You’re ready to move. Fast. You get an offer and you start to pack your boxes. You’re in escrow. What could go wrong? Well, a lot of things, as it turns out. Pending home sales fall through for myriad of reasons, some of which you can predict and control… and some you simply can’t. Traditional home sales go through specific steps, each of which have their own potential land mines. Here are some common reasons pending home sales don’t make it to signed contracts.
Why Do Pending Home Sales Fall Through?
1. Inspection Issues
One common reason for a pending sale to fall out of escrow is that a major issue is uncovered during the inspection. From plumbing problems to mold to a cracked foundation, potential buyers are free to back out if the inspection doesn’t exactly leave them with the warm fuzzies. Buyers are often willing to inherit some necessary repairs… but everyone has their limit.
Avoiding this problem: If you know your home has a major problem just beneath the surface, you’re best to disclose it or fix it before you accept an offer.
2. Financing Failure
A buyer’s financing may also fall through and cause them to withdraw their offer. Some buyers get pre-approved by a bank, reducing the chances of a financing problem while the sale is pending. But things can always change. A buyer could see a decrease in their income, for instance, in the middle of the sale process. This would negate their pre-approval from their lender and make the sale fall through.
Avoiding this problem: Find out if your buyer is pre-approved for funding. While the sale could still fall through, this gives you your best chance at a successful closing where finances are concerned.
3. Contingency Complications
Many buyers will make an offer that is contingent on them selling their current home first. If things go sideways and they are unable to unload their current property, they will have to withdraw their offer on your property. You can always turn away any offers with this type of contingency, though it may take you longer to find the right buyer. Other common contingencies include the inspection contingency, an appraisal contingency, and a title clearance contingency. If the bank lender assesses your property as being worth less than what the buyer has requested in financing, they may pull their funding and your offer will disappear.
Avoiding this problem: Don’t list your property too aggressively, and make sure the title documents are in order.
4. Buyer Back-Out
Some buyers simply change their minds. The escrow period is designed such that a buyer who finds another property they like more than yours can simply pull their offer. Depending on your contract, they may have to forfeit their good faith payment, but you can’t force someone to close. This might be the most frustrating reason for a pending home sale to fall through, because you can’t do much to prevent it on your end.
Avoiding this problem: While you can never fully predict if a buyer will get cold feet, you can look for red flags that indicate the buyer may be tenuous about the neighborhood or unhappy with major aspects of the home.
5. Timeline Trouble
A pending sale may also fail because the lender can’t deliver funding in time or another timeline issue crops up. Maybe you thought you could find a new place to live but it falls through. You’ll have to ask the buyer to give you extra time to move out, and if they don’t agree, the sale won’t go through. Similarly, you may prefer a 30-day escrow only to learn the buyer insists on a 45-day escrow process. Disagreement about the timeline can be difficult to overcome.
Avoiding this problem: Set timeline expectations with your buyer from the beginning, before you official accept an offer. However, if the offer is solid (and you’re able), be a little flexible to ensure you can still close.
Are you running into problem after problem with your home sale? If you’re tired of getting your hopes up on a pending sale — maybe it’s time to switch gears. Contact California Family Homebuyers today to see if we’re a good fit to buy your property! We’ll offer an all-cash offer with no contingencies and can often close as fast as seven days. You can even choose the closing date.