Based on The Jon Sanchez Show (Aired September 4, 2025
It’s a question more buyers are asking lately:
Can I back out of this real estate contract—and if so, at what cost?
As the housing market transitions away from the ultra-competitive environment of 2020–2022, today’s buyers are moving more cautiously. On the September 4th episode of The Jon Sanchez Show, guest host Jason Gaunt joined Dwight Millard (Highlands Mortgage) and Corey Edge (Edge Realty) to discuss why buyer cancellations are on the rise—and what both buyers and sellers need to know about walking away from a deal.
A Different Market Than Just a Year Ago
During the peak of the pandemic housing frenzy, many buyers waived inspections and rushed offers just to get their foot in the door. But today, the environment looks different:
- Interest rates remain elevated (30-year fixed averaging ~6.45%)
- Inventory has increased, giving buyers more choices
- Job growth is slowing, adding caution to financial decisions
“Buyers have more time, more options, and they’re taking advantage of it,” Edge noted.
In short: with urgency declining, second-guessing is increasing—sometimes even after contracts are signed.
Why Are Buyers Backing Out?
According to Redfin, 23% of home purchase agreements nationwide fell through in July—the highest rate in nearly a year. This trend is being driven by several factors:
Price Sensitivity
Corey Edge reported that 15–20% of homes in the Reno area have seen price reductions in recent weeks. Buyers who sign a contract one week may see better-priced homes the next—and begin to question their decision.
Stretched Budgets
Dwight Millard shared that many buyers are qualifying at the upper limit of their income, and even slight payment differences can cause reconsideration. Once closing disclosures are received, the reality of a $400/month difference can prompt regret.
Hopes for Lower Rates
Some buyers enter escrow hoping rates will drop before closing—but they don’t always. This mismatch between expectations and reality can lead to contract cancellations.
“It’s not always about qualification—sometimes it’s just buyer psychology,” Gaunt added.
Can You Actually Back Out of a Deal?
In Nevada and many other states, buyers typically can back out of a deal—but the key question is:
Will they get their earnest money deposit back?
Real estate contracts often include contingencies that allow buyers to exit under certain conditions:
- Inspection contingency
- Appraisal contingency
- Loan approval contingency
However, once these contingencies expire, walking away may mean forfeiting your deposit.
Edge explained the use of liquidated damages clauses, which define in advance the penalty if a buyer defaults. In many cases, the deposit becomes the maximum financial loss—but buyers must read contracts closely.
“It’s never just ‘can I cancel?’ It’s always: ‘What’s the cost of canceling?’” Edge noted.
What About Sellers?
The conversation also touched on seller obligations. While buyers can back out under certain terms, sellers don’t always have the same flexibility once a deal is in contract.
In some cases, sellers who cancel could face specific performance lawsuits, where a buyer may legally pursue the right to complete the purchase. However, as the hosts pointed out, sellers often have more flexibility before signing—which is why pricing and negotiation strategies are so important up front.
Navigating a Market in Transition
The episode emphasized that the housing market is in a cooling phase, not a crash. With roughly 3 months of inventory in many regions, it’s not yet a buyer’s market—but it’s no longer a seller’s market either.
Buyers are more informed. Sellers need to be more strategic. Both parties are more cautious.
In this context, the key takeaways are:
For Buyers:
- Understand your contract contingencies before signing
- Budget for realistic payments—not just “hoped-for” rates
- View earnest money as a real commitment, not just paperwork
For Sellers:
- Price your property competitively from the start
- Be prepared for negotiations and potential concessions
- Screen buyers carefully—especially on deposit amounts and closing timelines
Final Thought: Read Before You Sign
Contracts are getting more complex. Market conditions are shifting quickly. And consumer expectations are evolving.
Whether you’re buying or selling, take the time to understand your agreement—and consider working with experienced professionals who can help you navigate these decisions clearly and confidently.
For additional market commentary and educational resources, visit www.sanchezgaunt.com
To listen to the full September 4 episode of The Jon Sanchez Show, find it on your favorite podcast platform.