Can a Seller Back Out of the Deal?
Can a seller back out of a real estate deal? Generally no, but there are rare exceptions! Learn the 3 ways a seller can legally cancel the contract, including buyer breach and mutual agreement, and the serious consequences if you try to withdraw illegally.
No. Not in most cases. The exceptions are few and far between but they exist.
Early in my career I was helping a friend of the family and the day after agreeing to accept a buyer’s offer on his house he broke the news to me that he just couldn’t go forward. He changed his mind. He had a case of seller’s remorse!
I had to break some bad news.
First of all, this is not legal advice. YOUR contract may have special clauses or circumstances. This covers typical situations. For the most part a seller cannot back out. There are exceptions, but I’m reaching a bit in coming up with them. Bear in mind, the buyer is spending money on inspections and appraisals. For the most part, sellers need to perform their duties in the contract, by actually selling the house. Here are some circumstances where sellers can escape.
When Can a Seller Legally Cancel a Deal?
Before the agreement is signed
You may have gone back and forth a bit on terms and maybe you think you have reached an agreement but generally even a verbal agreement in Washington is not going to be enforceable. Before signing off on all terms a seller can walk away.
Sale Contingency for Finding a Home
In 30 years I’ve never had a contract that included a seller’s contingency—for example, giving you 30–60 days to find a new home before the sale closes, but they apparently exist. Not common though. Again, buyer is spending money on inspections and appraisal. Why would they do that if the deal wasn’t iron clad?
Attorney Review Clause
In certain states or contracts, there’s a brief attorney review period (often just a few days after signing). During that time, either party can cancel without penalty if legal concerns arise. This clause does not appear in our standard forms and is therefore rare.
Buyer Breach
If the buyer fails to comply with contract terms—like missing financing deadlines, not depositing earnest money, or failing to close—the contract may allow you to get out.
Mutual Agreement
You can ask the buyer to mutually agree to cancel. The buyer is not obligated to go along—but if they agree, the sale can be rescinded without legal consequences.
When Cancelling Is Not Allowed (and What Happens)
Backing out simply because you received a better offer, changed your mind, or regret the pricing are NOT valid reasons.
If the contract doesn’t provide a legal exit, attempting to withdraw could result in breach of contract consequences. Buyers may:
- Demand specific performance, forcing you to complete the sale in court
- Seek financial damages for expenses like inspections, appraisal, loan fees, and moving costs
What to Do If Considering Cancelling
1. Review Your Contract Carefully
Identify whether any exit clauses apply, such as a contingency or attorney review clause. If it does, follow contract deadlines and notification procedures precisely. Look also to make sure the contract is fully and properly executed. I have known of sellers finding missing signatures and the like.
2. Consult a Real Estate Attorney
If you are pondering getting out of a contract, a licensed real estate attorney in your jurisdiction can clarify whether you’re within your legal rights and what the implications might be.
3. Expect Potential Legal and Financial Exposure
Violating the contract may trigger legal claims, reimbursement of the earnest money deposit, repayment of buyer fees, and payment of real estate agent commissions or legal fees. This is an area to exercise caution and get good legal advice!
