The Hidden Damage a Canceling Homebuyer Causes That Most Sellers Never See Coming
Mar 04, 2026Marketwise column for the Bay Area News Group and its flagships The Mercury News and East Bay Times
Published: 18/June/2022
Titled: When a buyer cancels the deal, who gets the deposit?
By Pat Kapowich
Q: My husband is a real estate agent. Last week, the realty firm where he works had five sets of homebuyers cancel their home sales. My husband’s homebuyers canceled first. It’s infuriating. He worked on behalf of his homebuyers for over a year.
Today, I learned all the homebuyers “are walking away” from their earnest money deposit. Where does the canceling homebuyer’s money go? To the sellers or realty firms?
A: It is not uncommon for a homebuyer to walk away from a sale and proclaim, “They can keep my deposit.” “They” means the sellers. Full stop. Conversely, your husband, a real estate agent, can only be paid by his agency. Lest we forget, he chose commission-only sales. No sale, no paycheck.
I hope your husband was polite and professional when his homebuyers canceled. It is the best reaction. If so, the homebuyers might turn around and use him to buy another property. If not, they won’t ever return.
The real estate purchase contract, fully executed, describes what happens when the homebuyer defaults. It is straightforward. In California, the damages a home seller can receive from a defaulting homebuyer are no more than 3% of the purchase price.
The home seller must capture the undeniable appeal of their newly listed property. It only happens once. That’s why the sellers and seller’s agents must sell the property to the most motivated homebuyer. That savvy strategy is critical. Home sale transactions that fall apart, through no fault of the seller or property, can be extremely costly to the home seller. Why? Because a canceling homebuyer stigmatizes a property. Once relisted, prospective homebuyers and their agents often assume the worst and avoid properties that are “back on the market.”
It is the home sellers who “earned” damages — not your husband. If he doesn’t know that, he’s in the wrong business.
For Housing Market Data in your area, visit Pat's webpage for trends here. Do you have questions about home buying or selling? Full-service Realtor Pat Kapowich is a Certified Trust and Probate Specialist, Certified Real Estate Brokerage Manager and career-long consumer protection advocate.
He is based in his hometown of Sunnyvale, California. Office: 408-245-7700; Broker# 00979413 Pat@SiliconValleyBroker.com
Not sure where to start when preparing your home for sale?
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