Can I back out of escrow?

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Part 4: Can I back out of escrow?

To recap what escrow is…

“Escrow basically refers to the grant deed and transfer of title for a home.”

Typical escrow is 30 days, but can range depending on the situation.

Sometimes things happen and you change your mind about purchasing a home. Don’t worry, You aren’t the first one. There are things in place for those types of situations.

"You can walk away from escrow at any point." - Amy Cruz

However, if you decide to walk away after you have released your contingencies you will lose that Earnest Money Deposit and could risk the seller taking legal action for breach of contract.

If you decided before the release of the contingency, you will keep your Earnest Money Deposit.

First off,

You may be free to back out of escrow for any reason and get your deposit back, but…

Why would you want to back out of escrow?


  1. An inspection revealed too many repairs you don’t want to do or compromise time

  2. The lender can’t perform on the loan so you can’t allot the proper money

  3. You found a different house you love more and have changed your mind

  4. You’re waiting on your previous home to be sold and it’s contingent to buying the next one

Say you want to back out of the escrow deal during the contingency period because you found something out about the house you didn't like.

You have a few options to consider.

  1. Back out of the escrow

  2. Negotiate the purchase price

  3. Get credit

If you choose to (1) back out of the escrow you will keep your deposit if it is before the end of the contingency timeline negotiated.

If you choose to (2) negotiate the purchase price it’s as simple as it sounds. Your buyer’s agent will speak with the other party and try to negotiate the terms of the sale and come to a win-win for all parties.

If you choose to (3) get credit it is similar to the negotiation of the price, except instead of decreasing the price of the purchase you will be compensated with a credit that can go towards home repairs in the future.

Make sure to consult with an attorney and/or real estate agent before you decide to make any moves to back out of the escrow process.


“In California, you are buying a home as is... A seller does not have to do it.”
— Amy Cruz

For example, during the inspection, there was a huge renovation needed to fix something crucial like the pool is leaking, the plumbing in the bathroom is bad, or the roof needs a major repair.

Say it was going to cost about $20,000 to fix the roof…

You can ask the seller to negotiate the overall value and price of the home

You could ask the seller to negotiate and suggest a credit to fix those necessary repairs.

We can ask for a credit of $10,000 on the purchase price or you fix the roof before we complete escrow.

If the seller says they don't want to make the repairs then the credit option is probably best if you don’t want to lose the property.

“Getting credit is cleaner, it’s easier, it saves you guys some money.”
— Amy Cruz

You get the credit

When you get a credit it isn’t just money in your pocket. It isn’t written out in a check, or cashed to you. The credit will be set towards your closing costs and final price or adjustments for a lower rate.. This allows you to fix the roof when you're ready to do so. So when the time comes to fix that roof, you will have at least “$10,000” set aside to fix it.

Overall, it’s a fairly easy process as long as you have an agent walking beside you. We’ve done this thing. So ask all the questions, get all the answers, and look at all your options.

If you choose to walk away

Sometimes it is necessary to back out of escrow before closing those contingencies. Sure it may be unfortunate that you aren’t walking into your home sweet home just yet, but we don’t want to compromise your dreams. It may hurt a little more to lose that money when backing out of escrow after you’ve released contingencies, but life moves on. Take things as they come with a deep breath, and address things one by one.

If a home isn’t right for you don’t be afraid to speak up! It’s our job to exceed your expectations. So if we didn’t find the one we will keep house hunting and make sure all the legal things are taken care of!

We will walk with you until you reach the end of your journey, step by step.


So that’s just a little bit about backing out of escrow!

Do you want more details into this escrow world? Leave us a comment below so we can answer your questions and better inform home buyers like you in the future!


Want a sneak at what this Buyer’s Consultation is like? Check out the video below!


We hope these tidbits help you on your journey!

Feel free to contact us at Lori@lorialvarez.net and Follow Us to Your Dream Home or call us at 909.227.4196.


This is a part of a series so be on the look our for our next post coming out—part five where we cover some of questions about home warranties at this Buyer’s Consultation.

Thanks for reading.

Be boldly blessed.


Disclaimer always verify all the info with the licensed professional of your choice and make that us! ☎️ Call us at 909-227-4196!

Hasta Pronto! Lori Alvarez & team, kw Realty dre 01794115