With high interest rates, more and more buyers are beginning to realize they can no longer afford to buy, or would prefer to buy something less expensive. Sometimes this moment of realization hits them after they’ve already signed a purchase agreement, and now they want to back out. This is entirely legal, but does come with some potential costs.
When prices are increasing, breach of contract isn’t a huge deal, but can annoy sellers who have to delay their home’s sale. But when prices are decreasing, as is beginning to happen now, sellers have more to lose. Which is why they have a few different options to remedy the situation: they can enforce the purchase agreement, relist their property, or just withdraw the listing and wait for a better time. If the seller chooses to relist, they may be entitled to compensation from the buyer who breached contract. If the profit from the sale after relisting is less than what it would be given the original contract amount, the amount of the buyer’s deposit that would be returned to them is decreased by the amount of the seller’s losses. There may be cases in which there was an agreed-upon limit to this amount, in which case the agreed-upon limit is used, plus an interest rate of 10%.