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How to respond when your buyer backs out?

How to respond when your buyer backs out?

Most people don't know, but I was a real estate agent back in the 90's. I was excited whenever I received a signed contract for sale on one of my listings. Real estate sales is 100% commission based so I was really counting on the income for this sale. My clients were usually equally excited, as they could look forward to getting out of a second mortgage payment, or finalizing their next move. 

During this time the worse news you could receive is that the buyer is planning on backing out of the sale. This usually comes just a few days before closing (or worst yet, when they "no show" for the closing). Often times the buyer sends a message along the lines of "Sorry, we've changed our mind." Of course at this point not only is the real estate agent out of a commission, but the seller is usually out thousands of dollars in final expenses and may have turned down other offers once the house was under contract. 

Now as an attorney I've gotten to assist dozens of sellers around South Carolina pursue their legal remedies after a buyer backs out. These cases usually begin when the seller, or seller's agent, contact our office. They are angry, frustrated, and want help to either get the closing back on track or to recover their financial losses. 

The first step in these cases is to determine exactly what damages (money) we can legally pursue. Many buyers think that the only recourse against them is that the won't get their deposit money back. This is usually only just the beginning, and often times the legal damages will well-exceed $10,000. Sometimes when buyers are advised of this they change their mind and are willing to close. Other times it can result in a settlement, where the buyer pays additional money to compensate the seller for their expenses and inconvenience. If it isn't possible to work out a resolution with the buyer the seller also has the right to pursue a lawsuit.

The damages that sellers can pursue will include:

  • The full commission owed to the real estate broker - In South Carolina the real estate broker is entitled to 100% of their commission once the contract is signed. Successful closing is not required. Many brokers are willing to cooperate with our collection efforts to try to recoup some of their missed commission.
  • Legal fees - Most contracts contain a clause that says that a party in default (like the buyer who tries to back out), will owe the legal fees to the other side. This allows us to add-in the legal fees paid buy our client, beginning with the initial consolation and through the costs of any lawsuit.
  • Mortgage interest - If the sale falls through or is delayed, the additional interest paid on the seller's mortgage can be part of the damages.
  • Utility bills - If the house is empty then the utility bills are part of the damages
  • Property tax - The portion of the property taxes owed during the time of any delay can be added in.
  • Specially requested repairs - If the seller made any repairs or modifications not otherwise required (such as new carpet, or painting a particular color), then this expense can be included. 
  • Moving expenses - If the seller has moved out in anticipation of closing, then the moving expenses may be included. This could also include amounts owed to secure additional housing (such as if the seller had to rent an apartment).
  • Decrease in sale price- If the sale to the original buyer never takes place, and the sale ultimately occurs at a lower price, then that difference can also be pursued. However, if the sale occurs at the same or even a higher price, it still doesn't disqualify pursuing the other damages listed above (in fact there is usually no offset at all).

If you have found yourself to be the victim of a backing-out buyer, you are also welcome to welcome to contact our office for a consultation. This is a state-wide practice area for our office, and we can assist regardless of the county (in the past year we have been involved in matters in Greenville, Columbia,  Myrtle Beach, and Beaufort). 


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