A house sale is most likely to fall through during the conditional period, when the buyer still needs to sort out things like financing or a home inspection. But while getting through those conditions is a big step, it still doesn’t guarantee the sale will close.
So, when can you actually stop worrying about a deal falling through? Well, things can still go wrong right up until closing day, and the consequences can be much more serious once a deal becomes firm.
In this post, we’ll explain when and why house sales fall through and what sellers can do to reduce the risk.
Why Is the Conditional Period Often the Most Vulnerable Stage of a House Sale?
The key thing about a conditional offer is that the buyer may still have a way out of the deal. If they can’t satisfy the conditions within the agreed-upon timeframe, they may be able to walk away without losing their deposit, depending on the terms of the agreement.
However, a missed condition doesn’t necessarily mean the sale is over. The buyer and seller may agree to extend the deadline or negotiate changes that allow the deal to move forward.
It’s only when the buyer has satisfied or waived all the conditions that the deal becomes firm. At that point, walking away becomes much more complicated, and either party could face serious consequences if they fail to follow through with their obligations.
Why Do House Sales Fall Through?
There are several reasons a house sale might fall through, and some are harder to anticipate than others. From financing problems to unexpected issues with the property, even a sale that seems to be moving along smoothly can run into trouble.
Financing falls through
Getting pre-approved for a mortgage is a good first step, but it doesn’t guarantee the lender will approve the financing when it’s time to buy.
For example, if the lender appraises the property for less than the agreed-upon purchase price, the buyer may need to come up with additional funds to cover the difference. A change in their income, employment, or debt could also affect their approval.
If the buyer can’t secure the financing they need, they may be unable to complete the purchase. And if the financing condition is still in place, they may be able to walk away from the deal without losing their deposit.
Problems arise during the home inspection
A home inspection can reveal problems that weren’t obvious when the buyer first viewed the property. Maybe there’s water damage in the basement, an issue with the foundation, or a roof that needs replacing sooner than expected.
Depending on what the inspector finds, the buyer may decide the repairs are more than they’re willing to take on. And if their offer includes a home inspection condition, they may have an easy way out of the sale.
The buyer can’t sell their existing home
A buyer might find the perfect home, make an offer, and then struggle to sell their existing property. And if they’re relying on that sale to fund their next purchase, the whole deal could be in jeopardy.
This is especially tricky when their offer includes a condition that requires them to sell their existing home by a certain date. Even if they’ve found a buyer, delays or problems with that transaction could prevent them from meeting the deadline.
What Happens if a Firm House Sale Falls Through?
Once a deal becomes firm, both parties are legally obligated to complete the sale. So, if something goes wrong and the transaction doesn’t close, the consequences can be much more serious than during the conditional period.
As BoardWalk Law LLP explains, a buyer who fails to close could lose their deposit and face a lawsuit for additional damages. For example, if the seller eventually resells the property for less, the buyer may be liable for the difference, along with certain additional costs.
Sellers can face legal consequences for failing to close, too. Depending on the circumstances, the buyer may have the option to seek compensation or take legal action to complete the sale.
How Can Sellers Reduce the Risk of a House Sale Falling Through?
You can’t control everything a buyer does, but there are steps you can take to protect yourself before accepting an offer and throughout the selling process.
Here are a few ways to reduce the risk of a house sale falling through:
- Look beyond the offer price. A higher offer isn’t necessarily the most reliable one. Consider the buyer’s conditions, deposit, and proposed closing date before deciding which offer to accept.
- Understand the risks of each condition. For example, an offer conditional on the buyer selling their existing home introduces another transaction that needs to go smoothly. Make sure you understand the deadlines and what happens if the buyer can’t meet them.
- Prepare your home for inspections. Address known maintenance issues before listing and make any legally required disclosures. You may also want to consider a pre-listing inspection to identify potential problems before a buyer does.
- Be realistic about your closing date. If you’re buying another home yourself, consider how the timing of both transactions could affect your plans. Leave room for potential delays rather than assuming everything will happen exactly on schedule.
- Respond to problems promptly. If a buyer raises an issue during the conditional period, work with your real estate agent to understand your options. Sometimes, negotiating a repair, price adjustment, or extension can keep a sale from falling apart.
Of course, these still can’t guarantee a sale will close. However, understanding the risks before you accept an offer puts you in a much better position to make informed decisions and avoid preventable setbacks.
Need Help Navigating a House Sale in Southern Georgian Bay?
Even with the right preparation, selling a home can come with a few surprises, including the sale falling through. And when you’re dealing with offers, conditions, and closing deadlines, it helps to have someone who knows what to look out for.
At Hawkins Real Estate Group, we help sellers throughout Southern Georgian Bay navigate the entire process, from evaluating offers and negotiating conditions to addressing concerns that come up before closing. We’ll help you understand your options and make informed decisions along the way.
If you’re thinking about selling your home, contact us to learn how we can help you move from an accepted offer to a successful closing today.
