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 I 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 this La Crescenta 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, so I cannot offer legal advice. However, I can share a few situations in which I have been involved. For example, several years ago, I represented a buyer in a similar circumstance. Because the home had been on the market for more than a month, I believed the seller might have some flexibility on price. Accordingly, I prepared an offer. The seller responded with a counteroffer, and my client then countered the seller’s price. After several rounds of negotiation, we finally reached an agreement and opened escrow.
Meanwhile, a few weeks later, the seller’s agent informed me that the seller wanted to cancel the transaction because she believed she had accepted too low a price for the home. I immediately drafted a letter stating that I had earned my commission and expected payment. I also requested reimbursement for the buyer’s inspection and appraisal costs. Once the seller realized she would have to cover those expenses, she agreed to move forward and close escrow under the original terms.
I recommend that your son’s agent take a similar approach and submit a written request to the seller. The listing agent can then decide whether to seek compensation for the failed transaction as well.
Years ago, a Realtor acquaintance asked me to help establish a listing price for a remarkable fixer-upper. The home’s condition was dreadful. Wild dogs roamed freely inside, and the flooring had been destroyed. The owner had inherited the property from her parents but could no longer afford to maintain it.
The Realtor listed the property and quickly sold it to investors who planned to renovate and resell it. Three weeks into escrow, however, the seller announced that she would not complete the sale. The investors promptly hired an attorney and demanded specific performance. Faced with the prospect of legal action, the seller ultimately honored the contract and completed the escrow.
Best of luck to your son.
You might enjoy: Why would a buyer make an offer and change their mind?
Buyer-seller communication
