3 Top Reasons a Real Estate Sales Contract Falls Through
3 minute read
May 28, 2014


contract If you have friends or family who have bought a home, then you’ve heard the horror stories of a sales contract falling through at the last minute. When you enter into the real estate market you become apprehensive of the different hurdles you may have to work around, and fearful of losing a home that you have set your sights on. Below are the top three reasons that a real estate sales contract falls through.



There is a wide array or reasons that financing can fall through. These reasons include:

  • No pre-approval before entering into real estate contract.
  • Sudden change in income or employment.
  • Not gathering documentation required for financing.
  • Subject property  does not meeting lender guidelines.

If a buyer cannot secure financing the sales contract will fall through.  Additionally if a buyer does not have the proper documentation ready for their loan this can affect their mortgage loan as well. Financing may also be affected by the appraised value or inspections done on the subject property. A lender has guidelines to follow regarding the properties they finance, and if the appraisal shows that these guidelines aren’t mean to the financing can be lost.

Sales Negotiation

After a sales contract has been fully agreed upon by both parties and is ratified there are a series of appraisals and inspections that must be done. Often something will come up either on the inspection or appraisal that will make one of the parties want to renegotiate. Recently, a lot of homes will appraise at a value that is lower than the sales price. In this circumstance a buyer will usually want to re-negotiate the sales price down to the appraisal level or lower. If the two parties cannot agree on a new sales price, the contract will fall through.

Additionally, there may be items that arise on an inspection, such as a water heater that needs replacing or issues with the home’s foundation. This can make the buyer want the sellers to repair or provide compensation for these items, requiring more sales negotiation. It is also possible that the buyer will see these issues and want to back out all together from the contract.

Sales Contract Terms

A sales contract usually lists different dates and terms that must be met in order for the sale to be successfully completed. Some examples of these terms may be the buyer providing a mortgage approval letter by a certain date or the sellers removing an old and rotting tree in the back yard. If all of the terms listed on the contract aren’t met the sale of the home can become null and void. Additionally, if either party wants to add additional terms to the contract after it has been ratified and the other party doesn’t agree the contract can fall through as well.

Entering into a real estate sales contract on a home is a large undertaking. It is exciting to envision  your life in a new home, but scary to think of all that can go wrong before your closing date. You have some control over matters that can affect a home sale like securing financing and negotiating a well thought out contract. Do what you can to assure your sales contract will result and closing, and cross your fingers that the rest goes well.

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