W
hen selling a home, it's not uncommon for buyers to back out of the sale. According to a report by Redfin, nearly 56,000 home-purchase agreements were canceled in June 2024, accounting for 14.9% of homes that went under contract that month - the highest percentage on record. This can be a significant financial setback for sellers, who may have already lost time and money while their house sits on the market.

    Real estate agents attribute buyer backouts to several common reasons. One major issue is when the appraisal comes in lower than the offer price, leaving buyers without enough funds to cover the gap. "Buyers sometimes overbid due to exhaustion or fear of missing out," says Alexander Kalla, a realtor at Keller Williams Bay Area estates.

    Another reason for buyer backouts is financing falling through. Even with preapproval, lenders can deny loans due to changes in employment, credit score dips, or unexpected debt. In high-cost markets like the Bay Area, small financial hiccups can derail loan approval. Kalla shares an example of a buyer's financing being jeopardized by a $400 unpaid Target credit card balance.

    Home inspections can also lead to buyer backouts if they reveal significant issues with the property. A poor inspection can prompt buyers to seek credits or walk away from the deal altogether. In one instance, a buyer backed out after a home inspector found problems that required a $22,000 repair, which the seller was unwilling to cover.

    Other reasons for buyer backouts include concerns about neighbors and cold feet or overwhelm. Buyers may be deterred by noisy or messy neighbors, or they may second-guess their decision to buy after signing a contract. "Some buyers feel buyer's remorse the day after they get into contract, especially if they rushed the process," Kalla notes.

    By understanding these common reasons for buyer backouts, sellers can take proactive steps to mitigate risks and avoid financial losses.