When to Walk Away from an Offer

So, when should you walk away from a bidding war? Here are a few prime examples that indicate you are ready and should walk away from an offer on a home:

• It is Out of Your Price Range: If the bidding war continues and your price range is falling behind, it may be time to back out. While this ay seem obvious, you don’t want to live outside of your means. Pay attention to each offer and see how it fits into your budget. Take a look at the estimated mortgage payment and see if that can work with your income as well as your bills each month. 
• The Home Inspection Reveals Major Issues: A thorough home inspection can uncover critical information about the condition of the home. Major problems like structural damage, old roofing, faulty wiring, plumbing issues can spell out huge repair bills. If the inspection report is filled with repairs that the seller is unwilling to fix or give a reduction for in the sale price, it may be time to walk away.
• The House Will Cost Too Much to Insure: Before making an offer, you should fully understand what your total monthly housing costs will be, including insurance premiums. Choose a home where insurance rates are more affordable, this will make you feel more financially secure as a new homeowner. Shop around and compare quotes to get the best rate that fits within your budget.
• Appraisal Comes in Below Offer Price: If your lender’s appraisal values your home far below what you initially offered, it can affect the amount of the loan they’re willing to offer–so you may need to cover the difference on your own dime. If renegotiating the price with the seller doesn’t work out, or if it is something they won’t even entertain doing, it’s probably a wise thing to reconsider the deal.

• Unresolved Title Issues: The title search is crucial because it shows who legally owns the property and if there are any liens placed upon it. Issues such boundary disputes, or problems with the land’s deeds can mean something is definitely rotten in the state of Denmark. If these issues are not cleared up before your house closes, walking away now will save you future legal headaches.

What Happens When Financing Falls Through?

Sometimes, mortgage approval can fall through at the last minute because of changes in your financial situation like loss of a job, relocation, or a new addition to your family. All of these things can affect your ability to afford a home and the bank may re-evaluate its risk in loaning you money. If you can’t find a financing alternative, or if it is going to cause a lot of unnecessary strain, it might make sense to step back. 

Can You Stall Negotiations?

Now it’s worse-case-scenario-time: both parties reach a total deadlock, and neither are willing to budge on major issues like price, repairs, or closing costs. When it’s clear that there’s no way an acceptable agreement can be reached, you may want to raise a white flag and find another property where the terms are in your favor. 

When Should You Withdraw an Offer?

The best time to reconsider your offer is before the seller accepts it. If you have a change of heart not long after making an offer, your real estate agent can still retract it without incurring any legal penalties. But once the purchase agreement has been signed by both parties, you are now bound to it by law. One reason for wanting to withdraw is if either party, seller or buyer, makes counter offers neither find acceptable. 

As much as you may want to sign your name on the contract, the decision to walk away from the deal isn’t easy. But by being prepared, you can avoid potential pitfalls later. Always ensure you have a contingency plan that will allow you to back out without legal or financial consequences.

Buying a home for the first time? Contact Linda Moore to help guide you through the whole home buying process to get you into your dream home!