You think that you have found the perfect house, but you may have to walk away for some reason. You may learn new information that causes you to rethink your decision or your circumstances may change.
Problems With the House
A home inspector may discover serious problems, such as large cracks in the foundation or widespread mold. The inspector can also find that work was not performed according to code. If repairs would be expensive, it might be best to simply walk away.
Work that was performed without permits can also be problematic. If you buy a house that had renovations done without the proper permits, you may be required to pay fines.
If you learn that the seller withheld information about a problem with the house that he or she was legally required to disclose, you can decide this is reason enough to look for new home options.
Legal and Financial Matters
A title search can reveal a variety of issues that may create financial or legal problems. For example, there may be liens on the property for unpaid taxes or homeowners association dues. Legal documents can contain incorrect information. You may even learn that the person who attempted to sell the property is not the owner.
A lender won’t loan you more than the appraised value of a home. If the house appraises for less than the price you agreed to, you can ask the seller to reduce the price or you can pay the difference out of pocket. If neither of these is an option, you can pull the plug and walk away from the deal.
You may be unable to proceed with the purchase if you can’t get a mortgage. Even if you were pre-approved when you started house hunting, your circumstances may have changed since then and you may no longer qualify for the same amount and loan terms.
You may be unable to obtain homeowners insurance. Premiums may be unaffordable or insurance companies may be unwilling to insure the property because they consider it too risky for some reason.
Your circumstances may change after you make an offer on a house. You or your spouse may lose a job or one of you may be offered a promotion in a different city. A death in the family can also cause you to rethink your plans. You may also find another house that is more suitable for your family’s needs or that is more affordable.
Talk to Your Agent
If you decide not to go through with the purchase, contact your real estate agent as soon as possible to discuss the reason for your decision. You may or may not be entitled to a refund on your earnest money (the funds you paid to show that you were serious about buying the house). That will depend on your reason for walking away, the details of the purchase agreement and laws in your state.