The Top 6 Reasons That Home Deals Fail

Toronto Real Estate Podcast with Rene Ahmad

Unfortunately, it’s not uncommon for home purchase deals to fall through. Here are a few reasons why these deals sometimes go to hell.

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Right now I’m standing in a vacant property that I’m about to show a client. The reason that it’s vacant is actually because the deal on this house fell through not long ago. Unfortunately, this is not uncommon in the real estate world, which is why one of the questions I get most often from clients is, “Why do these home deals fall through?” Here are six of the most common reasons I’ve come across:

1. A change in the buyer’s credit score. A buyer may make a major purchase or see a dip in their credit score for one reason or another. If this happens from the time of purchase to the time of closing, it’s possible that the deal will fall apart based on financing.
2. The inspection spooked them. Especially with older, rural homes like the one in the video above, an inspection may reveal a lot of hidden issues that scare the buyer away from the deal.
3. The loan was not pre-approved. If the buyer didn’t have a pre-approval in the first place and put an offer in on the home, it’s possible that the deal would fall apart not long after, or even right up to the day of closing.
4. Running out of money. Sometimes it may take the buyer until the closing date to realize that they don’t have the money to close the deal. Occasionally, the buyer will come to the closing table and tell the seller that they have yet to sell their home, their funds haven’t come in from overseas, or they just simply underestimated closing costs.
5. Small problems are blown out of proportion. Especially after the home inspection and when the buyer has seen the home a few times afterwards, small problems may come to light that cause the buyer to back out of the deal.

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A buyer may blow small problems out of proportion and walk away.

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6. Cold feet. If a buyer gets cold feet and suddenly feels uncomfortable with the transaction, they may simply walk away from the deal.

If you’re ever wondering why a home you’ve been watching comes back onto the market, it could be for one of these six reasons. If you have any other questions on home purchase transactions or are looking to buy or sell a home yourself, please feel free to give me a call or send me an email. I’d be happy to help you!