Last year an agent in my office sold her first listing. She was very excited to make her first sale until about day 10 when the seller called and said, “I don’t want to sell my house. I decided to stay here.”

WHAT!!! She said, “You can’t! You must sell; you have signed a contract.”

I said, “Hold on.”

A seller cannot be implored to sell their home but, if they back out, it’s going to cost. How much depends on how far along the escrow is. For example, during the first day or so, it’s not too hard to wiggle out because very little work on the sale has been done. But, as time goes on and inspections are completed and the appraiser inspects, it gets harder and will cost more. Plus, the risk of the buyer suing is very real.

We were lucky; we called the buyer’s agent and explained. The buyer was very understanding but wanted reimbursement for her expenses. He was happy to pay for the home inspection, the pest inspection and he gave her an additional $1,000 for the headache. He even paid for the photographer and the cost of all the advertising. In the end, changing his mind cost him close to $3,000.

Can you believe this guy called this year and said, “I’m thinking about selling my house!”

If you are a buyer and you change your mind, it’s a similar story with a few key differences. If the house fails an inspection or if there is something on the seller’s disclosures or if your loan is not approved, those are legitimate contingencies and your deposit will be reimbursed if you cancel within the time frame agreed upon in the contract.

But, if you just decide you just don’t want the house, the seller may be able to keep your deposit. When you write an offer on a home, you are required to put a deposit down. Usually, agents try to collect a 3-percent deposit. The money is wired to escrow and is applied to your purchase cost. During the next 17 days, if you find something unacceptable, you can cancel and your money is returned.

If you change your mind, and just don’t want the house, it’s not an acceptable reason and the seller may want to keep your deposit. It’s called the Liquidated Damages Clause.  The seller has been damaged since he or she took the house off the market and may have missed the opportunity to sell it to another potential buyer.

I’ve been in the real estate business for over 20 years and I’ve only seen the Liquidated Damage Clause used twice. Both times the seller kept the deposit. One of deposits paid was $10,000. Ouch.

So, words of wisdom: Be sure you are ready to buy or sell before you sign a contract!

If you have a real estate question, I’d love to hear from you, give me a call or text at (909) 338-9995. Rosemarie Labadie, Realtor CA DRE #01240715.