How Often Do Pending Offers Fall Through?

When a home is listed as having a “pending offer,” it signifies that a buyer and seller have reached an agreement and signed a contract. This status indicates the transaction is moving forward, but it is not yet complete. While many pending offers proceed to a successful closing, these agreements can and sometimes do fall through before the final transfer of ownership. The journey from an accepted offer to a closed sale involves several stages, each with conditions that must be met for the transaction to finalize.

Understanding the Pending Status

In real estate, “pending” means an offer has been accepted and the property is under contract, but the sale is not yet finalized. This status indicates the transaction is moving forward, with contingencies still active.

Contingencies are conditions that must be satisfied for the sale to proceed. These clauses are included in the purchase agreement and offer protection for both the buyer and the seller, allowing either party to withdraw from the contract without penalty if specific terms are not met.

One common type is the financing contingency, which allows the buyer to cancel the contract if they cannot secure a mortgage loan. This protects the buyer from being obligated to purchase a home they cannot afford.

Another protection is the home inspection contingency. This provision grants the buyer a specified period, often around 7 to 10 days, to have the property professionally inspected. If the inspection reveals significant issues, such as structural damage or major system failures, the buyer can request repairs, negotiate the price, or terminate the contract. The appraisal contingency ensures that the home’s appraised value aligns with the agreed-upon purchase price. If the appraisal comes in lower, this contingency allows the buyer to renegotiate the price or withdraw from the deal.

A sale of current home contingency protects a buyer who needs to sell their existing property before they can complete the purchase of a new one. If the buyer’s current home does not sell within the specified timeframe, they can typically cancel the contract without penalty. A clear title contingency ensures that the property’s title is free of any undisclosed liens, boundary disputes, or other legal claims that could prevent a clean transfer of ownership. The title company conducts a search to verify ownership, and if issues arise, the buyer has the right to cancel.

Common Reasons Offers Fail

Pending offers can fail to reach closing for various reasons, often linked to the contingencies outlined in the purchase agreement.

One of the most frequent causes is issues with buyer financing. A buyer’s loan can fall through if their financial situation changes unexpectedly, such as a job loss or a significant new debt, which can lead to the lender revoking pre-approval or denying final loan approval. Even a minor change, like a late bill payment, can negatively impact a buyer’s credit score and derail the mortgage process.

Problems identified during the home inspection also represent a common reason for offers to fail. If a home inspection uncovers major defects like structural damage, significant HVAC problems, or issues with the roof, the buyer may decide to back out. This is especially true if the cost of necessary repairs is substantial and the seller is unwilling to negotiate or offer credits. The inspection contingency allows buyers to walk away if the findings are unsatisfactory or repair negotiations break down.

Another hurdle can be an appraisal gap, which occurs when the home’s appraised value comes in lower than the agreed-upon purchase price. Lenders typically will not finance more than the appraised value of the property, leaving the buyer to cover the difference out of pocket or renegotiate the price with the seller. If the buyer cannot or will not cover this gap, or the seller refuses to lower the price, the deal can fall apart.

Title issues can also prevent a sale from closing successfully. Undisclosed liens, boundary disputes, errors in public records, or unresolved claims against the property’s ownership can create significant legal complications. These problems must be resolved before a clear transfer of ownership can occur, and if they cannot be rectified in a timely manner, the buyer may withdraw from the contract. Offers can also fail due to buyer or seller “cold feet,” personal emergencies, or significant life changes that make one party unable or unwilling to proceed with the transaction.

The Impact of a Failed Offer

When a pending offer falls through, there are immediate consequences and next steps for both the buyer and the seller. A central component affected is the earnest money deposit, which is a good-faith payment made by the buyer to demonstrate commitment. The disposition of this deposit, typically held in an escrow account by a neutral third party, depends on the reason the deal failed and the terms of the contract. If the buyer backs out due to a valid contingency, they typically receive their earnest money back. However, if the buyer defaults on the contract without a valid contingency, the seller may be entitled to keep the deposit as compensation for lost time.

For the seller, a failed offer means the property usually goes back on the market, often reverting to an “active” status. While a failed deal can sometimes create a negative perception for the property, it is often unwarranted, as many legitimate reasons can cause an offer to fall through. Sellers must then re-engage with other potential buyers, which might involve re-listing the property, updating its description, or even making price adjustments.

For the buyer, a failed offer means they must resume their home search, potentially losing valuable time and incurring out-of-pocket expenses for services like home inspections or appraisals that are typically non-refundable. They may also experience emotional frustration from the setback. The entire process essentially restarts for both parties, delaying their respective goals of buying or selling a home. This reset underscores the importance of understanding the terms of the purchase agreement and the protections contingencies provide.