4 Reasons to Cancel Escrow When Buying a House

4 Reasons to Cancel Escrow When Buying a House

4-reasons-to-cancel-escrow-when-buying-a-houseAs escrow is a financial agreement between two parties, there are certain fees deposited relating to the value of the transaction, so if this agreement is canceled by the buyer then they are liable to lose their deposited fees.

So, canceling an escrow agreement is likely to cost a buyer a fair amount of money, meaning there should always be a worthwhile reason to cancel! Buyers are much more likely to cancel escrow than sellers, and this can be for any number of reasons.

Here are some of the most common:

1. Cold Feet

First-time buyers are perhaps the most susceptible to cold feet when buying, which is somewhat understandable when you consider the pressure of buying a home for the first time. While most first-time buyers get past their initial fears during escrow, some do get cold feet and want to pull out of the agreement.

While this will be an expensive decision, it’s certainly less costly than attempting to pay for a home that you can’t afford or simply don’t want to live in.

2. No Financing

Pre-approved loans are common in property transactions, but this can often be misleading as some lenders only offer an initial approval without fully approving the final loan.

This may be due to conditions that cannot be met by the buyers, but it’s less common if you have a qualified and well-experienced loan officer. This is because they should be able to predict these conditions prior to approval, allowing the best chance to meet them in time.

3. Finding New Property

Not every buyer that goes into escrow stops looking for property, as you never know what you might find. Often, they find a home that they simply cannot resist, leading them to cancel escrow in order to get the preferred property.

While this impulsive decision making isn’t recommended (it will cost a fair amount!) many continue to act in such a way.

4. Sudden Lifestyle Changes

Life can be unpredictable, even for people in escrow, and you never know what lifestyle changes are around the corner. Sudden changes tend to cause a fair amount of escrow cancellations from buyers, with a common example being losing a job or a medical emergency.

It is hard to predict what life may throw at you, even when in an important financial contract such as escrow, but sometimes buyers have no choice but to cancel because of something occurring in their lives.

Inland Empire Escrow  provides escrow services for a diverse variety of real estate transactions.  With offices in Chino CA and San Bernardino CA, we quickly and professionally service all the surrounding cities such as Chino Hills, Ontario, Rancho Cucamonga, Upland, Riverside, Redlands, Colton, Grand Terrace, Yucaipa, and more.  To hear more about our escrow services for residential, mobile home, short sale, REO, bulk/business sale, 1031 Exchange, or agricultural escrow, contact us today at (800) 917-9387.