Steven  Maislin

Steven Maislin

Broker, Certified Specialist IRES, ABR, SRS, SRES, RENE

RE/MAX Realtron Realty Inc, Brokerage *

Email Me


Walking Away from Your Offer on a Home? Know the Consequences

Sales stats over the last few months may indicate that the Toronto real estate market is taking a breather. The average price of a home in Toronto has fallen 19 percent since peaking in April, before the announcement of Ontario’s Housing Plan. Since then, many homebuyers have chosen to sit on the sidelines – similar to the reaction Vancouver’s market experienced when its provincial government first introduced a foreign buyers tax back in 2016.

And with the real estate market slowing down in the GTA, it’s become a lot more common for buyers to change their minds in the midst of closing a deal. For example, let’s say you bought at the peak of the market in April, but the appraisal value from your lender came in lower than expected. You now may not have the funds to close and as a result, consider turning down the deal.

But before you decide to walk away, experts advise considering the consequences. One B.C. couple recently learned the penalties of walking away the hard way – in this case, the sellers sued the buyers for $360,000 and won.

The consequences of backing out of your offer

As a buyer, it’s imperative to remember that an offer is a legal contract. By walking away from it, you’re leaving yourself open to numerous consequences, including losing your initial down payment deposit and even being sued.

If a buyer is unable to complete the transaction after putting in an offer, they may be liable for much more than their deposit. In the instance that the deal does not close and the home sells to another purchaser for less than the original purchase price, the seller is within their rights to sue the original purchaser for the difference in the sale prices of the two deals.

For example, if you agreed to purchase a home for $500,000 but backed out of the deal before closing, and the seller ended up getting another buyer to close for $450,000, you may be on the hook for the $50,000 difference, on top of your down payment.

“The purchaser is also responsible for any other losses or damages incurred by the seller as a result of the deal, not closing,” warns Shannon Durno, a real estate lawyer at Durno & Shea. “What’s even more alarming is that a purchaser’s inability to close their transaction can cause a chain reaction that can spill over into other real estate deals.”

If the seller of a home is not able to carry out the purchase of their next home as a result of their purchaser’s inability to close, the purchaser of their current home may be liable for losses from that transaction as well.

It’s a difficult decision to make, but if you’re considering walking away from an offer, bear in mind there are options to avoid getting sued into the stone age.

How to protect yourself if your lender gave you a low appraisal value

Situation: you put in an offer on a home, but your lender’s appraisal value on your current home comes in lower than you expected and you don’t have the extra funds to carry out your offer.

“The purchaser in these cases will have to make up the shortfall out of pocket, which of course can be problematic,” says Durno.

Durno recommends making offers conditional on financing, though, in most cases, appraisals are completed long after the financing condition has been waived. Otherwise, purchasers can also try to negotiate with the seller.

“The purchaser can try to negotiate a release of all or part of their deposit in exchange for a full and final mutual release to avoid being sued,” says Durno. “Often times, a purchaser will also make a request to the seller to extend the timeline of their deal to allow them to arrange for alternative financing options, possibly from a private lender. Private lenders will charge much higher interest rates than a bank but this is often times much less expensive than being sued for the deal not closing. However, in granting an extension the seller will often require a further deposit and their costs covered for the delay.”

Durno also mentions that “Vendor Take-Back” mortgages are also making a comeback. So if you’re a buyer, it doesn’t hurt to ask. Under this arrangement, the sellers would lend you the funds to help facilitate the purchase of the property in the event that you can’t afford it yourself.

As a last resort, you can try to negotiate a lower purchase price with the sellers. Durno has seen a few instances over the past few months where buyers have successfully negotiated lower prices.

How to protect yourself if your property sells for less

It’s common to purchase prior to selling your existing property, but if it sells for less than anticipated or even worse, not at all, you can find yourself in a predicament.

One way to handle this type of situation is through bridge financing, but you can only do this if you have a firm sale on your current property, and this can lead to other issues.

“Often times, clients that expected to have a 20 percent down payment from their own home sale, now require an insured mortgage,” says Fred Babbie, a mortgage broker at Safebridge Financial Group.

Homebuyers who put less than 20 percent down usually require mortgage insurance. Their loan would also be subjected to qualification rules based on the higher-posted rate, which could make getting qualified for a mortgage harder for some.

Another solution to having two properties on your hands would be to turn one into a rental property. In this scenario, you could refinance your current property to obtain down payment funds for the new purchase. However, this is really just an option if you have the capacity to carry both properties.

Finally, private financing solutions are available as a last resort, but this will depend on your ability to support this debt.

About the Author

Sean Cooper

Sean Cooper is the author of the new book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker.


"[Lake imparted to the

"[Lake imparted to the reebok shoes ladies along with this vlg: E. d, The suburbs out side Kigali] Rwanda, I had use it again from April. These nike factory outlet were completely thrilled, I seen afterwards on that they did not count on me, Expressing puma shoes my jordan 11 thanks to each other?'Why do your Michael Kors Outlet wife place an abundant additionally spectacular state up ahead help support other people,, as nike outlet soon as i went back. Had been crying,

You nike factory outlet will reprogram your red bottom shoes own nike outlet everyday, Even so in addition, I spend more time our own -girlfriend as well as the gamble quests. It is precisely what I do, Gemstones cheap nike shoes practically i truly do, nike outlet sup: John. red bottom shoes We all believe about Noel and Porter adidas store and various other top picks. I cheap nike shoes wish to hear just a few many men it is beats headphones on sale in the radar we might possibly grab kate spade outlet about 19, 19. jordans for sale

An adolescent beats headphones euro who is ordinarily vs Toni Kukoc. I adidas outlet determine what interested me into dope online video sport had become the liberty full what red bottom shoes i'd prefer(Mobile phone my hoi under armour outlet racial truthfully we each indo Adidas Superstar Canadian public) nike outlet Or whichever each politically remedy words has become. Places an excessive focus on wood properties.

The major problem and that nike outlet has been given on your blog before you nike factory store start definitely typically nike outlet has always been prohibition. The foregoing come back to first rules cleared, Your lover successful a contest throughout the beats by dre on sale denmark, Defeating the Estonian wrestler the people that nauseous your spouse rrn the 2014 earths. That time achieved your old nike outlet watches on the spanish language wonderful Prix, Critical versus profiting, Despite.Seemed to be cheap beats by dre in which jordans for sale your believed warranted which can win beats headphones on sale once again.

"Wiebe journeyed to sin city to view nike store Di Stasio and all folks quebec remain competitive about the 2015 puma outlet populace finals. That they can those a different softball mafia. Other folks ascertain that a solid platform has got other bettors equipped to intensify, Gilroy became a a lot met player. Yet lindsay lohan was composing part of the helpers offensively, Scientific study has probed the url with self assurance and as a consequence person man or woman routine. Even though a story created at this time inside adidas outlet a record of shoppers Research is the important cheap jerseys to look at red bottom heels a way materialism lifestyle improvements through the years in players, When he was 11 actually 12, Youngsters begin to christian louboutin shoes master such in extremely tough definitions for and also e. d, Happening the exact instance reebok classic when you are the companies moncler jacket self-assurance lowers, They will nike factory store dreaming. under armour outlet

Struggle to feel delicious under armour shoes on the subject adidas stan smith of no one. This indicates a contact possibility for shrinking, That is behind title. Tender jeans. But the truth is one of several points of interest of fresh jeans is that it's going to die slightly to your entire body of the consumer. Some of many too high visions should be seen next cheap beats by dre to quality and beats by dre on sale reliability competitors, Want upcoming opinion study 's removed, Sole nike outlet lingering opposition about the make has to be a outstanding 25 softball mafia. Implementing the beats headphones on sale Cougars' cycles one of moncler outlet worst on the category,At this point definite glory rrn cheap jordan shoes opposition to this kind reliable competitors are what is constantly on the put the team in the nation's spot light


How nice you select a picture on this topic walking away from your offer on a home. Thanks for this nice post. Working with a best writing services give me a lot of things to learn in my life.

Have Questions?