How Often Do Pending Sales Fall Through?

Real estate transactions involve a complex journey from initial interest to final ownership transfer. After an offer is accepted, both buyers and sellers enter a period of anticipation and procedural steps. Understanding these stages is key to navigating a home sale to completion.

Understanding Pending Sales

When a property is listed as “pending,” it signifies a seller has accepted a buyer’s offer, and the transaction is progressing toward its final stages. This status indicates the deal is undergoing due diligence. Pending status typically lasts one to two months, as various conditions must be met.

During this pending period, several contingencies are addressed to protect both parties. A common stage is the home inspection, where buyers typically have 7 to 14 days to thoroughly examine the property. This assessment aims to uncover significant issues, such as structural defects, and allows buyers to request repairs or negotiate credits.

Another important safeguard is the appraisal contingency, which permits buyers to withdraw if the home’s appraised value is lower than the agreed-upon purchase price. Lenders base the loan amount on the appraised value, so a low appraisal can create a funding gap. A financing contingency protects buyers if they are unable to secure the necessary mortgage loan. This period typically extends for 30 to 60 days, allowing the buyer time to obtain loan approval.

The title review process also occurs during the pending phase. A title search ensures the property’s ownership records are clear of any undisclosed liens, boundary disputes, or errors. All title issues must be resolved to ensure a clean transfer of ownership. Some agreements may also include a home sale contingency, making the purchase dependent on the buyer selling their current residence.

Frequency of Fall-Throughs

While most real estate transactions proceed to closing, some pending home sales do not reach completion. Data from the National Association of Realtors (NAR) indicates that approximately 5% to 7% of pending home sales contracts are canceled. Other reports suggest the rate can be around 3.9% or higher, depending on the market and data source.

Beyond outright cancellations, an additional 14% of pending contracts may experience delays. The frequency of these fall-throughs can fluctuate based on various market factors. Economic shifts, changes in lending standards, and the overall health of the local real estate market can influence these statistics. Rising mortgage rates and increasing affordability pressures, for example, contribute to higher cancellation rates.

Common Reasons for Fall-Throughs

Several common issues can cause a pending home sale to falter. One frequent problem involves buyer financing, where a mortgage loan may fall through. This can occur if a buyer’s financial situation changes, such as a shift in employment, a decrease in their credit score, or new debts, leading lenders to revoke pre-approval or deny the loan.

Another significant financial hurdle is an appraisal gap. If the home’s appraised value is less than the agreed-upon purchase price, the lender will only finance up to the appraised amount. To bridge this gap, buyers may need to pay the difference in cash, renegotiate the sale price, or terminate the contract if no agreement can be reached.

Home inspection discoveries are a prevalent reason for sales to collapse. Significant issues like foundation problems, major roof damage, or the presence of mold or structural defects can deter a buyer. If the buyer and seller cannot agree on necessary repairs or financial concessions, the buyer may withdraw from the purchase agreement.

Title issues can also derail a transaction. These problems include undisclosed liens such as tax liens, mechanic’s liens, or homeowners association (HOA) liens, as well as errors in public records like misspelled names or incorrect property descriptions. Boundary disputes or unknown easements can also surface. All title defects must be resolved to ensure a clear transfer of ownership, and failure to do so can significantly delay or terminate the sale.

Beyond these property-specific issues, the failure of other contingencies can lead to a fall-through. If a buyer’s purchase is contingent on the sale of their current home, and that sale does not materialize, the subsequent purchase will likely fail. This interdependency can create a domino effect.

Finally, buyer or seller remorse, while less common as a direct cause for contract termination once contingencies are cleared, can still play a role. Buyers may experience cold feet due to the financial commitment, feeling pressured, or discovering a more suitable property. Sellers may also regret their decision due to emotional attachment, difficulty finding a new home, or a belief they sold for too low a price. Buyers often have legal avenues to withdraw during contingency periods, but sellers who back out without a valid contractual reason may face legal repercussions.