Among contingent offers, less than five percent fail, according to several sources. Unfulfilled offers can arise because the buyer cannot obtain financing or because the seller is not willing to reduce the price of their listing after a low valuation. Contingent offers account for approximately 8 out of 10 home purchases, but only 1 in 10 of them fails. Both buyers and sellers can take contingency measures to protect themselves from lack of funding, exorbitant home repair costs, or property disputes.
Unfortunately, it's true that a small number of contingent offers sometimes fail. This can be the result of the buyer or the seller. According to Homego, between 1.4% and 4.3% of home sales fail. Zillow states that 3.9% of home sales fail, and this number has been increasing over time.
Contingencies, such as appraisal, inspection and title, can protect the seller from financial problems in the future and make the process much more pleasant. Next, we'll look at how often home sales fail at different stages of the transaction and discuss some of the reasons why this might happen. However, not all contingencies benefit the seller nor do they have to accept them in a contract presented by the buyer. And if the buyer can't meet this contingency either, the seller can turn back again.
For example, let's say the house you're buying was built in the 1940s and you decide to make an offer that depends on the house's electrical system not being comprised of knob cables and tubes. Many sellers are already doing so, so as a buyer, it can be difficult to make an acceptable offer if you first need to sell your home. With the valuation contingency, the buyer and seller are protected if the home is not valued at the agreed sales price. The first right of rejection allows the seller to keep their home on the market to see if they have received additional offers.
Statistically, you have a 96.1% chance that the offer you have accepted will be processed without much difficulty. But the reality is that the market will largely determine your ability to avoid contingent offers or not, not to mention that it will influence the likelihood that a contingent offer will succeed or fail. While home inspections are incredibly common, only 9% of deals weren't closed in August due to environmental or inspection issues. Buyers can use a financial contingency to look for a new lender or go back on the purchase contract and recover the money in collateral.
It's probably not a big surprise that finances can cause a purchase to fail, but it's not very common. This will depend on the type of contingency and the events that occur in the days following the submission of the offer.
