What Happens If I Pull Out of a Real Estate Transaction?

You are deep in the process of buying or selling a house… but you get cold feet and want to back out. What’s next… and can you actually do it?

If you have signed a real estate contract, you are legally obligated to follow through with the transaction.
If you back out of the deal, you may be subject to penalties, including legal action from the other party.

It is important to understand that a real estate contract is a binding legal agreement. This means that if you sign the contract, you are committed to completing the transaction. If you back out of the deal, the other party may take legal action against you.

There are a few different ways that you can be penalized for backing out of a real estate deal.

• The most common is by having to forfeit your earnest money deposit.
  This is the money that you put down to show that you are serious about the transaction. It is generally a few thousand dollars, and it is typically held in escrow by the real estate agent or attorney.
• Another way that you can be penalized for backing out of a real estate deal is by having to pay damages to the other party.
  This could be in the form of lost rent if the property was supposed to be rented out, or it could be compensation for the other party’s time and effort in working on the deal.
• In some cases, you may also be responsible for the other party’s legal fees.
  If they had to hire an attorney to help them with the transaction, you may be on the hook for those costs.

It is important to understand that each real estate transaction is different, and the penalties for backing out can vary. It is always best to consult with an attorney before signing a real estate contract to make sure that you understand your rights and obligations.