CALL US: (513) 560-8002

Can A Buyer Walk Away From A Contract To Purchase A Home?

Walking Away from a Home Purchase Contract

Walking Away From A Home Purchase Contract

After an offer has been accepted on a home a buyer has some options for walking away from the contract and possibly getting their earnest money back.  Usually those times to walk away and get the earnest money back apply during the contingency periods written into the contract.  A buyer can walk away though at any time from the contract up until the actual signing of all documents at closing.  Walking away from a purchase contract though could result in the buyers losing their earnest money or worse being sued if there were no contract contingency clauses upon which they based their decision to cancel the contract.  This article explores some of the different ways buyers can walk away from a contract to purchase a home and the consequences for doing so.

Inspection Contingency

Most contracts to purchase a home should contain a contingency section which allows a buyer to have the home inspected for condition.  A home with a bad condition may mean that the current offer price does not make sense.  The buyer may also decide that based on the condition they no longer want to purchase the home.  Whether the buyer can walk away from the home purchase contract based on a condition issue depends on the terms of the contract and the local laws that govern the real estate contract.

In the Greater Cincinnati Ohio area in the past the standard MLS (Multiple Listing Service) contracts that are provided for real estate agent use had flexible language that would allow a buyer to back out for almost any condition issue.  The recent changes (2022) to the contract have changed that ability and now a home buyer does not have an easy out due to inspection issues.  The buyer must specifically call out inspection issues that they don’t want to deal with, like mold, foundation issues and more.  When inspect homethe buyer specifies those condition issues they can cancel the contract and request an earnest money refund.

The buyer can request the Cincinnati, OH contract be modified so that they are allowed to cancel for any inspection issue regardless of how small.  To do so properly though the buyer should have a real estate attorney draft such amendment to make sure it is legally enforceable.  For contracts in other cities and states the ability to terminate based on inspection conditions will vary and a local real estate agent and/or real estate attorney should be consulted to find out what laws are applicable.

The inspection contingency generally should be time limited in that all inspections should be performed by a certain time frame specified in the contract.  Sellers usually don’t like when inspection periods are too long, but depending on time of year and inspector availability more time may be needed.  The buyer can always ask for additional time under the inspection period if needed and the seller must also agree to the extension.

Appraisal Contingency

When purchasing a home with a mortgage (depending on how much money the buyer plans to put down) usually the lender will require the home to be appraised by a licensed appraiser.  If the value of the home comes in below the contract price then the buyer has the option to cancel the contract and walk away.  Other options available to the buyer include proceeding with the contract with price as-is and brining in additional money to closing to meet lender requirements.  Negotiating with the seller to reduce the sales price to meet the appraised value or to reduce it somewhat and agree to bring the difference to the closing table as needed per lender requirements.  If the buyer does choose to cancel they can request a return of their earnest money under the appraisal contingency clause.

The appraisal contingency time frame is generally open since the lender is the one who orders the appraisal and the appraisal has to wait until the appraiser is able to schedule it.  During peak buying/selling season appraisals can be backed up.  The appraisal is usually ordered by the lender after the buyer has passed through the inspection period.  Since the appraisal is an additional expense a buyer must pay for, assuming everything went okay with the inspection period then the buyer can let the lender know to go ahead and order an appraisal.

Finance Contingency

When buying a home with a mortgage a finance contingency is a must.  Unless a buyer also has the option of paying full cash in case the mortgage falls through, having the financing contingency clause in the contract can protect the buyer in case the worse does happen and the mortgage is denied.  So long as the buyer is remaining on track with their process of providing documents to the lender and making sure any lender questions/issues are resolved timely the final loan approval should come around the date of closing.

Due to the nature of the mortgage process it is possible the mortgage could be denied at the last minute.  As a result the there man with question markusually is no expiration on the finance contingency.  While not very common there have been buyers and sellers told at the closing table that the buyer cannot get a mortgage to complete the purchase of the home under contract.  Good lenders will be actively working on the buyer’s loan package and if they do have to deny the buyer the loan will be doing it much earlier during the mortgage loan process.

No Contingency Cancellation

Right up until the buyer and the seller are to sign the closing paperwork the buyer can back out and refuse to close.  When the buyer refuses to close and has no contingencies upon which to rely upon to cancel not only will they likely lose their earnest money they could also face a lawsuit from the seller for breach of contract.  In most cases a court will not force a buyer to buy a home they don’t want but the court will require the buyer to pay damages to the seller.  Those damages could include reimbursing the seller for lost expenses such as moving expenses, marketing expenses, as well as will include punitive damages.  If the seller can prove loss in value of the home due to lack of the sale closing the court could also award monies to the seller based on that loss.

Final Thoughts

When cancelling a contract to buy a home a buyer should make sure they are within the timeframes allowed of the contingencies written into the contract  In most cases as long as done within the allowed time frames of the contract the buyer can get their earnest money back when cancelling.  A buyer wanting to cancel outside of any contingency period should consult with an attorney to make sure they understand all the legal risks.

Additional Resources

  • First Time Home Buyer Mistakes To Avoid - Buying a home for the first time can be an exciting time until mistakes are made.  In addition to making the process frustrating those mistakes can get costly.  Buyers needs to be aware some common issues so they can avoid them.
  • First Time Home Buyer Q&A - This article provides twenty common first time home buyer questions and answers that all home buyers should know about.  The process of buying a home is a long and expensive one and buyers should know what to expect.
  • Should You Work With a Real Estate Agent? - Buying or selling real estate whether to live in or invest in takes a lot of time and effort.  Having a great agent in your corner can help save time and headache as this article explores.


About the author: The above article “Can A Buyer Walk Away From A Contract To Purchase A Home?” was provided by Paul Sian. Paul can be reached at or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you.  Contact me today!

I service the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde ParkIndian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.

Walking Away from a Home Purchase Contract pin 


#1 By Gabe Sanders at 3/5/2023 8:27 AM

Great post Paul. The details are always in the contract and the contract needs to be understood and followed precisely.

#2 By Paul at 3/5/2023 9:14 AM

Thanks Gabe.

Post a Comment

Blog Archives

Posts By Category

All Categories Cincinnati (10) Cincinnati Multifamily Market Overview (4) Commercial Real Estate (5) First Time Home Buying (2) Home Buyers (57) Home Ownership (52) Home Sellers (80) Investment Property (16) Knowledge (34) Luxury Home Buyers (6) Luxury Home Sellers (14) Luxury Real Estate Market Overview (34) Mortgage (3) New Construction (6) Podcasts (6) Real Estate Investing (8) Real Estate Market Statistics (49) Sellers & Buyers (51) Selling Your Home (1)

Posts By Month

Grab Our RSS Feed

Greater Cincinnati Communities

Northern Kentucky Communities

Map Search

Use our interactive map search system to find your dream home today!

What's My Home Worth

Find out about recent area sales and current neighborhood market trends.

Have Questions?

Our real estate experts can assist you with all of your real estate questions.