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Why do home sales fall through?

On Behalf of | May 24, 2022 | Real Estate Law

There are many reasons why a California home may go back on the market after a sale has been listed as pending. In some cases, the seller may have decided to back out of a proposed deal. However, generally speaking, a sale falls through because of something the buyer or the buyer’s lender did.

How a lender might derail a home purchase

A lender may decide that it doesn’t want to make a loan to a buyer who has burned through his or her cash reserves prior to closing on the purchase. A lender may also decide to back out of a deal if the home receives an appraisal for less than what the buyer wants to borrow. If this happens, it may not be possible for an individual to follow through on a real estate transaction, and it may revert from a pending sale back to an active listing.

A buyer might back out of the sale

Prior to closing, the buyer may identify an issue with the home that this person believes makes the home impossible to live in. Alternatively, the buyer may simply decide that it doesn’t make sense to follow through on a deal to buy a home because of a lien or other issues that make it difficult to take legal ownership of the house.

It’s critical to understand that you don’t actually take possession of your home until the transaction closes. Your real estate agent may be able to give you advice regarding steps that you should avoid taking during the closing process. For example, you may be encouraged to avoid making a large purchase as it could put your credit score below the threshold needed to obtain loan approval.