Signing a purchase agreement is an exciting milestone in any real estate transaction. But even after an offer is accepted, there are still several steps between contract and closing day. In today’s market, about 5% of home purchase transactions fall through before closing, according to a recent REALTORS® Confidence Index Survey.
Many of the most common issues can be anticipated and managed with the right preparation and professional guidance. Understanding these potential pitfalls can help keep your transaction on track.
Financing Problems Can Derail a Deal
One of the most common reasons a transaction falls apart is financing. A buyer may be pre-approved for a mortgage, only to face a denial before closing.
This can happen for several reasons, including:
- A drop in credit score
- Taking on new debt, such as buying a car
- A job change or reduction in income
- Changes in lending guidelines or loan terms
How to Avoid It
Buyers should avoid making large purchases, opening new credit accounts, or changing jobs during the transaction process. Sellers may also choose to work with buyers by allowing extra time for alternative financing or the addition of a cosigner if problems arise.
Home Inspections Can Reveal Unexpected Issues
No home is perfect, but some inspection findings can create major concerns for buyers. Structural problems, water damage, outdated electrical systems, or code violations can quickly become deal breakers.
How to Avoid It
Sellers can reduce surprises by ordering a presale inspection and addressing repairs before listing the home. Full disclosure of known material defects is also important and required by law in many states.
For buyers, it’s important to review inspection results carefully with your real estate agent. Some issues may be minor maintenance concerns, while others could justify negotiating repairs, requesting a credit, or walking away from the deal.
Low Appraisals Can Create Financing Gaps
If a home appraises for less than the agreed-upon purchase price, lenders will base the mortgage amount on the appraised value — not the contract price. That can leave buyers short on financing.
How to Avoid It
Proper pricing from the start is critical. Sellers should work closely with their agent to ensure the home is priced appropriately based on comparable sales and market conditions.
During the appraisal process, agents can provide the appraiser with relevant information about the property and comparable homes that support the value. If the appraisal comes in low, buyers and sellers may renegotiate the price, the buyer may pay the difference in cash, or the buyer may request a reconsideration of value from the lender.
Title Issues Can Delay or Stop Closing
Before a property changes hands, the title must be clear. Problems such as unpaid liens, ownership disputes, or unresolved legal claims can delay or even prevent a sale from moving forward.
How to Avoid It
Sellers should address any title concerns before listing the property. A title search can uncover issues early in the process.
Buyers typically purchase lender title insurance, and many also choose owner’s title insurance for additional protection against undiscovered claims, errors, or fraud.
A Buyer’s Current Home May Not Sell in Time
Some buyers submit offers contingent on selling their current home first. If their home doesn’t sell on schedule, the entire transaction can be affected.
How to Avoid It
Sellers should discuss flexibility around closing timelines with their agent before accepting a home-sale contingency. Buyers may also consider bridge financing, which can help cover the purchase before their existing home sells.
Sometimes Deals Fall Apart for Personal Reasons
Not every transaction fails because of financing or inspections. Sometimes emotions or changing circumstances play a role.
Buyers may decide the home no longer feels right. Sellers may reconsider moving. Another property may come on the market, or negotiations may become difficult during attorney review or inspection periods.
The key is communication, flexibility, and a willingness to negotiate. In many cases, challenges can still be resolved when both parties remain focused on the end goal.
The Value of Working With a REALTOR®
A real estate transaction involves many moving parts, and unexpected issues can arise at any stage. Working with a real estate professional who is a REALTOR® can help buyers and sellers navigate challenges, stay informed, and keep the transaction moving forward.
Not all real estate professionals are REALTORS®. Only members of the National Association of REALTORS® may use the term REALTOR®, and they are bound by the NAR Code of Ethics to put their clients’ interests first.
For more consumer resources and information, visit facts.realtor.
Your real estate agent can guide you through the purchase or sale process. For legal advice, consult an attorney licensed in your state.
Source: NAR Consumer Guide
