Can a home seller get out of a contract if a backup offer is for more?

 I am often get asked by sellers if they can get out of the contract to take the other offer. The answer in Arizona is no unless the buyer is in breach of the contract. A buyer and Seller are legally under contract once both sign the contract and it is delivered. At that point it is a legally binding contract. One party must not perform or be in breach of the contract to get out of the contract. An example would be if the house doesn’t appraise. The buyer can ask the seller to agree to the appraisal price and if the seller is not willing the buyer can get out of the contract with their earnest money. Another example would be if a buyer’s offer is contingent on the sale of their home under contract and doesn’t close in the specified time frame. The buyer would immediately notify the seller and request an extension. If the seller doesn’t agree then the buyer can cancel the contract with their earnest money. The buyer has many opportunities to get out of the sale during the 10 day inspection period with most any reason. After that it is harder but do-able. I had a buyer back out 1 day before closing because it didn’t feel right. In this instance the buyer did lose her earnest money.

If the seller is the breaching party the buyer can sue the seller for specific performance (this will result in a lis pendens), the buyer’s agent and broker can also sue the seller for commission and the listing agent and broker can sue the seller for commission. In the end, it will most likely cost the seller more than he hopes to get from the back up offer and there will be a cloud on the title from the Lis Pendens.