The Top 6 Reasons Pending Home Sales Fall Through

In real estate transactions, moving from an accepted offer to a successful closing is not always guaranteed. Various issues can arise during the escrow period that may cause a pending home sale to fall through. Here are the top six reasons why this can happen and how to address these challenges effectively.

1. Financing Issues

Securing financing is a critical step in the home buying process. However, financial plans can encounter obstacles, impacting the buyer's ability to meet the lender’s terms.

Why it Happens:

• Changes in the buyer’s financial situation, such as job loss or increased debt.
• Loan approval issues related to credit scores, debt-to-income ratios, or other financial factors.
• Delays in loan processing.

How to Prevent:

• Maintain financial stability and avoid major purchases during the escrow period.
• Obtain fully underwritten pre-approval for a mortgage to understand your budget and demonstrate financial readiness to sellers.
• Stay in close communication with your lender to promptly address any issues that arise.

2. Low Appraisal

If the property appraisal comes in lower than the purchase price, it can create significant challenges. The lender may not approve the full loan amount, leading to potential renegotiations or the deal falling through.

Why it Happens:

• The appraisal value is lower than the agreed-upon purchase price.
• Market conditions or unique property features that do not align with comparable sales.

How to Prevent:

• Have your realtor do thorough research on comparable home sales before making an offer.
• Be prepared to negotiate with the seller to lower the price or cover the appraisal shortfall.
• Provide additional comparable sales data to challenge the appraisal if necessary.

3. Home Inspection Findings

A comprehensive home inspection can reveal previously unknown issues with the property. Significant defects can lead to buyers or sellers reconsidering the transaction.

Why it Happens:

• Discovery of major structural issues, plumbing problems, or electrical faults.
• High repair costs that neither party is willing to cover.

How to Prevent:

• Attend the home inspection to fully understand the findings.
• Negotiate repair costs or request credits from the seller to cover necessary repairs.
• Allocate a budget for potential repairs when making your offer.

4. Buyer’s Remorse

Buyer’s remorse can occur when buyers second-guess their decision during the escrow period, potentially leading to a withdrawal from the purchase.

Why it Happens:

• Buyers feeling overwhelmed by the financial commitment.
• Doubts about the property or neighborhood.
• Influence from friends or family advising against the purchase.

How to Prevent:

• Take time to research and reflect on the decision before making an offer.
• Clearly define your needs and preferences to ensure the property aligns with your goals.
• Work closely with a real estate agent who can provide guidance and reassurance.

5. Title Issues

Problems with the property title can delay or derail a home sale. Ensuring clear ownership is essential for a smooth transaction.

Why it Happens:

• Unpaid taxes, liens, or conflicting ownership claims.
• Errors or omissions in public records.

How to Prevent::

• Conduct a thorough title search before closing.
• Purchase title insurance to protect against future claims.
• Engage an experienced title company or attorney to manage the process.

6. Job Change

Changing jobs during the escrow period can raise concerns about income stability and affect loan approval.

Why it Happens:

• Lenders require proof of stable income for mortgage approval.
• A new job may include a probation period or different terms that impact loan qualification.

How to Prevent:

• Avoid changing jobs during the home buying process if possible.
• Inform your lender immediately if a job change is unavoidable.
• Ensure the new job offers the same or higher income and comparable terms.

Understanding these common reasons why pending home sales fall through can help you better prepare and navigate the home buying process. By addressing financing issues, ensuring accurate appraisals, conducting thorough inspections, managing buyer’s remorse, resolving title issues, and maintaining job stability, you can increase the likelihood of a successful and smooth home purchase.

SIGN UP FOR OUR WEEKLY NEWSLETTER