What Percentage of Pending Sales Fall Through?

Navigating a real estate transaction involves several stages, with the “pending sale” status representing a significant step towards completion. While many agreements proceed smoothly to closing, a notable percentage encounter unforeseen obstacles and do not finalize. Understanding this phenomenon can provide clarity for both buyers and sellers involved in property transactions. This article explores the nature of pending sales, the likelihood of their completion, the primary reasons some transactions falter, and the subsequent actions taken when a sale does not close.

Defining Pending Sales and Fall-Through Statistics

A pending sale signifies that a buyer and seller have formally agreed to terms and signed a purchase agreement. During this period, the property is typically taken off the active market, and various activities occur, such as property inspections, appraisals, and the buyer securing financing. This interim phase allows for due diligence and the fulfillment of contractual conditions before the final transfer of ownership.

Despite an accepted offer, a portion of these pending sales do not reach completion. Recent data shows fluctuations in fall-through rates. For instance, the National Association of Realtors reported approximately 6% of pending home sales were canceled in May 2025, an increase from 5% a year prior. Other analyses show higher rates, with roughly 14.9% of pending sales failing in June, reflecting the highest June level since 2017. These statistics can vary based on market conditions, including shifts in mortgage rates, affordability, and lender underwriting standards.

Key Factors Contributing to Sales Not Closing

Numerous factors can cause a pending sale to unravel, often tied to purchase agreement contingencies. One common reason involves financing issues, where a buyer’s loan approval falters. Changes in a buyer’s financial situation, such as employment shifts, credit score fluctuations, or acquiring new debt, can lead lenders to deny final mortgage approval, even after pre-approval.

Another common issue stems from home inspection discoveries. Inspections can reveal significant property defects, such as issues with roofing, foundation damage, plumbing, or electrical systems. If these findings are substantial, buyers may request repairs or price reductions. If the parties cannot agree on a resolution, the buyer may withdraw from the contract. Inspection issues contribute to many failed sales.

Appraisal gaps also frequently derail transactions, occurring when a property’s appraised value is lower than the agreed-upon purchase price. Lenders base loan amounts on the appraised value, not the contract price, leaving the buyer to cover the difference out of pocket to proceed with the sale. This situation often leads to renegotiations, and if a compromise is not reached, the sale may terminate.

Title or legal issues can impede a sale’s progress. These problems include undisclosed liens, such as unpaid property taxes or mortgages, or errors in public records. Boundary disputes, illegal deeds, or questions regarding heirs can complicate matters, requiring resolution before clear ownership can transfer. Buyer or seller remorse can also lead a party to back out for personal reasons, particularly within contractual contingency periods.

What Happens When a Pending Sale Falls Through

When a pending sale falls through, the purchase agreement is formally terminated. The process typically involves notifying all parties of the contract’s nullification. A significant aspect of a failed transaction is the handling of the earnest money deposit, placed in escrow by the buyer.

Generally, if the buyer terminates the contract due to an approved contingency, such as issues with financing, inspection, or appraisal, the earnest money is typically returned to the buyer. However, if the buyer withdraws for reasons not covered by a contingency or breaches the contract, the earnest money may be forfeited to the seller as compensation for taking the property off the market. The release of earnest money usually requires mutual agreement from both buyer and seller, or a legal determination if a dispute arises.

Buyers resume their home search, often with a clearer understanding of their preferences and financial limitations. For the seller, the property re-enters the market, usually with a “back on market” status. Sellers may need to adjust their asking price or address issues identified during the prior failed transaction, such as making repairs highlighted by a home inspection, to attract new buyers.