How Often Do House Offers Fall Through?

Buying or selling a home involves many steps, from initial property searches to closing the transaction. This journey requires coordination between buyers, sellers, real estate agents, lenders, and legal professionals. While many offers proceed smoothly, not every accepted offer results in a completed sale. Various circumstances can lead to an offer being terminated before ownership is finalized.

Understanding Offer Fall-Through Rates

Real estate offers can fall through for various reasons, and their frequency fluctuates based on market conditions. Industry data indicates a notable percentage of residential property transactions do not reach completion after an offer is accepted.

For instance, the National Association of Realtors (NAR) reported approximately 5% of pending offers were terminated in 2023. Other analyses show cancellation rates varying, with some periods, such as June 2022, seeing nearly 15% of homes under contract not close. More recent data from May 2025 indicated a 6% cancellation rate for pending home sales, an increase from 5% the prior year. While most accepted offers proceed to closing, these statistics highlight that a portion of transactions encounter obstacles. Such rates can also vary significantly by region and specific market dynamics.

Primary Reasons for Offers Not Closing

Several common factors contribute to real estate offers not reaching the closing stage.

Financing Issues

One frequent cause relates to financing issues, where a buyer’s loan approval may not materialize despite an initial pre-approval. Changes in a buyer’s financial situation, such as a job loss or new debt, can lead to a lender denying the final mortgage. Rising interest rates can also impact affordability, making the purchase price unsustainable.

Home Inspection Findings

Another significant reason for offers terminating involves findings from the home inspection. Buyers often include an inspection contingency, allowing them to conduct a thorough evaluation of the property’s condition. If the inspection reveals significant defects or costly issues, buyers may withdraw their offer or be unable to reach an agreement with the seller on repairs or credits. A failure to compromise can lead to the deal’s collapse.

Appraisal Gaps

Appraisal gaps frequently cause offers to fall through, particularly in competitive markets. Lenders require an appraisal to ensure the property’s value supports the loan amount. If the appraised value comes in lower than the agreed-upon purchase price, a gap emerges. If the parties cannot agree on how to cover the difference—such as the buyer bringing more cash to closing or the seller reducing the price—the transaction may terminate.

Title Issues

Issues related to the property’s title can also derail a sale. A title search is conducted to ensure clear ownership and identify any existing liens, easements, or other defects. Unresolved title problems, such as unreleased mortgages or property line disputes, can prevent a clean transfer of ownership and lead to the contract’s termination.

Cold Feet

Finally, “cold feet” can result in an offer not closing. This occurs when either the buyer or seller decides not to proceed with the transaction for personal reasons, even if all contingencies are met. While less common and potentially subject to contractual penalties, a change of heart can stem from buyer’s remorse or finding a different property.

Contractual Aspects of Offer Termination

When a house offer falls through, the resolution is largely governed by the terms outlined in the purchase agreement, particularly concerning the earnest money deposit. Earnest money, typically ranging from 1% to 5% of the purchase price, is a sum the buyer places in an escrow account to demonstrate a serious intent to buy. This money is held by a neutral third party, such as a title company or real estate brokerage, and is not paid directly to the seller.

If the offer terminates due to a contingency explicitly stated in the contract, such as a failed inspection or inability to secure financing, the buyer is generally entitled to a full refund of their earnest money. However, if the buyer backs out for a reason not protected by a contingency, or fails to meet contractual deadlines, they may risk forfeiting the earnest money to the seller as liquidated damages. The specific circumstances dictating the disposition of the earnest money are detailed within the purchase agreement.

Upon the termination of a real estate contract, both the buyer and seller typically sign a mutual release agreement. This legal document formally cancels the original purchase agreement and releases all parties from their obligations and potential liabilities. The mutual release also specifies how the earnest money deposit will be disbursed.

The aftermath of a terminated offer requires careful attention to these contractual details. The seller will need to be re-listed on the market. The buyer resumes their home search. Both parties must adhere to the terms of the mutual release to avoid future disputes.