Why Pending Home Sales Fall Through

Once you have a pending home sale, you may assume that you're free and clear: you're under contract. You've accepted the seller's offer. You're ready to sell your house and move forward.

Just because a sale is pending, however, does not mean everything will go according to plan. There are several key reasons why a home sale may fall through, leaving you to figure out what comes next. 

1. The house has unexpected problems revealed on inspection.

Many buyers will not conduct a full, detailed home inspection until they are under contract for the home. They may have gone over the home themselves and noted any immediate problems, but they might not schedule those full inspections until they decide that they're definitely ready to buy.

Unfortunately, sometimes, those home inspections reveal more serious problems than anticipated. The home may have electrical or plumbing problems that could pose a serious hazard alongside substantial expenses. It could have structural problems that the buyer could not see from the outside. Whatever the case, those problems could prevent the buyer from going through with the purchase. 

To help decrease the odds that you will run into this challenge when selling your home, you may want to consider having an inspection of your own done before you put the house on the market. What things do you need to fix up before a buyer will be interested in it? What challenges could prevent a buyer from wanting to purchase the home? By taking a solid look at these things up front, you can decrease your sale price or fix things up as needed.

2. The buyer does not get approved for the right purchase amount.

Often, buyers come into their purchases with preapproval from a bank or credit union: a look at how much they may afford when the time comes to purchase a house. Unfortunately, preapproval does not necessarily mean that the buyer will end up approved for the home purchase. In some cases, buyers may not get approved for the mortgage amount they need in order to purchase the house. Sometimes, this occurs because of the buyer's income or the down payment the buyer can come up with. Other times, the buyer may need to ask for a larger mortgage than the bank feels the house will support. 

3. The buyer reviews their budget and discovers they cannot afford the house. 

Buyer inexperience: in many real estate transactions, simple inexperience can cause a number of challenges, particularly if the buyer overestimates the amount of house they can afford. Many buyers do not fully understand how the mortgage will work: what payments they will need to make, how they will handle covering insurance, and other important facets of home ownership. As a result, they may apply for a loan, even be under contract for a house, only go to back and calculate what those payments will take out of their budget and decide that they can't really afford it.

4. Property liens or title problems crop up before the sale goes through.

Before the buyers can complete the sale, the title must be clean, with no unexpected liens and no title problems. The title must clearly show that the home belongs to the person selling it and that there are no outstanding loans on the property that will not be paid off by the sale of the home. If one of these issues does crop up, it can stop the sale in its tracks. Often, buyers will walk away, rather than waiting for these issues to be resolved. 

5. The buyer can't sell their current home. 

Many buyers simply cannot afford two mortgages at the same time--not to mention the maintenance and upkeep fees that go along with owning two homes. They may need to sell their current property before buying a new one. Often, buyers will go ahead and make an offer on a property with the assumption that their home will sell within a reasonable period of time, especially if they're operating in a seller's market. Unfortunately, that doesn't always prove true--and the lack of a sale can make it very difficult for buyers to secure financing for their new purchase. While a bridge loan can help bridge the gap between buying a new home and selling an existing one, for many buyers, that simply isn't feasible, especially when they consider additional moving expenses. 

6. The home appraises for a lower price than indicated by the asking price (and the offer price). 

When new buyers purchase a home, they're looking for an investment. They want a home that they can build equity in over the years. In some cases, including a hot seller's market, homes may sell for slightly higher value than anticipated. Most of the time, however, buyers want a home that will appreciate steadily in value--and in equity--over time. If they start off paying more for a home than it's worth, including renovation costs, they may not see that increase in equity. Most buyers will have an appraisal conducted before they sign on the dotted line and issue payment. Lenders may also want to see an appraisal before they approve new buyers for a loan. If that appraisal comes back too low, it could prevent buyers from moving forward with the process. 

Most of the time, once a house is under contract, buyers have a much easier time getting out of the contract than sellers. Sometimes, buyers will use contingencies in the contract to help them get out of the contract. Unfortunately, this can make it very difficult for sellers, especially those who may be ready to move out of their current property and on to bigger and better things. To help reduce the odds that a buyer will back out of your sale at the last minute, carefully review available offers before making a decision about the one that's right for you, and make sure you choose a buyer who has already been preapproved and has few contingencies in their contract that will allow for an escape.

How to ensure a guaranteed home sale

When a seller sells to FlashHouse, it is guaranteed. Get a competitive cash offer and sell without hidden fees or the uncertainty of contingencies or buyer financing falling through. Selling a home is stressful. FlashHouse makes it simple.