Why Do Transactions Fall Through?

Updated: Jan 5

There are four main reasons why deals fall through in our market.

Sometimes you’ll see a home hit the market, go under contract, but then the transaction falls through—what factors cause this type of thing to happen? Here are the most common that we Realtors see:

1. Buyer remorse. In our limited-inventory market, a lot of homes are getting bid upward—especially if they’re in great condition. If a home is priced at $500,000, for instance, it’s not uncommon for a buyer to offer something like $550,000. A day later, though, that same buyer will have that “uh oh” moment where they’re not sure they should’ve bid as high as they did. Thus, these types of transactions fall through right away. If you’re a seller and you feel that your transaction is heading down the wrong path, you’re much better off if it falls through right away so you can relist it and get it back under contract right away.

2. Unresolved property issues found during the inspection period. In order to get their homes ready for the market, homeowners and their Realtors have to do everything they can to make them look beautiful. This includes tasks like repainting, replacing old windows, installing new carpeting, etc. However, homeowners sometimes neglect to fix larger maintenance issues within their homes. In this case, a buyer will overbid for their home because they love the look of it, get it under contract, but then find out that the roof is shot...or the furnace has issues...or the sewer line has roots in it. You can prevent this type of problem by addressing any maintenance issues your home may have before it goes under contract.

If you’re a seller and you feel that your transaction is heading down the wrong path, you’re much better off if it falls through right away.

3. Disagreements during the appraisal. As I said, a lot of properties are getting bid upward in this limited-inventory market. However, if a home is priced at $500,000, the seller accepts an offer for $550,000, but the home only appraises for $525,000, the buyer has to decide whether they want to bring additional cash to the table to make the deal happen or negotiate the price down. A lot of times, sellers don’t want to negotiate the price of their own home downward. I don’t blame them—I wouldn’t want to either. If the two sides can’t come to terms, the buyer will back out of the deal.

4. The loan conditions deadline. This is typically the last deadline the buyer has to meet before they can back out of the deal. It basically means they’re getting a loan with terms that are favorable to them. In this COVID era, though, someone’s job can get affected and change the loan conditions. A negative shift in interest rates can have the same impact and cause buyers to back out of the deal.

If you have questions about this or any other real estate topic, don't hesitate to call or email us. We would love to help you.

36 views0 comments