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What happens when a home buyer backs out of an offer?

Selling your home is one of the largest financial transactions of your life. Once you accept an offer from a buyer, you may feel a sense of relief, but even a firm offer has the potential to go sideways.

November 2, 2026   |   3 min read

TL;DR

BC's property market is changing and buyers delaying or defaulting on firm offers is on the rise. There's a new kind of insurance to protect home sellers from eligible financial losses, Home Closing Insurance from SecureMyOffer. Here's what you should know:

  • A firm offer is legally binding, but buyers can still fail to close.
  • Buyer delays and defaults can create unexpected financial pressure for sellers.
  • A deposit may provide compensation but is not always immediately available.
  • Failed sales can result in bridge financing costs, legal fees, carrying costs, and lower resale prices.

In this article

What happens if a buyer backs out of an accepted home offer?

Even after accepting a firm offer, there is still a chance a home sale won't close as planned.

A firm offer means the buyer has waived or satisfied the conditions in the purchase agreement and the contract is legally binding. However, buyers can still run into problems that prevent them from completing the transaction, including:

  • Financing problems, such as a bank/credit union denying their mortgage or approving a smaller mortgage than expected
  • Funds don’t arrive in time for closing
  • Unexpected financial or personal circumstances
  • A buyer changes their mind and walks away from the transaction despite their contractual obligations

In BC, buyers may also have certain legal rights to cancel an agreement, such as during the Home Buyer Rescission Period.

When a purchase doesn't proceed as planned, it typically results in either a delay or a default. A delay may be resolved if both parties agree to extend the closing date. A default occurs when the buyer fails to complete the transaction altogether, potentially leaving the seller with financial losses and legal complications.

Working mother managing work life and childcare at home

Does the buyer's deposit fully protect a seller?

Not necessarily.

A deposit demonstrates the buyer's commitment to purchasing the property and is often between 5% and 10% of the home's purchase price. While sellers may ultimately be entitled to a buyer's deposit if the agreement is breached, deposits are typically held in trust while lawyers work through the situation.

That means the funds may not be immediately available when you need them most.

A delayed closing or buyer default can be especially challenging if you're relying on the proceeds from your sale to purchase another home, pay off debt, or access your home's equity. Even if you eventually receive the deposit, it may not fully offset the financial impact of a failed transaction.

What costs can sellers face when a home sale falls through?

A failed home sale can create a number of unexpected expenses.

If you've already purchased another property, you may need bridge financing while waiting for your current home to sell again. You'll likely continue making mortgage payments and paying property taxes, utilities, and insurance costs while the home remains in your name. Additional costs can include:

  • Legal expenses
  • Relisting and marketing costs
  • Home staging expenses
  • Bridge financing interest and fees
  • Reduced sale proceeds if the home later sells for less

For example, if you expected to sell a home for $900,000 but ultimately sell it for 3% less after the first transaction falls through, the shortfall would be $27,000.

Depending on your situation, these costs can add up quickly and create stress during an already complicated move.

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What is home closing insurance?

Home Closing Insurance from SecureMyOffer is designed to help protect home sellers from eligible financial losses caused by buyer delays or defaults.

Depending on the policy and covered circumstances, protection may be available for:

  • Equity advances
  • Resale shortfalls
  • Carrying costs
  • Legal expenses
  • Relisting costs
  • Certain bridge financing costs

For homeowners concerned about the financial impact of a failed closing, Home Closing Insurance can provide an additional layer of protection and peace of mind.

BCAA Members can receive a free pre-approval through SecureMyOffer to better understand their options and save $50 on a new policy.

Bottom line: If you’re selling a home in BC, understand what’s at risk if a buyer delays or defaults on their offer and consider if it’s worth getting protection. To learn more about home seller protection, get a no-obligation, free preapproval with SecureMyOffer and save $50 as a BCAA Member.

Wishing you a stress-free homeownership journey!