When you purchase a new home with the help of a lender, you must have the home inspected to ensure that there are no major structural problems with the home. Most contracts allow the buyer a certain number of days in which they can decide to cancel the contract, or they can decide to request that the seller fixes the problems and have the house reinspected. Always read your contract carefully before you sign it so you will understand what to do if the home fails inspection.

Consult with your Realtor and ask him how you can cancel the contract. In some states, such as Texas, if you choose to cancel rather than allow the seller to fix the problems in the report, you will lose your "earnest" money, or deposit. In other states, you may not be able to cancel the contract if you decide to cancel outside of the time frame given in the contract; for instance, if you have ten days to cancel and you cancel on the eleventh day, you may be legally obligated to follow through with the purchase. Ask the Realtor to outline the consequences of canceling the contract.

Inform your Realtor that you wish to cancel the contract. She can prepare the cancellation paperwork and advise you what to do next. In some cases, the Realtor can act on your behalf and cancel the contract but in other states you may have to notify the seller personally.

Prepare a letter to the seller that lists the items that were not approved in the house, and states that you wish to cancel the contract. Ask your Realtor to look over the letter to ensure that it meets the state and local laws for the cancellation notice.

Ask your Realtor how to deliver the notice. In most cases, he will ask you to mail the letter via registered mail to the seller and mail another letter to the seller's Realtor, if he is using one.

Notify your mortgage company, if you were pre-approved for the property, that you will not be purchasing the home.


Always read the terms of your home sales contract before you sign. States have different policies about cancellations and you should understand how and under which conditions you may cancel your contract for the home.