Need to back out of an Accepted Offer?

Even though these are words a Realtor® never wants to hear, when you are buying a home, the sale can fall through for many reasons and if you're wanting to back out of an accepted purchase offer, things can get complicated.

It's not impossible to back out of a signed real estate contract, but there could be repercussions without a plan for escape beforehand. Knowing what could happen is critical so you know your financial and legal rights as a homebuyer.

Here's what to expect if you rescind an accepted offer.

Can you back out of an accepted offer?

The short answer: yes. When you sign a purchase agreement for real estate, you’re legally bound to the contract terms, and you’ll give the seller an upfront deposit called earnest money. Earnest money shows the seller that you’re serious about purchasing the house and plan to follow through on the agreement. But having contingencies in place makes backing out of an accepted offer perfectly legal while ensuring you get your earnest money back in most cases.

“It’s not fair to the seller to pull their home off of the market if a buyer is not totally serious,” says Marc Hagerthey, a Realtor with Keller Williams in Baltimore. “The earnest money will sit in an escrow account and will be used to pay a portion of the closing costs at settlement.”

However, the severity of the consequences depends on whether you had contingencies in your offer that spell out situations when backing out without penalty is acceptable.

When is it too late to back out of buying a house?

Outside of contingency periods, it’s easier to back out of buying a house before the purchase agreement is signed. If you decide to exit after that point or after the contingency periods have expired, you’ll have a much harder time doing so without landing in legal or financial trouble.

In some states, home purchase agreements have a clause that requires both parties to agree to mediation if there is a dispute. That means you have a chance to plead your case to the seller directly with the help of a neutral mediator and, hopefully, resolve the issue outside of a courtroom.

Backing out of an accepted offer with a contingency

A standard real estate contract typically comes with a number of contingencies — these are the conditions that need to be met in order for you to move forward with a home purchase. This includes a mutual agreement of specific tasks that have to b