You’ve fallen in love with the home of your dreams. You think everything is going perfectly, and you’re steadily moving towards your closing. Then, seemingly out of nowhere, the seller backs out of the sale.

It can feel devastating to face the reality of not getting to move into that home of your dreams. In addition, you’ve just gone through all of the paperwork and chore of planning to buy a house. Going back to square one is not ideal. What should you do if a seller backs out of a home you want to buy? In this guide, we’ll talk about what to do if you find yourself in this heartbreaking situation.



Planning Notebook | Why do sellers back out


Why do sellers back out?

You know just how bad it feels from your end. As the buyer, it’s extremely disappointing to realize that you won’t be moving into the home you’ve been working so hard for. It can be helpful to understand why sellers back out in the first place.


Most home sellers back out for very human reasons. For instance, they might have an emotional connection to the home or they’ve decided to keep it within the family. It could also be a financial reason, such as not being able to afford a new home.


One of the most common situations for backing out is when the seller doesn’t trust the buyer to actually go through with the sale. They might not think you have enough for a downpayment or that you’ll be approved for your mortgage. In these cases, you might have some actions you can do to rectify the situation.  Finally, sellers sometimes will sell to a higher offer at the last minute, even if this feels unethical.



Is a purchase agreement legally binding?

You might be wondering if your purchase agreement is legally binding. A written and signed purchase agreement is considered to be a legally binding document, and this means there will be ramifications for sellers backing out of a home sale.


If you haven’t yet signed a purchase agreement, you might not have any options to convince the home seller to sell their home to you other than offering more money. However, if you have signed a purchase agreement, you can consider the options below.



Buyers can sue for specific performance. 

What is a specific performance? It’s a breach of contract by one party. If you sue for specific performance, the court can order the party to go through with the duties outlined in the contract.


In the case of buying a home, this means completing the home sale. However, beware that this is a lengthy and time-consuming legal process, and it’s not usually worth going through with as a homebuyer.



Buyers can sue for damages. 

Another option other than forcing the seller to go through with the sale is to simply sue for damages. Because the contract was breached, you can sue for any of the following:


  • Temporary housing costs
  • Storage costs
  • Lost deposits
  • HOA application fees
  • Legal fees
  • Inspection fees

Basically, any costs you racked up due to this process, you can sue for. This is the most effective way to recover financially from a seller who backs out of a home sale.



What comes next?

Unless you decide to sue the seller to proceed with the sale, you’ll need to come to terms with no longer moving into the home you’ve dreamed about. Luckily, you have options for reclaiming lost funds during this process so you can refocus your energy on finding a new property you love.


Many home sellers get cold feet. No matter their reasons for backing out, you should make sure you’re compensated as the buyer if you’ve completed a purchase agreement.