepts the offer, then the contract between buyer and seller is legally binding based on the wording of the offer.
But there are occasions when a buyer backs out of the deal. Reasons may be that:
- the buyer cannot secure the mortgage commitment under the terms of the contract
- the buyer may have found a better home
- on inspection, there may be repairs required that neither the buyer no seller are willing to pay for
When the buyer backs out of the deal, the seller gets adversely affected:
- the seller has lost the opportunity to sell to someone else
- the seller’s property may have lost value during the contract phase of the sale
- the seller may incur additional expenses arising from a delayed move
- the seller may lose deposit on another home intended for purchase
While the buyer’s action affects the seller, there are also dire consequences for the buyer:
- the buyer may lose the deposit paid to bind the contract
- the buyer may face extended legal action should the seller incur expenses that are not covered by the deposit
- the buyer may have to compensate the seller for loss of value during the contract period
The decision to withdraw an offer and its consequences can emotionally drain buyers and sellers alike.
The bottom line is that the seller’s goal is to sell his/her property at an agreed upon price. If the buyer breaches the contract, the seller is entitled to “be made whole”; this includes providing the seller with all costs associated with obtaining a new buyer and the fair market value of the property at the time of the breach.
Remember this – a buyer intending to purchase a home must:
- Understand his rights before he signs the contract and makes a deposit.
- Understand that once an agreement is signed and accepted, simply changing his mind can have far reaching consequences.
- Understand that as a buyer if he defaults on his obligations the seller can sue for the deposit and damages.
If you are looking to buy or sell a home, you need an experienced real estate professional to guide you carefully through all the steps. We have been in business for over 28 years and currently have over 60 listings. Contact us, call us on 604 913 1000/604 695 1000, or visit one of our offices.