How You Can Protect Yourself when the Buyer Backs out of the Deal

Question: Twice I have accepted a contract from a buyer on my Sun Lakes home. On both occasions, the buyer "backed out," and the earnest money was returned. During this time, I could have sold my home to another buyer. My real estate agent said that I am just unlucky because all of the transactions in Arizona are handled this way. Is there any way to protect myself from a third buyer backing out?

Answer: As a practical matter, no. Your real estate agent is correct that under the standard real estate contract, a buyer generally has 10 days to approve all of the inspections, approve the Seller's Property Disclosure Statement (SPDS), and furnish a conditional loan approval (CLA) from a mortgage lender for any mortgage loan. Even if the buyer furnishes a CLA, the transaction is still contingent on the buyer qualifying for a loan with the mortgage lender by the scheduled closing date. If you do not want a buyer to be able to cancel the transaction and receive the earnest money, you will need to change the terms in the standard contract. Examples of such changes are: making the earnest money non-refundable and eliminating the contingency on qualifying for a mortgage loan.

-C. Combs