How Often Do Home Sales Fall Through? Key Statistics & Top Reasons Why Deals Die

The home-buying process, from accepting an offer to the final closing day, is often fraught with anticipation and anxiety. For both buyer and seller, this period represents a fragile state where the dream of a successful transaction can feel just one unexpected problem away from collapse. While the majority of real estate deals do cross the finish line, a significant number falter, leaving parties disappointed, frustrated, and often financially strained.

Understanding how often home sales fall through and, more importantly, why they fail is the first step toward navigating the complexities of the market with confidence and preparedness. This article provides a comprehensive look at key statistics on failed home sales and delves into the primary reasons these deals fail before closing. By examining the top deal-killers, from financing hurdles to inspection surprises, you can better fortify your own real estate transaction against common pitfalls.

The Reality Check: Home Sale Fall-Through Statistics

Before diving into the main reasons for failure, let's take a look at the statistical baseline. The good news is that the vast majority of home sales that go under contract do successfully close. However, the percentage of those that fail is not insignificant and can fluctuate dramatically based on market dynamics.

Historically, the termination rate of purchase contracts has hovered in the low single digits. However, recent economic shifts, including fluctuating interest rates and affordability challenges, have introduced more volatility. For instance, in a shifting market, Redfin reported that 14.3% of homes that went under contract in January 2025 failed to close. This highlights a critical point: while a deal falling through is not the most common outcome, it is a significant risk that warrants attention.

The path from an accepted offer to a closing date is paved with potential obstacles, and understanding the most common ones is essential for every buyer, seller, and real estate agent involved in a transaction.

The Dominant Deal Killers: Common Reasons for Home Sales Falling Through

Financing, inspection, and appraisal issues are the most common roadblocks on the path from an accepted offer to a successful closing process.

#1: Contingency-Related Failures

Contingencies are clauses in a purchase agreement that must be met for the sale to proceed. They are designed to protect the buyer, but they also represent the most common exit ramps for a deal. Two categories of contingencies in home purchase contracts stand out as the primary culprits behind failed home sales: mortgage financing issues and home inspections.

Financing and Appraisal Contingencies

A buyer’s ability to secure a mortgage loan is the bedrock of most real estate transactions. When financing falls apart in mortgage-backed transactions, the deal almost always dies with it. Several factors contribute to this:

• Loan Denial: A buyer may receive a pre-approval from a lender but be denied the final mortgage approval. This can happen if their financial situation changes between the offer and closing, such as a job loss, a drop in credit score, or taking on new debt that impacts their debt-to-income ratio (like buying a car). The lender re-evaluates everything before funding, and any new risk can lead to denial.
• Appraisal Gaps: A lender will only loan money up to the property's appraised value. In a competitive market, buyers may offer more than the asking price to win a bidding war. If the home appraisal comes in below the agreed-upon sale price, a gap arises. The buyer must then cover the difference in cash, the seller must lower the price, or the deal collapses. Approximately 8% of home appraisals come in below the contract price, making this a frequent point of contention. While it's true that in the first half of 2024, 51% of home appraisals were higher than sale prices, a low appraisal remains a potent deal-killer.

Home Inspection Contingencies

The home inspection is a buyer’s opportunity to uncover the true condition of the property. The inspection contingency allows them to back out or renegotiate if significant issues are found. If you’re wondering how often home sales fall through after inspection, this is arguably the second-most common reason a deal fails. A 2025 survey by Redfin found that a staggering 70.4% of their agents cited home inspection or repair issues as the reason for a terminated contract.

Common inspection-related deal-breakers include:

• Major Structural Issues or System Defects: Problems with the foundation, roof, HVAC systems, electrical wiring, water damage, or widespread plumbing issues can be prohibitively expensive to fix.
• Environmental Hazards: The discovery of mold, asbestos, radon, or significant pest infestations can scare off even the most enthusiastic first-time home buyer.
• Negotiation Impasse: After the home inspection, the buyer typically submits a repair request to the seller. If the seller is unwilling to make the requested repairs or offer a credit, and the buyer is unwilling to accept the property as-is, the two parties reach an impasse, and the buyer can walk away.

#2: Title Problems

Although less likely than the buyer, the seller is not immune to causing a deal to collapse. Issues can arise from their end in several ways. A primary cause is problems with the property's title. A title search might uncover unexpected liens from unpaid taxes or contractors, or ownership disputes that create a "cloud on the title." It is estimated that title issues contribute to approximately 11 % of delayed or canceled home sales. Because of this risk, title searches and clearances are standard parts of the closing process.

A clean preliminary title report gives buyers confidence, but when the report reveals problems, they must be resolved before the sale can proceed, and if they cannot be cleared in time, the deal is terminated. A seller might also fail to disclose known defects in the property, leading to a loss of trust and a potential legal battle that may prompt the buyer to walk away.

#3: Buyer-Related Issues

While financing and inspection issues dominate, other factors can derail or kill a home sale.  Sometimes, the problem lies not with the property but with the buyer themselves. "Buyer's remorse" is a very real phenomenon. After the initial excitement of having an offer accepted wears off, a buyer might develop cold feet, feeling they overpaid or made a hasty decision.

Another common issue is the home sale contingency, where the buyer must sell their current home before closing on the new one. If their own sale falls through, they are often forced to terminate their purchase contract.

#4: Low Homeowner Equity

In some cases, a seller may not have enough equity in their home to cover the closing costs and their outstanding mortgage balance. This is particularly relevant if property values have declined since they purchased the home.

If a seller is "underwater" on a mortgage or has very little equity, they may find they have to bring cash to the closing table to complete the sale. If they are unable or unwilling to do so, they may be forced to cancel the deal, leaving the buyer back at square one.

The Role of Market Conditions in Deal Failures

When it comes to answering why home sales fall through, not everything is up to the buyer or seller. The health of the broader real estate market and economy also plays a significant role in the stability of individual home sales. Fluctuating market conditions can create an environment where deals are more likely to fail.

Interest Rates

Rising interest rates directly impact a buyer's purchasing power. A buyer who was pre-approved for a mortgage at one rate may find they no longer qualify or cannot afford the monthly payment if rates increase before they lock in their loan. This affordability crunch is a growing concern. The National Association of Realtors’ Housing Affordability Index fell from 108.8 in 2022 to 94.4 by June 2025, indicating that the median-income family has less and less purchasing power.

This trend is reflected in sales data. Existing home sales in the US declined 0.7% in May 2024 as the median price hit a record high. When prices are high and affordability is low, buyers are stretched to their financial limits, making them more vulnerable to any unexpected costs or financing adjustments.

This economic pressure can lead to more cancellations, with forecasts suggesting that since housing was already out of reach for many buyers in 2025, 2026 is likely to bring the same affordability pressures amid persistently high rates.

Increased Housing Inventory

A larger supply of properties on the market gives purchasers greater choice, as was the case this year. At the end of April 2025, housing stock reached its highest level in five years, as Reuters reported, giving buyers more power and lessening the rush to close deals.

Rising housing inventory gives buyers more options and leverage, which can lead to more housing deals falling through. With plenty of alternatives, buyers feel freer to cancel contracts if inspections reveal issues, negotiations stall, or a better opportunity appears — making sellers more vulnerable to last-minute withdrawals.

The Cost of a Collapsed Deal: Financial & Emotional Impact

When a home sale falls through, the consequences extend beyond mere disappointment. Both the buyer and seller incur tangible financial losses. The buyer is typically out of the money spent on the home inspection and appraisal, which can total over $1,000. There may also be disputes over the earnest money deposit, potentially leading to mediation or legal fees.

For the seller, the costs are even greater. They must put their home back on the market, which can be stigmatizing. A property that goes "back on market" often raises red flags for potential new buyers, who may assume something is wrong with it, leading to lower offers. Besides the costs of preparing a home for sale, the seller also incurs continued carrying costs for the property, including mortgage payments, taxes, and insurance, for every additional month it sits unsold.

The emotional toll – the stress, uncertainty, and frustration of starting the entire process over, can be just as damaging as the financial impact of a killed home sale.

Strategies to Prevent Your Home Sale From Falling Through

While you can't control every variable, both buyers and sellers can take proactive steps to minimize the risk of a deal collapsing.

For Buyers:

1. Secure Solid Financing: Get a full underwriting pre-approval, not just a pre-qualification. This is a more rigorous review of your finances and provides a stronger guarantee from the lender. Once under contract, avoid making any large purchases or changes to your financial profile.
2. Understand Your Contingencies: Work with your real estate agent to set realistic deadlines for your inspection, appraisal, and financing contingencies. Understand exactly what your rights are under each clause.
3. Be Realistic About Inspections: No home is perfect. Distinguish between major defects and minor cosmetic issues. Focus on negotiating the significant problems rather than letting a long list of small items kill the deal.

For Sellers:

1. Prepare and Disclose: Consider a pre-listing inspection to identify and fix potential issues before they can be discovered by the buyer's inspector. Be transparent and thorough on your property disclosure forms to build trust and avoid last-minute surprises.
2. Price Realistically: Overpricing your home increases the risk of a low appraisal. Your real estate agent can provide a comparative market analysis (CMA) to help you set a competitive price that is likely to be supported by an appraisal.
3. Be Ready to Negotiate: Be prepared to negotiate reasonably on repair requests. A small credit or a minor repair can often be the key to holding a deal together and avoiding the significant cost and hassle of putting your home back on the market.
4. Sell to Direct Cash Home Buyers: Partner with SleeveUp Homes for a guaranteed, direct home sale. Our process was designed for simplicity and certainty. Sell your home as-is with no repairs, staging, or closing costs required. We’ll beat any legitimate offer by $10,000, giving you certainty, control over the timeline, and avoiding the risk of your deal falling through.

Sell Your House As-Is to SleeveUp for a Guaranteed, Quick Deal

The prospect of a home sale falling through can be daunting, but it is far from an inevitability. Statistics show that the vast majority of transactions succeed, and understanding the primary reasons why some fail is the most powerful tool for prevention. The most critical hurdles consistently relate to financing and home inspections, areas where preparation and transparent communication can make all the difference.

For buyers, this means entering the process with robust financial pre-approval and a realistic mindset about a home's condition. For sellers, it involves proactive disclosure, strategic pricing, and a willingness to negotiate. By focusing on these fundamentals and knowing what to keep an eye out for, you can significantly increase the odds of keeping your deal alive and achieving your real estate goals.

And for Southern California sellers looking for certainty, SleeveUp Homes offers a guaranteed, hassle-free solution – we buy houses in any condition, whether they are outdated, damaged, distressed, or tied up in debt, allowing you to sell quickly and confidently without repairs, listing, waiting for buyers to shake hands, or unexpected closing issues and costs down the line. Simply request a free, no-obligation cash offer for your property, and our team will get in touch with you in no time.

Author:

Cesar Gomez , Broker /

Cesar has worked as a real estate agent and broker in the southern California region since 2013.

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