What to do if the seller wants to back out of the deal?

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Can you sue a seller for backing out of a real estate contract? If you're a real estate wholesaler, then you're certainly going to experience deals when the seller wants to back.  It's very frustrating, especially if you've already assigned the contract to your new buyer.

Maybe you've found yourself with one of these sellers, and left wondering what to do now.  I mean, they've signed a contract. They should have to perform, right?  The truth is, you can't drag a seller to closing and hold their arm while they sign.

Most contracts specify the remedy for non-performance by both parties. Typically, a buyer must sue the seller for specific performance. This is a costly and time-consuming process.  Most of the time, it's not worth it. As a professional, you must take each seller case-by-case and do what you feel is the best, both ethically and professionally. You'll certainly find yourself in situations where you will both agree that its acceptable to just call the whole thing off.

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Reasons Why Sellers Back Out of Real Estate Contracts

There are various reasons why a seller may want to back out of a contract once it has been signed. Let's have a look at some of the most common reasons:

Emotional Attachment

Sellers will get emotionally attached to a property, especially if they grew up in the house or if their parents lived in the house for many years

Seller Occupies the House

It can be overwhelming for a seller to start the process of packing up everything they own and moving into a new house. This rings true for owner-occupied homes. Mainly ones that have many years of memories.

Seller Has Remorse or Regret

Motivation doesn't always accompany good decision making. Sometimes a seller really NEEDS to sell the house for financial reasons but doesn't really WANT to sell the house. This can cause the seller's remorse after the contract has been signed.

Seller Received a Higher Offer on the Property

We all love it when a seller signs a contract and then receives a higher offer from another real estate wholesaler. Ouch! In a competitive real estate market you'll find this the most common reason for a seller backing out of a contract.

How to Protect Your Interest in a Real Estate Contract

Suing a seller for backing out isn't the only option that you have when it comes to protecting your interest. In fact, it may be the longest and most expensive way to resolve the dispute.

Record an Affidavit and Memorandum

There's a way to secure your interest in the property once you have a signed contract with the seller of a property. Technically once the contract is signed, both parties are contractually obligated to perform on the deal. If you run into a situation where the seller wants to back out of the contract, then you have the option of filing an affidavit and memorandum with your local courthouse.

Watch the video below for more information on how an Affidavit and Memorandum work.

So can a seller back out after accepting an offer? Well the answer is both yes and no. Yes, of course, they have the option to. Does that mean that they won't have to pay a fee for doing that? NO. Eventually, you'll be compensated for the lost revenue.

For more tips and foundational training on how to wholesale houses, check out the Bad Ass Real Estate Wholesaling Virtual Coaching Program. This will teach you all of the fundamentals that are required to be a successful real estate wholesaler.

6 comments on “What to do if the seller wants to back out of the deal?”

  1. Johnna Lodge says:

    Once I did not plan to buy this seller's property. I was actually selling my own property and thought this property would go on the market before mine. The seller had used unskilled labor and it was hard for me to determine how to repair the improper installations. It took me a few weeks to find a decent contractor. I kept the seller abreast and they appeared to be fine but maybe a little frustrated as I was in regards to the time it took for me to find a legitimate contractor..When I found out another investor was involved for a higher price the seller lied. He was now in two contracts and I found out he was a real estate broker no less. Fortunately, I knew the other wholesaler. Since my contract was earlier she agreed to give me til the end of the week I closed by the end of the week. That wholesaler was honorable.

    On the next two happened within two weeks of each other. Both seller's had tenants so a quick close was not possible.Both seller's were under contract with me at the same time that they contracted with a 2nd seller. The 1st I met the end buyer who when we realized each other she said she would not pursue. She lied and pursued. I had already filed the affidavit since i felt the seller was waning.

    On the 2nd, I had to wait a over 1 month and 1 week before tenants were removed. I wanted to close within 30 days but it was not possible. Seller had liens and tenants so getting title clear and tenants out took time. The seller appeared to start wavering. I filed the affidavit. 2nd buyer's contract had been signed as i had suspected. This wholesaler knew there was a contract with this seller. I was able to get seller back with a higher sales price. 2nd buyer threatened. We closed. Saved.

    The 3rd time, I had not been under contract with this seller for a month. Tenant needed to move. Squirrelly seller. I was scheduled to close in less than 1 week. I saw an advertisement on FB from another investor. I filed the affidavit then called the wholesaler feeling that they did not know about 1st contract. I knew this wholesaler. I asked for professional courtesy to back away from seller. He said he would. He did not ask for contract or any other information. I sent him and his partner the affidavit anyway. His partner kept marketing the property on FB. I asked them to stop marketing it.He stated it must be an old fb marketing instead of removing any marketing. He did nothing. It came time to close. Seller would not send closing documents to closing attorney. The 2nd wholesaler closed over my affidavit of memorandum.He also waited one more month before he closed. He lied on FB saying he asked for the contract that I did not send to him and said I didn't have the price right and extended the closing date all of which were untrue. I did not want to engage on a online FB argument. They only way I could have salvaged this was to sue the seller for performance. The affidavit did not hold water.

  2. It would be nice to have video transcript on these so I don't have to spend 12 minutes watching something i can read quickly.

  3. Troy Darnell Sarsirresteo Williams says:

    I use a Memorandum of contract on all my wholesale deals when i flip my assigned contract. I will still get paid...!!!!!!$$$ I feel more comfortable when i do a memorandum of contract..........!!!!!!!!!!

  4. Johnna Lodge says:

    Affidavit and Memorandum of contract are one in the same.

  5. So I’m selling my personal home and the buyer is a whole seller who placed a memorandum on my house. She listed it under the agreed upon amount , I had another offer and I kept asking her to end the contract since she knew she offered too much. But now she isn’t even trying to sell she is bullying me to pay her $15k to lift it. I know I’m the crazy seller in y’all’s eyes. But how can she do this if she really isn’t an agent, all she wants is easy money by placing memorandums on houses and when sellers get fed up with her and decide to leave she acts like it’s ok then you find out you can’t sell. What do I do?

    1. The Flamingo says:

      Hi Jess. Unfortunately, theres nothing you can do until the contract expires with her and the deal doesn't close. She can file and record this affidavit,BUT if she's unable to close by her closing date, then she was unable to perform and thus in default. You can send her an email or something in writing saying you expect her to close on her losing date, or release the affidavit that she has on the property.

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