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6 Reasons Why Real Estate Deals Fall Through + FAQs

a black and white house with a mortgage sign

Home-buying involves a lot of steps and a fair share of paperwork. It’s not uncommon for real estate deals to fall through – even after both parties have signed a contract.

If you’re in the process of buying a new home, it’s important to be aware of the reasons why real estate deals fall through. This way, you can avoid making mistakes and avoid any potential pitfalls.

Here are six reasons real estate deals may not come to fruition, plus answers to frequently asked questions about the home-buying process.

1. The property is in poor condition and needs too much work.

Sometimes a real estate deal will fall through because the property is in poor condition and needs too much work. When this happens, the buyer often underestimates the cost of repairs and renovations.

Think about it from the seller’s perspective – if they have to put in a lot of money and time to fix up the property, they will not be happy about it.

It’s also not worth it for them to invest all that money into a property that may not sell for much more than the repairs would cost. Sometimes, it’s just not worth it for the seller to go through with the deal.

How do you avoid this issue?

The best way to avoid this issue is to get a professional home inspection before making an offer on a property. This way, you’ll know exactly what needs to be fixed and can factor that into your offer price.

You should also have a realistic idea of the cost of repairs before making an offer. This way, you won’t be surprised by the cost later on.

2. The buyer can’t get financing.

Sometimes real estate deals fall through because the buyer can’t get financing. Here are the common reasons why buyers can’t get a loan:

They don’t have a good enough credit score.

If a buyer doesn’t have a good enough credit score, they might not be able to qualify for a loan. A good credit score is typically needed to get a competitive interest rate.

If a buyer can’t get a good interest rate, they might be unable to afford the monthly payments. This is one of the most common reasons real estate deals fall through.

They don’t have enough money for a down payment.

Another reason a buyer might not be able to get financing is that they don’t have a good enough down payment. Lenders typically require a down payment of at least 20%, so if a buyer doesn’t have that, they might not be able to get a loan.

How do you avoid this issue?

Before making an offer on a property, ensure you’re pre-approved for a loan. This way, you’ll know how much money you can borrow and what interest rate you’ll be able to get.

You should also have a realistic idea of how much money you’ll need for a down payment to ensure you have that saved up before making an offer.

3. The buyer’s employment situation changes.

Sometimes real estate deals fall through because the buyer’s employment situation changes. This could be anything from getting laid off to taking a pay cut. Naturally, if a buyer’s employment situation changes, it could affect their ability to afford the monthly mortgage payments.

How do you avoid this issue?

When buying a home, it’s important to keep your employment situation stable. 

If you know there’s a possibility you might get laid off or take a pay cut; it might be best to wait until after you’ve bought the house.

For example, if you’re a contract worker and your contract is about to end, you might want to wait until you’ve signed a new one before buying a house.

4. The appraised value comes in lower than the purchase price.

A home appraisal is when a professional assesses the value of a property. Lenders will often require an appraisal to make sure that the property is worth the amount the buyer is borrowing. This typically happens when the buyer takes out a loan to buy the property.

If the appraised value comes in lower than the purchase price, it could affect the buyer’s ability to get a loan. Sometimes, it might even mean that the deal falls through entirely.

How do you avoid this issue?

The best way to avoid this issue is to have a realistic idea of the property’s value before making an offer. This way, you won’t be surprised by the appraised value later.

You can research recent sales of similar properties in the area to get an idea of what the property is worth. You can also ask a real estate agent for their opinion on the property’s value.

5. The seller’s real estate agent is difficult to work with.

A couple talking with a real estate agent in front of a house for sale

The real estate agent representing the seller can play a big role in whether or not a real estate deal falls through. Did you know that real estate agents are not required to disclose everything they know about a property?

In some cases, they might withhold information that could be important to the buyer. For example, they might not mention that the property has been on the market for a long time or that there have been multiple offers. 

Or, they might be uncooperative when scheduling showings or negotiating the purchase price.

How do you avoid this issue?

Difficult real estate agents can be frustrating, but there are a few things you can do to try to avoid this issue.

  • Ask for referrals from friends or family who have recently bought a home. They might be able to recommend a real estate agent who was easy to work with.
  • Interview multiple real estate agents before choosing one to work with. During the interview, ask them questions about their experience and what their process is for buying a home. 

Check out how to choose a great listing agent and avoid the common problems with real estate agents.

6. The buyer changes their mind.

A real estate deal can also fall through if the buyer changes their mind about buying the property. This could be for any number of reasons, such as deciding they don’t like the property after all or realizing they can’t afford it.

How do you avoid this issue?

If you’re unsure about whether or not you want to buy a property, it’s best to wait before making an offer. Once you’ve made an offer, the seller might take the property off the market or be less willing to negotiate on price.

You should also ensure that you’re 100% sure you can afford the property before making an offer. This means considering the purchase price and ownership costs, such as property taxes, insurance, and repairs.

Real Estate Deals: FAQs

Q: What are the steps of a real estate deal?

The steps of a real estate deal can vary depending on the situation but typically involve finding a property, making an offer, negotiating the price, and getting financing.

Q: What is a real estate contract?

A real estate contract is a legally binding agreement between the buyer and seller of a property. It outlines the terms of the sale, such as the purchase price and closing date.

Q: What happens after a real estate deal falls through?

After a real estate deal falls through, the buyer and seller are no longer obligated to each other. This means the buyer is free to buy another property, and the seller is free to put their property back on the market.

Q: Can a real estate deal still be canceled after it’s been signed?

Yes, a real estate deal can still be canceled after it’s been signed, but both parties must agree to cancel the contract.

Final Thoughts

It’s not uncommon for real estate deals to fall through, but there are a few things you can do to avoid problems.

The best way to avoid issues is to be prepared before making an offer on a property. This means having a realistic idea of the property’s value, knowing what you can afford, and choosing a real estate agent you’re comfortable working with.

Kelly Hudson

Hi there! I’m Kelly and I’m your friendly neighborhood mom! I work as a marketing assistant and I’m the woman who writes for Work Home Tips! I’m here in Seattle with my two sons, Gian and Gino, and we’re living our best life!

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