I'm thinking about backing out of the real estate contract on the Olathe home I bought. Where do you stand and what are your options?

With so many homes on the market today in Olathe, Kansas to choose from, it is very easy to find an Olathe home that fits your needs exactly. But, what if something has gone wrong during the buying stage and you are unsure about buying the home after all. 

You the home buyer wants to back out because you found a home down the street and it is a better deal or you got "Cold Feet" and you feel that you maybe getting over your head. Where do you stand backing out and what are your options?

I will outline your options.

It is important to remember that once you have a signed agreement, put down earnest money, it will be harder than you think to back out. Earnest money is a deposit in good faith that you will purchase the home as agreed upon with the home seller. Unless you back out due to a contingency, you may lose your earnest deposit. 

A contingency is condition in the real estate contract that needs to be met in order to perform the real estate contract.

Ok, since you can back out due to a contingency, lets look at popular contingencies in a real estate contract.

The first popular contingency in a real estate contract is financing. A financing contingency is a contingency for you, the home buyer, to obtain financing according to the terms of the real estate contract. Terms of the contingency that need to be met are type of loan, length of loan, interest rate of loan, loan amount, loan to value and mortgage lender. The home you are purchasing also needs to appraise for the purchase price or terms will not work according to the contract. If all of the loan terms according to the real estate contract are not being met, then you the home buyer may back out the real estate agreement and receive your earnest deposit back. If all financing terms are being met, then lets look at the next popular contingency in a real estate contract.

The next popular contingency in a real estate contract is a mechanical and structural inspection. In order to meet this contingency, you need to hire an inspector to inspect the house according to the terms of the real estate contract. If the home does not pass the mechanical and structural inspection, you the home buyer, may back out of the agreement and receive the earnest deposit back. If the home does pass inspections, then you must go to the third most popular contingency in a real estate contract.

The third most popular contingency in a real estate contract is a pest contingency. In order to meet this contingency, you need to hire a pest inspector to inspect for inspect for pest in the house according to the terms of the real estate contract. If the home does not pass the pest inspection, you the home buyer, may back out of the and receive the earnest deposit back. If the home does pass inspections, then you must go to the fourth most popular contingency in a real estate contract.

The fourth most popular contingency in a real estate contract is a Radon, Mold, Asbestos and Microbials contingency. In order to meet this contingency, you need to have an environmental inspector inspect for Radon, Mold, Asbestos and Microbials in the house according to the terms of the real estate contract. If the home does not pass the Radon, Mold, Asbestos and Microbials inspection, you the home buyer, may back out of the agreement and receive the earnest deposit back. If the home does pass Radon, Mold, Asbestos and Microbials inspections, then you must go to the fifth most popular contingency in a real estate contract.

The fifth most popular contingency in a real estate contract is a roof contingency. In order to meet this contingency, you need to have a roof inspector inspector inspect the roof on the house according to the terms of the real estate contract. It is also common for a whole house mechanical and structural inspector to also inspect the roof. If the home does not pass the roof inspection, you the home buyer, may back out of agreement the and receive the earnest deposit back. If the home does pass the roof inspection, then you must go to the sixth most popular contingency in a real estate contract.

The sixth most popular contingency in a real estate contract is a sewer contingency. This contingency is typical for rural areas with a sewer system that is not on a public utility. In order to meet this contingency, you need to have a plumber or septic inspector inspect the sewage lines running from the house according to the terms of the real estate contract. If the home does not pass the sewer inspection, you the home buyer, may back out of the agreement and receive the earnest deposit back. If the home does pass the sewer inspection, then you must go to the seventh most popular contingency in a real estate contract.

The seventh most popular contingency in a real estate contract is a well contingency. This contingency is typical for rural areas with a well water system that is not on a public utility. In order to meet this contingency, you need to have a plumber or well inspector inspect the well water supply on the house according to the terms of the real estate contract. If the home does not pass the well inspection, you the home buyer, may back out of the agreement and receive the earnest deposit back. If the home does pass the well inspection, then you must go to the eight and typically last  most popular contingency in a real estate contract.

The eight most popular contingency in a real estate contract is a clear title contingency. In order to meet this contingency, a title company needs to be able to offer a clear title commitment on the house according to the terms of the real estate contract. If the home is not able to receive a clear title, you the home buyer, may back out of the agreement and receive the earnest deposit back. 

If the home is able to receive a clear title, then you are out of typical options to get out of the real estate agreement and receive your earnest deposit. At this point you probably will need to hire an attorney if the home seller will not release you from the real estate contract and release the earnest deposit.

Many home buyers find that backing out of a real estate contract will cost money, so sometimes agreeing to a split of the earnest money maybe advantageous.

Hope this helps. If you have any questions, feel free to contact the Dowell Taggart Team.

RE/MAX sells more homes than any other real estate company.
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Blog post written by the Dowell Taggart Team of RE/MAX Premier Realty 

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