What you need to know about backing out of a home purchase when you’re under contract

Abstract

A year ago, the share was 11.2%. Yet before you join the ranks of buyers who walk away from a deal in progress, it's important to consider if it will cost you to do so. Typically, buyers provide what's called an earnest money or "Good faith" deposit when an offer is made on a home, although the specifics vary from state to state. Given the financial risks of a broken contract, it makes sense to ensure the final purchase is contingent upon certain aspects of buying a house. If the inspection were to reveal problems with the house that are unacceptable to you, a home inspection contingency generally would mean you can walk away and get your deposit back. "Buyers are putting contingencies back in and not giving it all away to sellers like they did a month ago," said Stephen Rinaldi, president and founder of Rinaldi Group, a mortgage broker. As for why buyers are backing out, it may be due to home inspections that failed to pass muster with the buyer - or at least gave them an out. Buyers "Are willing to walk away even if they can qualify because the house payments have gone up," Bingham said.