You’re selling your home, have accepted an offer you’re happy with, and it seems like all your stress is over. It’s time to pack up and move on!
But sometimes life throws you a curveball—such as another buyer who is smitten by your fabulous home and steps up with a higher offer. What’s a seller to do?
Overall, switching to a higher offer after you’ve already accepted one (and are in contract) isn’t always possible and even when it is, it often isn’t something most experts recommend—it’s unpleasant, unethical, risky, and could even land you in legal hot water.
Once a seller has accepted an offer, it’s very difficult to back out, even if you receive a higher one. Most deals allow a buyer to back out, but not a seller.
Still, money talks—and if the higher offer is something you want to consider, here’s what you can expect.
Review your contract
When a seller accepts an offer, that doesn’t mean the deal is truly done. For one, did you sign a contract? Until you’ve got your John Hancock on that document, a home is still technically available.
This contract—often called a home purchase agreement—defines the responsibilities of each party, deadlines, and specific contingencies. Once it’s signed, anyone backing out could face Lady Justice.
It’s important to fully understand the language in the sales contract to ensure each party is aware of their responsibilities and repercussions for breaching such obligations. That usually includes the nondefaulting party’s right to pursue “lawful remedy” against the defaulters.
Check your contract’s contingencies
Even if you have signed the contract, if it includes contingencies, then there may still some wiggle room. Contingencies cover the obligations that must be met by both buyer and seller before a real estate transaction can close. For the seller, a buyer closing a mortgage within 30 days is a typical contingency. If the buyer fails to meet that deadline, a seller may be legally able to call the sale off.
For the buyer, one common contingency is that the home passes inspection. If it doesn’t because of major flaws with, say, the foundation or roofing, then the buyer may walk away without incurring penalties, or ask the seller to pay for repairs. An inspection contingency is typically put in place to protect a buyer, however, in the case another higher offer is received, it could work in a seller’s favor (see our next point).
Accept the higher offer as backup
Sellers don’t have tons of options when it comes to backing out. But one thing a seller can do—though it’s not guaranteed to work—is to accept the higher offer as a backup.
As the seller you can then play hardball with the first party when it comes to any inspection/remedy items they want fixed.
The goal for the sellers would be to make the buyers with the initial offer back out on their own by not meeting their inspection contingency demands. Once the original buyers walk away, the seller is then free to move on to the higher offer.
The big danger, however, is that once you let one buyer go, the second folks could then ask for even more repairs or back out altogether. The bottom line when letting go of one strong offer in favor of a higher one: “It’s a significant risk.”
Fill the original buyer in
If a seller decides to go with a higher offer, she must communicate that to the original buyer immediately—and return any deposit presented with the initial offer. But here’s another option: A seller could advise the original buyer of the higher offer and allow the original buyer to present a counteroffer. Granted, the buyer may not want to and again if this is the case you the seller are then free to move forward with the higher offer.
Seek legal counsel
Realty laws vary from state to state, based on the contracts.
Here in Ohio, if a seller just wants to back out of the contract, the buyer and the agents can sue for breach of contract and non-performance. The suit can be used to force the seller to sell the original buyers the home, or to pay a specified amount of damages—which could include the price of seeking alternate housing like a hotel and legal fees. In addition, one of both of the real estate brokerages could sue the seller for the sales commission.
We would strongly encourage a seller to seek legal counsel before making any attempt to back out of a contract.
… or avoid such drama at the outset
One way to circumvent legal battles—and bad karma—is to ask yourself before you put your house on the market what you’d do in such a circumstance. If you’re the type of person who wants to take all comers, it’s advisable to list the property as “contingent, accepting backup offers.” This would “avoid any and all repercussions to the seller.
The reason: If a seller communicates upfront that all backup offers will be considered, the buyer cannot reasonably claim he relied on the offer acceptance as a sign he’s guaranteed the keys. The downside? Some buyers might be scared off, knowing that their dream home could disappear on a dime. In addition, a home isn’t likely to get much showing activity as “contingent accepting backup offers” as buyers and their agents prefer to focus on homes that are available and not otherwise encumbered.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Hilliard 43026 Lewis Center 43035 Marysville 43040 43041 New Albany 43054 Pickerington 43147 Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235
Connect with us 
