Ask Phyllis: a blog series of frequently asked real estate questions. Please email us here.
Sellers Change of Heart
Dear Phyllis,
I have been reading your advice column for years and don’t think I have seen you address this problem. Can a seller back out of escrow after they have signed the contract? The seller accepted my son’s offer; he applied for a loan, had an inspection, and now the seller’s Realtor® called his agent to say they changed their mind. He really wants a home for his new wife when he marries in the fall. In my mind, I think my son has a valid contract. Can a home seller change their mind?
Puzzled
Dear Puzzled,
I am a Realtor®, not an attorney, and cannot offer legal advice. Although I can share several situations, I have been involved in some fashion. Several years ago, I represented a buyer when this happened to us. As the home had been on the market for over a month, I assumed there would be some flexibility in the selling price. I prepared an offer, the seller countered the price, and my client countered the seller’s price. We finally came to terms and opened escrow.
Meanwhile, a couple of weeks later, the seller’s agent informed me that the seller was canceling the deal due to her belief that she had sold the home for too little. In response, I took the initiative to draft a letter asserting that I had rightfully earned my commission and expected to be paid accordingly. Additionally, I stated that the buyer should be reimbursed for the inspection and appraisal fees incurred. Upon realizing that she would have to bear these costs, the seller eventually agreed to proceed with closing escrow based on the initially agreed-upon terms. I recommend that your son’s agent follows a similar approach by drafting a request to the seller. Ultimately, it is at the discretion of the listing agent to decide if they also require compensation for this “sale.”
Years ago, a Realtor acquaintance sought my assistance in establishing a listing price for a remarkable fixer-upper property. The condition of the home was appalling, with wild dogs freely roaming inside, and the flooring completely ruined. The owner had inherited the home from her parents but could no longer afford to keep it.
The property was listed and successfully sold to investors who intended to renovate and flip it. However, three weeks into the escrow period, the seller unexpectedly declared her refusal to proceed with the sale. Faced with the threat of legal action from the investors, who had promptly hired an attorney and demanded “specific performance,” the seller ultimately chose to honor the terms of the contract and completed the escrow process.
Have your son’s Realtor start with a demand to be paid. Additionally, demand your son be reimbursed for all out-of-pocket expenses. If that doesn’t work, have your son contact a real estate attorney.
Best of luck to your son.
You might enjoy: Why would a buyer make an offer and change their mind?
Buyer seller communication
