Expert: Lisa Webber - 7/28/2008

Question
A week ago my realtor and I looked at homes.  I found one that met MOST of my criteria.  I say most because I really wanted one with a deck, fenced backyard and finished basement.  The house I found had a bonus room in the finished basement and a patio but no deck and no fence.  Based on the other items I wanted(close to schools, etc), I made an offer. Another house on the same street for the same price with all the things I sacrificed. This house was/is on the market also. My mom said my realtor should have suggested we look at the other houses on the block knowing my criteria BEFORE I made my offer.  I'm VA and the home inspection has been done.  I gave earnest money to my realtor who already deposited it.  Can I back out of this contract and go into one on the other house?

Answer
Before giving you the answer to your question, I wanted to share some thoughts with you about the buying process.

In this market, with your criteria, there could be potentially hundreds of homes in the right price range, near good schools with a deck, fenced yard and finished basement.  Realistically, most buyers don't want to see hundreds of homes.  We've found that there really isn't the "perfect" house for most people and I know you didn't say the "perfect" house, but I mean one that meets every criteria that a buyer has. When buyers go out and shop, it is more a process of elimination, or eliminating the houses that just won't work and seeing which ones will work.  Most houses won't have everything that a buyer wants.  

Another thing that we have noticed when working with buyers is many times they will give us criteria up front and what they purchase is totally different from what they said they want.  Your agent has experienced this also, so the criteria you laid out is a rough guide, but sometimes a great home won't have everything.  Some buyers will say they absolutely will not live in a split foyer, and then they purchase one because it is a great deal compared to another style home in a neighborhood.

Without seeing the house down the street on the inside, it's hard to know if that really would have been a better choice for you.  Did you know that the house was available when you looked at this one?  Before making an offer is the time to see all of the houses that might interest you. I wouldn't blame the Realtor if I were you because she did help you find a home with most of the amenities that you were looking for. There are a couple other things that could have happened with the house down the street.  It could have been expired or withdrawn in the system at the time you were looking at that street (could still have the sign up).  Do you know if it might be a "short sale"?  Many houses on the market today are short sales and that is a whole other problem that I won't get into here (would take too long).  

Just playing the "what if" game here - what if you got a better offer accepted on this house than you would have on the other house?  If you received a good enough price on the house that you purchased with the offer that was accepted, would you be able to put a deck on and fence the yard?

The unfortunate thing in this situation is that you did present a written contract and you did offer earnest money which is showing the sellers that you are serious about purchasing their house. In good faith, they have taken the house of the market and saved it for you when someone else could have been looking at it and they are making their plans based on this house being sold.  If you were to back out now just because you changed your mind, the sellers would keep you earnest money and they could sue you for performance, or take you to court and require you to purchase the house that you put the contract on.  I don't know how often this happens in real life, but it is a possibility.  There is the possibility the sellers could sue you for any money they have lost by taking the house off the market and any other plans they may have made.  The only way to get out of a contract at this time, without penalty, is if you have a financing clause where you agreed to obtain a certain type of financing at or below a certain percentage rate and terms and you were not able to get those terms.  

I totally understand your concern and wanting to change your mind as I felt the same way when we bought our house.  Is this really the right one, could this other one be better, etc.  I would think about another house, just like ours but with a different layout and then I started to regret the choice I made (I bought a house with a patio and no deck as well), but decided that I was happy here until I focused on making the comparisons.  That is something that just about everyone feels when they make a purchase.  It does sound like you found a really nice home in a great neighborhood.  I hope with whatever you decide to do, you'll be happy and ultimately feel that you made the right choice.  Good luck to you!