Can You Back Out of a Sales Contract on a House After Inspection?

Read your sales contract before you sign to understand your exit options.

According to HUD, consider hiring a home inspector to check out structural and mechanical systems in a home before you buy it. If you don't take care of this before you write an offer, include a contingency clause that will allow you to back out of the contract based on inspection results.

Features

Home sale contracts often contain boilerplate language that covers many different contingencies. Read the contract before you sign so you understand your rights and responsibilities. You can request additional clauses to protect yourself from possible problems in the transaction.

Types

According to Investopedia, backing out of a sale can cost buyers and sellers money. An inspection clause outlines the rights and responsibilities of each party if the house fails inspection. Other common clauses anticipate difficulties with mortgages, selling a current home and appraisal values.

Considerations

If you pull out of a contract, you may lose the money you deposited or a specified percentage of the agreed price. Review the contract carefully or consult with an attorney. The contract may offer more than one way to cancel the sale. Generally, you'll find sellers more generous with refunds when they believe they can easily sell to another buyer.

References

• HUD: 100 Questions and Answers About Buying a New Home
• Investopedia: Housing Deals That Fall Through

Resources

• New York Times: TALKING: Contracts; Getting Out Of a Deal On a Home
• Realty Times: Contract Clauses for Buyers