Belt Auction

Can the seller back out of sales contract b/c he got a better offer?

My husband and I are first time homebuyers and not at all familiar with this real estate stuff. We have found a house we really like, and went through the whole negotiating process with the seller (which is a bank, b/c the house was a foreclosure). They finally accepted our offer and we signed a sales contract. I recently rode by the house and there was another real estate agent at the house showing it to another potential buyer. My question is, if they receive another bid that is better than ours, can the seller(bank) back out of the contract with us? Also, is it normal for the house to continue to be shown even though a sales contract has been signed on the house? Thanks so much for all the help!

Public Comments

1. Until closing they can show it all they want unless you placed a restriction not allowing them to do it. This is done because they don't know if you will qualify for the loan or the requirements will be met. (contingencies) in the contract. However if the terms of the agreement are met by you and the bank and you qualify for the loan they have to abide by the written contract. Usually a disclosure to other potential purchasers is made by the agent that the home is under contract.
2. If both parties signed, including you and the seller, the contract is withstanding. You can sue for breach of contract and may be entitled to receive the worth of the house. Years ago, my ex and I faced a similar situation. The seller agreed to give us the house, to save face and more money.
3. No, not in the US anyway. Once an offer has been accepted the seller cannot accept any other offer. They CAN accept a backup offer, contingent upon your deal falling through but your closing has to continue through the actual closing or until it falls through.
4. As usual, New Mexico is correct. The other poster is way off base. The house will continue to be marketed until closing and this is perfectly normal. Don't panic, it is still "your" house.
5. The bank is probably just protecting their interests by continuing to show the home and possibly even accepting a backup offer. Your contract will still be in place (unless there was some specific wording which gave the seller the right to void the contract if they got a better offer, whihc it probably doesn't). As long as you fulfill all the conditions on the contract you should be fine. Just make sure you meet all the dates spelled out in the contract and get written extensions if you need more time for something.