Can a Buyer Back Out Of A Purchase Agreement On My Home?

The question often arises, “can a buyer back out of an accepted offer on a house?” after putting their home under contract. Of course, it is great to be under contract but don’t think you are on easy street.

Simply put, it’s not over till the fat lady sings!!

When it comes time to sell your home, there is always risk involved when a seller takes their home off the market for a buyer.

While you have done everything possible to put a good transaction together, things happen that can prevent your buyer from closing.

It is not over until the closing is complete and the deed is recorded. Anything can happen while you are in escrow waiting to close.

Can A Buyer Back Out Of A Real Estate Contract?

The short answer is yes. A buyer can back out of an accepted offer on your home.

The question is how easy is it for a buyer to back out of a real estate contract?

The answer to that is it depends. There are several scenarios that can play out if a buyer decides to walk away from a real estate contract.

A Buyer Backs Out And Exercises A Contingency The Real Estate Contract

The first scenario is the buyer terminates a contract under the right given to them in a contingency in your purchase contract. A contingency is where something must happen for the sale to occur, like a buyer being able to secure mortgage commitment by a certain date.

If the buyer backs out based on terms of a contingency, usually there is language stating that all earnest money deposits are returned. The contingency will further state the contract is null and void and no further recourse can be pursued by either party.

Many of the basic contracts, in Massachusetts, are written relatively the same when it comes to purchasing a home. There are typically two standard contingencies in the contracts where buyers can withdraw from a contract and if done in a timely manner and properly they will receive all deposit monies back.

Mortgage Contingency- The buyer usually has about 30-45 days from the date of signing the contract to secure a mortgage. If they cannot obtain financing by a certain date they can notify the seller and back out of the contract with no recourse to them. As a seller it is important to keep that date tight usually no more than 45 days out. You don’t want to find out two days before closing that the buyer cannot perform.
Home Inspection Contingency- The home buyer will typically have 5-10 days to complete a home inspection. If anything is to their dissatisfaction they again may withdraw from the contract with no further recourse to the buyer. (unless new terms can be negotiated after the home inspection)

Once the contingencies have passed then a home buyer must complete the sale or risk losing their earnest monies.

While most transactions that have reached this point will close on time there can be unforeseeable events that could prevent the buyer from closing on the purchase of your home.

Buyer Backs Out A Real Estate Contract For Reasons Other Than A Contingency

So this leads to another scenario where a buyer backs out of a contract for reasons other than what is spelled out in a contingency. There can be a wide range of reasons why a buyer does not close on a property.

Some of the more common reasons are:

Loss of job/ income- not being able to pay the mortgage or their financing is withdrawn
Credit profile has changed in which event the financing can be withdrawn
Buyers just change their mind, due to illness, lost interest, change of situation, divorce……

In this scenario, the buyers have left a good faith deposit table, typically in the amount of 1% to 5% of the purchase price.

In this scenario, a seller would have a claim on the good faith deposit that the buyer put on the table for damages.

Seller Issues Causing A Buyer To Back Out Of Buying Your Home

Issues that can arise on the seller’s side of the transaction may cause a buyer to walk away from purchasing a home.

Title issues, material change in the condition of the house (fire damage, water damage) not delivering the house as spelled out in the contract and so on….

If something should happen on the seller side that causes the buyer to walk away from a home purchase of course a home seller should immediately return the deposit money and agree to terminate the contract.

Can A Seller Sue A Buyer For Backing Out Of An Accepted Contract?

In Massachusetts, most contracts state that damages are limited to the deposits tendered and all deposit monies are held in an escrow account. The following language is from a Massachusetts Contract to Purchase:

“If the buyers default in the buyer’s obligations and all monies tendered as a deposit shall be paid to the seller as liquidated damages and this shall be the seller’s sole remedy”

So can a seller sue a buyer for backing out?

Of course, you can try to sue for damages or specific performance. But, you signed an agreement stating specifically what would happen if the buyer defualted on the contract. Which is you accepted that liquidated damages are limited to the deposits held in escrow.

There would have to be some extenuating circumstances like fraud for a seller to make any headway in suing a buyer for terminating a real estate contract.

Interactive Floor Plans Help Get Your House SOLD!!

Interactive floor plans are just one of the tools I use to market a sellers home. Most of my moderately priced to expensive listings get an interactive floor plan to be used on the MLS, property websites and more…. as another virtual tool to help get your home sold in today’s real estate market.

What are the benefits of an Interactive Floor Plan

Provides the potential home buyer with a true sense of the space that your home offers that cannot be felt from photos alone
Links provided to photos of your home showing the angle they were taken from.
Allows potential home buyers to move and size furniture.
Links directly from the Massachusetts MLS.
Its a unique tool that many agents do not utilize.

Watch the video on Interactive Floor Plans

An interactive floor plan can set your listing apart from the competition. It is a great listing tool to help get your house sold. So many buyer’s are using the internet to shop for their new home. What they want is information, so give it to them.

If you would like to know more about a full online presentation of your home and how it can help you sell your house for more money, contact Kevin Vitali at 978-360-0422

Top 5 Showing Tips to Sell Your Home

I have put together a list of the top 5 showing tips to sell your home. It is important to make the most of every showing, every potential showing means a potential offer. You don’t want a missed opportunity because you were unprepared.

1) Curb Appeal

The first impression the home buyer gets of your home is usually the lasing impression. Don’t turn them off before they hit the front door. Start from the street and enter like a buyer would if you can’t be objective have a friend do it for you. Good curb appeal will attract drive by traffic as well as entice the home buyers doing drivebys into scheduling a showing.

Your landscaping should be neat, trimmed and in good shape. As spring approaches a good over seeding can get you a nice lush lawn for the spring.
Make sure your driveway is in good repair. Sometimes sealing the cracks and a new coat of sealer can go a long way.
Is all the lawn equipment, trash barrels and play equipment out of view and neatly stored?
Make sure your walk ways are in good repair and well lit.
Your entrance ways should be in good repair and freshly painted. Peeling railings and beat up front doors can benefit from a quick coat of paint.

2) A Pleasant Welcome

Make your home buyers feel at home, n0t like an inconvenience.

Make your home accessible. Try not to have too many showing restrictions or deny showing because it is inconvenient.
Don’t insist that home buyers take their shoes off. Most buyers are very respectful and its just insulting.
Vacate your home and give the home buyers plenty of time to view their home. Don’t sit across the street in your neighbors driveway watching what’s going on…. it’s just creepy.
Try to remove your pets. Their is nothing worse then a dog barking it’s head off in a crate. As much as you love your dog don’t assume everyone does.

3) Light It Up

Make your home more welcoming by lightening it up. A well lit home is far more appealing than a dark home.

If you know a showing is coming, light up your home by turning on every light in your house.
Add lights if needed.
Open up shades blinds and curtains and let the light in. Many times my home stager will recommend removing window treatments for showings.
Don’t forget the basement, closets and garage.

4) Play Down the Smells

Try to neutralize pet odors, cooking odors or any other odors in your home. Have an objective friend come into your home and see if they notice any odors that might be offensive to buyers.

Do not try to mask smells with a fragrance. many people have allergies and buyers start to suspect you are covering something up.
Again don’t light candles that can give of a scent.

5) Housekeeping

Make sure your house is sparkling clean.
Keep the rooms clear of clutter so people can actually see the room.
Get the clutter off the sinks in the bathrooms. If you have to keep baskets or tote bags handy that you can pack your toiletries up and stow them in a closet.
Clear your kitchen counters of any unused appliances and personal items.

Make the most of every showing by using these 5 showing tips. Remember your house is competing with similar homes in the market place and all it takes is one buyer to get your home sold. Make sure your buyers are welcome and leave a lasting impression.

Re-listing your home- THE DREADED EXPIRED LISTING!! Part 1

Re-listing Your Home! Avoid being an EXPIRED LISTING again!!

It’s happened! Your listing is about to expire and your home hasn’t sold. The initial listing period agreed upon between you and your real estate agent has expired. As expected you are probably disappointed and frustrated because your home did not sell and you are wondering what to do next.

Stay calm; it’s not the end of the world! There are strategies that can help you sell your home. For starters, don’t panic. You aren’t alone! In a sluggish real estate market as many as one-third to one-half of the listings may expire unsold!! In Middlesex County, Massachusetts in the past year, 42% of the homes that were listed for sale, expired unsold. That is not even taking into consideration the listings that just cancelled their contracts, never to be sold.

As a home seller there are things you can do to make sure your home sell the next time you list your home. First its time to re-evaluate your decision to sell. Why did you initially decide to list your home? Are those reasons still valid? If you really don’t want to sell this could be affecting your attitude toward the whole process, including the price you are asking and the offer you will accept. Many times sellers have no choice but to sell because of job or personal situation. It is time to roll up your sleeves and make a renewed commitment to do what it takes to market your house effectively.

There are no problems, only situations, and the key is to turn the situation into an opportunity. – Dale Carnegie

Is it time to renew your contract with the same agent or find a new agent to list your home? As your home sits on the market unsold and your listing contract expires, expect to be approached by other real estate agents seeking to re-list your home with a better “plan or strategy”. It is now time to decide do you re-list with your original agent or find a new one?

It’s up to you, but now’s the time to decide!

The Expired Listing and what may have gone wrong

Review the big 4 areas that could have hindered your home from selling. There are 4 areas to look at to determine where things have gone wrong. Every home has the potential of selling in any market. The following posts will help you identify problem areas.

Communication– Expired Listing Part 2
Price– Expired Listing Part 3
Condition– Expired Listing Part 4
Marketing

This article is just the first of five.

Lastly, I want to leave you with one thought. If your home did not sell the first time, something needs to change for it to sell. Doing the same thing will produce the same results!! Many times a homeowner will list with the same agent. This may or may not be a bad idea depending on how it went the first time around. Unfortunately many home sellers will hire the agent that gives them the highest number for there house. Look at the four major reasons why your house didn’t sell. Are you the problem or was your agent a problem?

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This post, Re-listing your home- THE DREADED EXPIRED LISTING!! Part 1, has been provided by Kevin Vitali of EXIT Group One Real Estate. Kevin bring over 12 years of full time real estate experience with 100’s of successful sales to the table. He has successfully sold many expired listing from homeowners that were not successful the first time around. For your free EXPIRED LISTING CONSULTATION, call Kevin at 978-360-0422.

Control- Sellers What Can and Can’t You Control? Home Seller Advice

Are you a home seller getting ready to put your home on the market? It is important to know what you can and can’t control during the home selling process. There are plenty of aspects of the home selling process you can control. But realize there are just as many that you can’t.

I recently had a home seller in Andover MA who had a hard time understanding that up to a certain point you have no control how a buyer perceives your home. There are certain things that you can change like the price and the condition, but you cant change the layout or how the home functions or even how a home buyer will perceive your home.

What Can A Home Seller Control?

List Price– You, as the home seller have total control on how you price your home based on your competition and fair market value. Price just right and things go well. Over price your home and frustration will kick in.
Preparation and Condition– You have a great deal of control over how the condition of you home and how it will show to the buying public.
Advertising– You, or you real estate agent have a fair amount of control over the exposure your home will get to the buying public in your price range. This one really ties in with #4. Great real estate photographs and good web exposure go a long way in marketing your home.
Providing access to your home. Sometimes I have home sellers who deny half the showings on their home with excuses of inconvenience. Yes, selling your home is inconvenient but we can’t sell homes where buyers can’t get in. Everybody has schedule that need to be accommodated in in may be different than yours.
The agent you pick– You have complete control over the listing agent you choose. Pick an agent based upon their history of success and their marketing plan, not based on the highest price they say they can sell your house for.

What a Home Seller Cannot Control

Location- Location, Location, Location…. Its true! Location is very important and definitely has a huge impact on what your home is worth and what buyers will be interested in the home. You have absolutely no control over your homes location or more importantly what your buyers think of the location.
The appeal and functionality of your home– Lets face it a colonial built yesterday versus the same size colonial built in the 50’s will have a totally different appeal and functionality. Today’s buyers want a more open floor plan than what an older home may offer. Also amenities can differ greatly from an older home to a newer home. You can’t control what a home buyer wants.
Buyers– This is a tough pill to swallow but you have absolutely no control over how a home buyer will perceive your home, will do or even think. Don’t even try to control a home buyer, it is a huge turn off for a potential buyer. You cannot make a buyer buy your home that doesn’t like it.
The overall real estate market– Yes we all know what your house was worth at the top of the market in 2006 but we are talking about selling your home in today’s real estate market. The real estate market fluctuates and as a home seller you are merely along along for the ride.
The true fair market value of your home– Your home is worth the highest amount a buyer is willing to pay for your home in a reasonable market time… period. Just because you need more money doesn’t mean a buyer will pay it.

Sometimes home sellers want to control every aspect of a home sale and it is impossible for that to happen.. They especially want to take control when their home is not selling as fast as they would like. This is time to look at what you can control!

You cannot force a home buyer to write an offer on your home. Really that is what it boils down to you want your home sold. Calling your agent five minutes after a showing for feedback is not going to change anything. Trust me if a buyer is going to make an offer you will know about it in a short period of time.

I recently had another home for sale in Andover MA. The home was just off a very desirable location that demanded a premium….. except, this home overlooked a commercial garage with heavy equipment parked outside and piles of dirt. The home seller only wanted the buyer to see the premium location but ignore the commercial property behind. Feedback from the buyers kept saying the commercial property was a turn off.

Home sellers, know you do not have complete control over much of the home selling process. Realize what you can control and what you can’t control and the home selling process and concentrate on what you can control.

Other Home Selling Resources

Teresa Boardman- Home Sellers Expectations Sky Rocket
Bank Rate- Thing Sellers do to Turn Off Home Buyers
Kyle Hiscock- 10 Ways to Scare Away Potential Home Buyers

Home Sellers Learn What You Can Control and Can’t Control, was provided by Kevin Vitali of EXIT Group One Real Estate of Tewksbury MA. If you would like to sell your home or buy a home give me a call at 978-360-0422 and let’s get the process started.

Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford

How to Have a Successful Home Sale

Any home can sell in any market, if you line up what I call the 3P’s of Home Selling. The 3P’s consist of:

Preparation- What are you prepared to do to your home to make it stand out from the crowd?
Pricing- The most critical piece and must be looked at very carefully without pricing your home properly there is no amount of pricing or presenting that will sell your home.
Presentation- What the agent does to put the most positive spin on your home and expose it to the most amount of home buyers.

One critical step of the 3P’s is honest and open communication as well as trust between the real estate agent and the home seller. You need to have an agent you are comfortable with and you feel is providing you with good information. Without honesty and trust between the parties, it makes a successful home sale much more difficult.

If you get the 3P’s to line up you will sell your home fast for top dollar.

I recently sold a home in Melrose Massachusetts at 157 Perkins Street. This was a perfect home sale as the homeowners payed attention to the information I gave them and did a lot of hard work to prepare their home for the local real estate market. We met back in September 2010 and worked through the fall and winter to prepare the home. At our first meeting we discussed the general marketplace, pricing their home and what preparation they were willing to put into their home as well as expectations.

Preparation– The first thing we discussed was bringing in a home stager, which I highly recommend. Margaret Innis of Decorate to Sell is my preferred home stager. She gives a lot of bang for the buck and is very good at what she does.

Margaret spent several hours at the home making suggestion to layout and what to do with certain areas of the home as well as discussing basics like de-cluttering. Some struggles that we had were:

Awkward layout of some of the rooms. Furniture was carefully rearranged or removed to maximize the flow of each room
Rooms not used to their best potential. Each room was highlighted for its best use for todays home buyer.
Lack of backyard due to ledge. We highlighted the outdoor space and made it look like a Beacon Hill patio.

Margaret puts out an excellent report detailing her suggestions. My home seller went through and addressed each line item in Margarets report.

I also went through and suggessted minor repairs and cosmetics. Some of the biggies were painting the kitchen cabinets, repairing doors, repainting the front entrance plantings in the font of the house to soften its edges as well as the rear to make the back patio shine.

Overall it took the better part of the winter and early spring to prepare the home for the spring real estate market. My home seller did everything asked of them. Kudos to them!!

Pricing– While we discussed pricing the prior summer/fall it was time to relook at the data. Based on everyhing they did to the home and a stengthening of the market place we were talking about a higher price than we originally discussed. While my clients spent very little money preparing their home they did put in a lot of time and energy. It certainly paid off. We were able to list the home close to what they bought it for in 2007… when many homes are seriously underwater that were purchased at that time.

My home sellers were very pragmatic about pricing their home. They understood the downsides of their home…. lack of backyard and location on a busy secondary road vs a neighborhood setting. We had a discussion about being a market leader when it comes to pricing and condition. The house needed to stand out and shine and not just be part of the pack. We together picked a price and strategized , that we would list the home with no showings until the first open house. This strategy only work when the house is priced right and is in excellent condition. We withheld showings for almost a week before the open house to give buyers time to discover this gem.

Presentation– First and foremost I needed to leverage this home on the internet. The internet is now the #1 tool for home buyers to find a new home. The online presentaion needed to be key.

The first step was taking top notch [intlink id=”887″ type=”post”]real estate photography[/intlink]. In a previous life I was a photographer and take the photography of my listings very seriously. I have about $3500 in photography equipment including a tripod and multiple lights. I spend about 3-4 hours on the photography and the post processing of the photos. it is important to remmeber that homebuyers are accepting or rejecting homes based on the online images of a home. It is the #1 most important step in your homes online image.

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From there I leveraged the home on the interent. Using every avenue of advertising including social media, listing syndication and personal sites. This site alone I can post a home and have it ranking on the first page of google in just hours of being listed!!

Right away my clients said that they were seeing tons of cars a day stop in front of their home. They were excited!

Pulling it all together- We had both worked hard and now the first open house. It was a constant stream of people we had over 60 interested parties come through with over 12 buyers coming with their agents. When this can occur you send a very powerful message to buyers….. Theres a lot of interest in this house and we need to act if we want to purchase this property.

By Monday we had several multiple offers just over asking. We picked one and closed about a month and a half later. I would also just like to say multiple offers puts the home seller in a great negotiating position. If the buyers push because they think they are in a buyers market, we can push back and say step aside their are several offers right behind you and we don’t want to play games….. and mean it!!

You will tend to get better offers early on in the process, when the property is new and fresh to the market. Be careful of the can’t we just try syndrome where you hope for more money than the data indicates. Your property will sit on the market through a couple of price reductions than buyers feel that the property is stagnant and becomes stigmatized ultimately causing you to lower the price below fair market value to secure an offer.

The Move Up Home Buyer

One thought thrown around by home sellers is… I will wait until my home was worth 5 years ago before I purchase a new one.

Seems to makes sense…. or does it? On the surface it probably seems to make sense for many Massachusetts homeowners that are looking to sell their home and buy a new one.

I would like to show you why, you might want to reconsider. Selling your home in a down market or buyers market to purchase a larger more expensive home can make a lot of sense from a financial standpoint. It can save you money on your new home purchase or allow you to buy more home for the same mortgage payment!!

Of course every home owner remembers what their home was worth 5 years ago. I could of, should of, would of….. What the home owner tends to forget is that even though their home dropped 25 or 30% from peak, so has the price of homes that would have been in their price range, making that new home more affordable.

Lets take a look at a few numbers.

Current Home		New Home
Peak Value	$400,000.00	$600,000.00
Proceeds after Expenses/ Down payment	$147,500.00	$147,500.00
Previous Mortgage Balance/ New Mortgage	$230,000.00	$453,100.00
Difference in New Mortgage Balance vs Old		$223,100.00
New Mortgage Payment at 5%		$2,432.34


Lets look at the numbers after a 25% drop in Value from peak

Current Home		New Home
Fair Market Value Today	$300,000.00	$450,000.00
Proceeds after Expenses/ Down payment	$52,800.00	$52,800.00
Previous Mortgage Balance/ New Mortgage	$230,000.00	$397,200.00
Difference in New Mortgage Balance vs Old		$167,200.00
New Mortgage Payment at 5%		$2,132.26

This only makes sense if you either have equity to work with or cash in the bank and you are moving up. You will still have to come up with a minimum down payment and maybe closing costs. The other thing to remember is that interest rates are still at an all time low. You may even have more savings if you are dropping a half a point or more in interest rate.

The other advantage is while we are in a neutral to buyers market it is not unusual to get home sellers to pay all or some of your closing costs as well as the fact that home sellers are more willing to do necessary repairs to get their house sold.

If you have been waiting for the market to turn around to purchase a new one maybe its time to reconsider crunch some numbers and you may find it is more advantages to buy and sell now.

Can your photography make or break you?

Real Estate Photography- marketing your home — Marketing your home with photography!!

I have posted several real estate photography articles in the past. I think it is important for sellers to look at their listing agents photography and ask themselves two questions:

Is the listing agent taking high quality photographs?

Is the listing agent hiring a professional to take photographs?

The marketing of real estate has changed drastically over the past 10 years with the internet becoming the primary way buyers are discovering properties. Buyers are no longer as reliant on their real estate agent to choose properties for them. The buyers have access to everything right at their finger tips right on line. Your homes photography is in the first line of the marketing of your home. If the buyer does not like what they see they will not call an agent to schedule an appointment.

My Real Estate Listing — My listing photo

Real Estate Photography — Other Listing Photo

Sample Photos: The two photos to the left show identical condominiums that were on the market exactly at the same time. I personally, always try and photograph a home with full sunlight on the front and blue sky in the background. It make for a much more compelling presentation to potential home buyers. Ultimately I sold my condo in half the time and for $15,000 more.

Don’t underestimate the power good listing photographs have in the marketing of your home. When it come to the internet:

good photos= more click thru= more showings!!

Lets look at how buyers choose homes. Buyers usually go on line and are looking at multiple thumbnails of properties at the same time. Your house is competing visually with multiple properties at the same time. Many times their are upwards of 25 properties showing up for a buyer to scroll thru.

If the first image in the line up is not compelling, chances are that a buyer will not investigate your home more. Once you catch the buyers attention it is important to follow up with carefully thought out additional photographs of your home. Many buyers will not talk to an agent until they are compelled to view a property in person.

Hopefully as a homeowner you can see the importance good photography can have in the marketing and sale of your home.

Can a Buyer Back Out Of A Purchase Agreement On My Home?

Can A Buyer Back Out Of A Real Estate Contract?

A Buyer Backs Out And Exercises A Contingency The Real Estate Contract

Buyer Backs Out A Real Estate Contract For Reasons Other Than A Contingency

Seller Issues Causing A Buyer To Back Out Of Buying Your Home

Can A Seller Sue A Buyer For Backing Out Of An Accepted Contract?

Other Questions

Can A Buyer Back Out After The Final Walk Through?

Can A Buyer Back Out At Closing?

Get A Large Deposit

Consider A Pre-Home Inspection

Read Your Contract

Don’t Be Affraid To Ask Questions

What Can I Do If A Buyer Is trying To Back Out Of The Purchase Of My Home?