Why do transactions fail?

3 Reasons Transactions Fail

Why do pending transactions fail? In the real estate market, the stars have to align ever so perfectly for a transaction to close.  Today, sellers are trying to cash out the equity they have gained over the last year in their properties.  Many of the sellers in the market are taking advantage of the aggressive market and the lack of inventory.  Homes that are coming on the market are in need of serious repair and the sellers are passing this responsibility on to the buyers.  Additionally, the recent rate hikes by the Fed are squeezing potential buyers out of the market.  With all of these moving parts of the market, transactions do not always make it to the finish line. Navigating a real estate transaction is much like riding a bull.  You hold on tight! Here are some reasons that a transaction can fall through.

Home Inspections

Home inspections are an important part of the transaction.  They help buyers/lenders peace of mind.  Unexpected surprises are less likely.  If something majorly wrong shows up on the inspection report, the buyer may chose to walk away from their transaction.  Some examples of major concerns would be active leaks, mold, foundation issues, and roof damage.  Unfortunately, these kinds of issues may cause the buyer to renegotiate the price. No agreement equals no deal.   Have the property inspected prior to listing.  You will have to pay out of pocket for this expense. This will allow ample time to address the major issues. Also, it will allow you to bring issues to the buyers attention early.


Financing is the most common reason for pending sales failing to close. Loans get denied for a variety of reasons. For instance, debt to income ratio, unstable work history, poor credit, and application errors can account for a majority.  There is no way for a seller to know for sure they will not encounter this with any particular buyer.  However, its is wise to get a pre-approval letter from the potential buyer prior to signing a contract. Remember, most lenders require an appraisal be conducted of the property prior to approval.  If the appraisal of your property comes in lower than the purchase price, the lender may not approve the mortgage. With lending taken out of the equation, most buyers do not have a lump sum of cash sitting around to buy the house. A transaction without financing will fail every single time.

Liens/Code Violations

Lastly, liens and code violations can get in the way of a closing.  For example, if a seller failed to pay a contractor for work that has been performed on a house the contractor can place a lien on the property.  Having a lien on the property will cloud title. Clearly, this will result in the title not being able to be transferred.  Most buyers will not accept becoming responsible for the payment of the lien.  Code violations are less common but just as much of a problem.  They normally result from some form of neglect or another. Nonetheless, title and lien searches are required to be performed. Liens and code violations need to be address prior to closing.  Normally the seller pays them off out of the proceeds of the sale.

In conclusion, not a transactions close.  It is important to qualify any professionals you are considering.  Do your due diligence before making any major decisions.  If you have any questions about your property, contact the licensed professionals at Homeinc.  We are here to help you with all your real estate needs. Call or text the team today 1-888-850-2636.

Thomas has been working in real estate for over two years and has been a valued Homeinc advisor for the past year. Thomas is the best of the best when it comes to helping customers achieve their goals. He loves his coworkers and the dynamic work environment at Homeinc. In his free time, Thomas enjoys spending time with his fiancé, raising fruit trees and exploring new places. We are so glad that he joined the team this year!!

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