Why Do Some Homes for Sale Return to the Market?

man covering his mouth

When you drive past a house that has one of those “sale pending” or “under contract” signs out front, you may have wondered how often a sale goes awry—and why. A great majority of homes for sale do go through to settlement, but a small number have their ‘Home for Sale’ sign go back up without an ‘under contract’ banner.

The most common reasons for failure to settle were recently described in a PowerPoint document assembled for National Association of Realtors® members by its research group. It is part of a presentation that recounted the recent experiences of NAR members.

Five issues dominated:

  1. Reported as the most common cause (11%) throughout 2021was Appraisal Issues. That’s not surprising, given the sustained run-up in sales prices. When values rise quickly, you’d expect comparable properties’ prices to lag somewhat.
  2. Second most common (8%) were “Issues Related to Obtaining Financing.” That can be due to a number of causes—but if you suspect that many could also be related to the price issue, that’s probably true. Buyers who would have qualified at a lower offering price twelve months earlier might have trouble finding a willing lender today.
  3. Third (also at 8%) were “Home Inspection/Environmental Issues.” When buyers can’t come to an agreement with sellers over details discovered at the inspection phase, a deal can sometimes falter.
  4. Next (4%) came “Titling/Deed Issues.” The proportion is small, but when these can’t be cleared up in a timely fashion, impatient buyers may move on.
  5. Fifth (also 4%) was “Contingencies Stated in the Contract.” These could be any particulars built into the agreement.

There were some other minor (1%) issues, as well as a larger grab-bag “Other” category that covered all the other possible reasons that sales stalled. Even so, the actual proportion of failed sales was slight. Ninety-four percent closed successfully, leaving only 6% that actually fell out. But the failed sales are emblematic of the importance of drawing up offers that cover all the bases. The value of protecting all parties in such an important agreement is why the vast majority of buyers and sellers decide to recruit a licensed Realtor—someone who knows how to construct an offer that foresees all the likely circumstances that could affect the parties’ interests.