As a Realtor®, you know well that going under contract doesn’t always lead to a happy family standing in front of their home with a fresh set of keys and moving boxes.
For both sellers and buyers who went under contract in the last year, only 6% did not have a contract fall through, according to a recent survey from Cinch Home Services. More than half of buyers (51%) had a contract fall through, 23% had a contract fall through as both a seller and a buyer. Finally, 20% of sellers had a contract fall through.
The majority (54%) of contract cancelations were due to the buyer backing out, while 42% of contracts were canceled because of a mortgage application not being approved. Forty-one percent of canceled contracts were due to the seller backing out, 38% were canceled because of a home inspection contingency and 35% were canceled due to a home sale contingency. Other common reasons for a home contract being canceled included an appraisal contingency, home sale contingency, high interest rates and breach of contract.
Generation Z was the most likely to face a canceled contract, at 57%.
The market has shown signs of cooling, which perhaps will lead to fewer canceled contracts. According to Redfin, 35% of homes on the market during four-week period ending Sept. 4 went under contract in two weeks, down 7% year over year while 24% went under contract within a week of hitting the market, down 5% year over year. Homes are also lingering on the market for a but longer, lasting 27 days on average, up from 22 days year over year and an increase of 10 days from the spring.