Waht percentage of real estate transactions cancel after making an offer?

Question

I'm curious to see if anyone knows the statistics. We've recently accepted an offer on our home that fell through. We now have the home under contract for the second time. My realtor told me only 1-2% of transactions/offers don't result in a closing. I'm curious to see if he's correct. Should I start packing my bags?

Thanks

Answer 1

It depends on the contract. In my opinion, contingent contracts where the sale of another home is involved, have a much higher "fall through rate", unless the contingent home has a contract on it.

Contingent contracts subject to inspection and financing contingentcies, in my opinion, have a much lower "fall through rate."

Answer 2

The percentage your Realtor gave you is about right. Most of the transactions are closing.
However in some cases they don't. If your contract is written contingent to financing and the buyer can not qualify for financing because either the appraisal did not come in as needed or the buyer has some credit issues.
What i like to do as a Realtor on either site is to put a time frame for the lender's approval (not pre approval). At least you don't have to wait until closing date if that might be an issue.

It is always a good idea to write the offer contingent to home inspection to buyers satisfaction. Should your home not pass the home inspection the buyer can cancel the contract or renegotiate the price. There should be a time frame as well.

Sometimes a buyer is getting pretty simple "cold feet" and walks away from closing or at closing.Unfortunately we see once in a while that buyers are being lied to by "unfair" mortgage brokers and at closing they realize that their monthly payment is way higher than they were originally told it would be.

Those cases are rare. My suggestion would be, if home inspection and appraisal are done and you have the approval letter from the lender, you can be pretty certain that it will close with no further surprises.

Answer 3

The problem with your Agent's answer to your question is that the answer is lacking specifics. 1-2% of what? Your market? Is that NAR's stats which puts it on a national level?

The problem with your question is that there cannot possibly be a correct answer. As a RE/MAX agent, we keep our files, only turning in closed files. I personally have never participated, nor have I been asked to participate, in any survey asking that question with regard to my own production. And to get an accurate answer to your question, every agent either in your market or across the nation would have to chime in with an answer for tolls to be tallied; not going to happen.

The agent can only give an accurate answer based on their own production. Perhaps that is the kind of answer you received, although, I don't think that was the answer you were looking for. Yes?

When should you start packing? Every Seller should begin packing when they decide to sell. Packing away the excess is all a part of the staging process.

When should you begin packing the last of your things? Your agent needs to be communicating to you outstanding conditions of the Buyer. You'll always have conditions with regard to the property (inspections, appraisal, etc.). Determining the extent of Buyer conditions (strong Buyer versus volatile Buyer) will help guide you further in the process.

Hopefully, you knew going into this transaction the qualifications of the Buyer. No Seller should begin negotiations without a letter from the Buyer's Lender as part of the offer. Agents representing the Seller should contact the Buyer's Lender for status of that Buyer before presenting the offer if at all possible.

In my opinion, there would be fewer failed transactions IF more knowledge were gained on the front end. Too many lenders qualify Buyers on less-than-substantial information. For example, they should have already ran a credit check through all three repositories, not just one. In short, a serious Buyer should have already been loan approved, not pre-qualified. Pre-qualified means the lender is basing their recommendation of the Buyer's qualification based on what that Buyer 'told' the lender on income, debts, etc. Loan approved means they're committed to the process and have been approved with conditions. Need to know what those conditions are, employment, income, debts all verified ,and a full-blown credit report has been reviewed.

Even if you could know the percentage of canceled transactions, that knowledge wouldn't help you. Given the many components of a sale, every situation, every transaction is different and should be treated accordingly.

Answer 4

Your Realtor may be talking about his own experience since no one compiles such statistics. For instance in my experience the percentage is much higher for lower priced homes and virtually nil for higher priced homes. So much has to do with the willingness of the buyer to buy and the willingness of the seller to sell, but most importantly, the condition of the house.

Answer 5

I know of no specific statistics on your question, but I'd venture that your agent is not far off on his/her guess. My experience in the business is that most offers DO close. Certainly the percentages would vary from locale to locale, but it's surely nowhere near a third of offers, as an example.