The most common reason for buyers to back out of a contract is as a result of a poor inspection, most commonly a home inspection. When you purchase a home, you are given the option to do a variety of inspections including; a general home inspection, radon test, lead test, chimney inspection, and/or mold test just to name the most frequently requested inspections. For investment, commercial properties and raw land, often we have buyers choose to do a “study period” where they can check into anything that they would like to for a certain number of days to be sure they can do what it is they intend to with the property. These inspections are a very important part of the process and allow the opportunity for the buyer to either negotiate repairs or allow the buyer an “out” from the contract, should they not be satisfied with results or they cannot come up with a satisfactory resolution with the seller to remedy issues, or they just may find the property may not meet their needs. Now there are also mandatory inspections when you are using a loan to purchase which include a termite test and water and septic inspections if it’s a property in a rural location. These can cause issues as well, but typically not as much as most sellers realize that it’s really the responsibility to provide the property free of wood destroying insects and with a good septic and water if the buyer is using a loan to purchase.
In Maryland as rule of thumb, the buyer usually pays for all the inspections and then the seller is “asked” to make repairs. Usually a back and forth negotiation takes place.
When a buyer backs out due to the home inspection, they either are not satisfied with the results and/ or the seller is not willing to invest in the repairs that the buyer would like them to do. Agents can give the buyer the option for the unconditional right to terminate the contract if they are not satisfied with the results and/or chose the option to negotiate all repairs with the seller. In the latter case the buyer still has option to exercise their right to terminate if the repairs cannot be successfully negotiated. In my opinion, better to spend about $350 to $600 in inspections and lose it rather then move forth with something that later on you wish you hadn’t. Use your out if you need to. When I have had buyers exercise this option they have always ended up with a better fit the next time around. Better to walk then to have a home be a constant source of financial strain for years to come.
What’s that movie, The Money Pit? Don’t go there. My advice is to be an informed buyer, and back out if you need to. Find the house that is right for you.