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How To Cancel a Listing or Purchase Contract
Wondering how to cancel a listing or purchase contract? Below is a previous post on another site written by partner Elizabeth Weintraub. What is so interesting — it’s as relevant today as when written, more than a decade ago. These questions are asked often by the public when visiting our website about: Sacramento Real Estate.
“It’s too bad that you can’t just rip up a contract to terminate an association or an agreement, but that’s not how it works. To find out if your contract can be canceled, the first step to take is to read the contract. Contracts typically contain a provision for cancellation.
Many contracts are bilateral, meaning a promise for a promise. If the other party is not living up to its promise, it’s possible you may have grounds for cancellation.
I give my clients personal guarantees that if at any time they are unhappy with my services or if they feel I am not performing as agreed, I will cancel the contract, whether it’s a listing agreement or a buyer’s broker agreement.
Because I am not a party to the purchase contract — at least not in California — I cannot cancel a purchase agreement. Only buyers and sellers (or the court) can cancel a purchase agreement. But purchase contracts contain provisions for cancellation and, in most cases, the buyer can get her deposit back. I’ve heard of buyers these days walking away from signing loan documents and canceling the contract at closing. The buyers either got cold feet, found a better property to buy or simply changed their minds. Of course, THAT leaves the buyer’s earnest money deposit at risk, but for some, it’s not enough to worry about.
If you require legal advice, however, by all means, contact a real estate lawyer, because real estate agents are not licensed to give legal advice.
Here is more about how to cancel a contract.“
— Elizabeth Weintraub
If you are interested in selling or buying a home, we are here to help you achieve your goals in real estate; call Weintraub & Wallace Realtors at RE/MAX Gold, 916-233-6759.
How a Request for Repair Can Result in a Canceled Contact
Buyers who upset sellers with a Request for Repair might not buy a home.
Sacramento home buyers can forget all about a promise to purchase a home in its AS IS condition, which is how we end up so often with a Request for Repair in the sellers’ laps. They find a defect or some problem, and either their agents suggest they ask for a credit or repair or they find it somewhere online. When you call them on it and say, hey, what did you not understand about no repairs, no credits, they will say but we didn’t know about this, that or the other thing or they rationalize why they think it’s OK to try to renegotiate.
Their buyer’s agents say, oh, just go with the plan and let them down gently. Because the buyer’s agents do not want to be the bad guy. I get it. Completely. They want to be the buyer’s friend. A nice person. Not the person who tells them to read the contract. Not the person who shares what happens to buyers who upset the apple cart by asking for repairs. Not the person who explains how a request like that can dampen any enthusiasm or gratitude the sellers may have harbored toward the buyers.
If they press too hard, the buyers will say whoa, who are you representing? Me or the seller? You’re my agent, you’re supposed to do what I want. Even if it’s a stupid thing. I don’ want to be educated. I want what I want. So the agents back down and, if we’re honest, they hope to god their buyers are told no. I see this play out over and over in Sacramento real estate.
In fact, I just closed a home in Citrus Heights. I had to sell that home twice, but that’s OK. The first buyers were VA. We took their offer because I know how hard it is for a VA buyer to buy a home. Few listing agents want to deal with their type of loan. They get the short end of the stick. On top of this, the VA buyer was also a contractor, so he could make repairs if they were needed. Instead, he shot himself in the foot by asking for a Request for Repair. The answer was no. He could cancel. This might have been his only chance to buy a home this summer, and he blew it.
But he did provide us with a bunch of free inspections the seller didn’t have to pay for.
We’re in a hot seller’s market. VA buyers have a super tough time. Along came buyer #2 about a week later. We had several offers, IIRC, and we selected the same sales price, which was higher than our list, which was already higher than what the seller thought we could get. Not only did that home appraise, but a lovely family who really needed a 4 bedroom in Citrus Heights bought this home with an FHA loan. They assumed all responsibility for the pest work. No repairs. Closed the day before the 4th of July!
The Upside When FHA Buyers Cancel the Escrow
FHA buyers who cancel escrow pave the way for the next FHA buyer.
It’s doubtful that most potential home buyers start out the home buying process by thinking they will become one of those freaked out FHA buyers who might cancel the escrow, but it can happen even in markets of tight inventory more often than you would imagine. There are many reasons, none particularly substantial from an experienced listing agent’s point of view. The reasons tend to range the gamut, from unsophisticated to twisted to incorrect analyzations, but whatever the reasons the decision is right for them. Buyer’s agents do their best to manage these events; however, they are not always successful.
You can’t change the mindset of stubbornness in some people. It’s a fine walk for buyer’s agents. On the one hand, they may instinctively realize the buyer is unreasonable but, if they agree, they lose the buyer. Sometimes they are afraid to point out: No, the seller will not rip off the two-year-old brown roof and replace it with your favorite color of black. In that instance, the buyer would probably feel alienated and jump ship. They often feel there is not enough real estate business to allow them the luxury of choosing their buyers, so they stick with whomever they get.
The thing is you can’t blame the buyer’s agents when FHA buyers cancel the escrow. Their agents are doing the best they can. You also really can’t blame the buyers, especially when they are first-time home buyers. It probably hasn’t sunk in that all homes have defects, nor that they might not buy a home now, especially if they try to force the seller to meet demands the next buyer won’t make. Or, that it could take them another year to find a home. We have such reduced inventory in the Sacramento area, so little for sale, and almost every cute home will receive more than one offer for it. With every rejected contract, though, they learn more about the market in Sacramento and what it will take to buy a home.
Meanwhile, back at the ranch, the sellers might be wary that the next buyer will cancel the escrow. But that is unlikely. The odds are most buyers who go into escrow manage to close escrow. Sometimes, sellers want to take an offer from a conventional buyer over that from an FHA buyer — OK, most of the time, they do. But in a situation where it was an FHA buyer who elected to cancel the escrow, the seller is actually in luck. Because FHA appraisals are assigned a case number, and when the home immediately resells to another FHA buyer, that same case number will be pulled.
I sold a home in Natomas last year this way. We did not want a conventional offer but accepted FHA for that reason. Agents could not understand, what? No conventional offers?
An FHA buyer who cancels escrow means there are no appraisal concerns for the next FHA buyer. The seller simply lost a couple of weeks of marketing time, but there are dozens of excited buyers right around the corner who would love to buy that home this spring. All the reports have been completed, too, so the seller is able to supply full disclosure prior to an offer. When an FHA buyer cancels the escrow, it’s a slight setback but odds are the next buyer will be stronger, better informed and more deserving in the seller’s eyes, especially when there are no concerns of a low appraisal.
Better yet, the market has gone up. If you’re thinking about selling a home in the Sacramento area, call Elizabeth Weintraub, 916.233.6759. Put 40 years of experience to work for you.
Once Upon a Time There Were 3 Homes in Escrow
One would think it was an April Fool’s joke the way things seem to be going this morning in my Sacramento real estate business, but I can assure you that it’s entirely coincidental that 3 properties are going back on the market today pending rescission through absolutely no fault of the sellers. It’s those buyers. Once we had 3 homes in escrow and then not.
You would think buyers would have received the message by now that we have limited inventory in the marketplace, and they are pretty much lucky to be in escrow on any home. But with any strange market comes strange buyers as part of the mix. The problem is as a listing agent, we don’t meet the buyers face-to-face and we have no idea really whether they face mental challenges or are just drunk or stoned. The scenarios seem so similar at times.
I want to suggest hey, buyer’s agents, why not rifle through your buyer’s personal belongings to see if they have stashed illegal drugs in their coat pocket and better sniff that water bottle, does it contain vodka? Because I don’t see any other explanation for such absurdities. I know for some people it’s a lot of fun to be in escrow and picture what life would be like after closing, but for some of those people, it pains me to say, well, they can harbor no intention of closing. Some of them don’t realize it at the time, I’ll give them that much; but others are fully aware, they’re just playing in some other kids’ sandbox, one that the cat visited.
Just seems like a big case of buyer’s remorse sneaking into town on slipper-clad feet. Like that purple smoky haze cast as a curse by Maleficent over Storybrooke. Three perfectly good homes in escrow back on the market today. It’s unbelievable. Enough with the negative, let go of that — time to focus on the positive. These will sell again. They always do.
If you need a turnkey home in Elk Grove at $225,000, or a model home condo in West Sacramento by the Lighthouse Marina at $195,000, or a huge upgraded home with hardwood floors and a fabulous view in Natomas around $300,000, please give this Sacramento real estate agent a ring today at 916.233.6759. I’ll be more than happy to help you find that perfect home and slip you into backup position as we await the processing of the inevitable. No April Foolin’, I promise. When we put homes in escrow, they generally stick.
How Responsible is a Sacramento Agent Whose Client Cancels?
There are Sacramento real estate agents who believe it is the other agent’s fault when a party to a real estate transaction cancels. I noticed this a few weeks ago when one of my sellers accepted an offer, and the Sacramento agent who wrote it seemed familiar to me. Like we had worked together in the past, but I couldn’t quite put my finger on it. So, I asked her if there was a reason her name rang a familiar bell with me.
Immediately, the agent apologized for her former client’s behavior. As though what had happened carried a stigma of some sort. I didn’t even recall the transaction. I searched for her name on my computer and found a sale in which she had submitted an offer, but I could not recall any details. It was a few years ago, and hundreds of real estate closings later. Whatever happened was water under the bridge.
I don’t believe it’s the other agent’s fault when a client cancels. Maybe that’s because I have sold hundreds of homes in Sacramento and, as a result, I realize that stuff happens — stuff that we can’t always control. Once, I had a seller start to cry when I brought him an offer. It was full price, everything he wanted. But that’s when the reality hit. He was too emotionally attached to his home and had relied on other reasons, things he had used as an excuse to sell, and he had talked himself into putting his home on the market. However, when it came right down to it, he didn’t really want to sell.
Was I going to beat him over the head and say: See ya in court, buddy? To a man who is in love with his house and made a mistake? That’s incredibly stupid on so many levels. I released him from the listing.
Agents we remember who “did us wrong” are agents who are unprofessional. Those who don’t return phone calls or, worse, scream into the phone, or refuse to submit required documentation, intentionally thwart transactions. Not agents whose sellers or buyers cancel an escrow. Sacramento real estate agents tend to hold other agents accountable for honesty, ethics, and doing the best job that they can. Not for how their clients react.
Agents this Sacramento agent remembers are those with whom I close escrow, not the others. Some agents who work with me end up in multiple transactions with me. They know I will be professional. That’s a good thing.
