You have finally located the ideal home. You’re prepared to make an offer because the property meets all of your requirements. The vendor accepts, and escrow is opened. Then, however, something goes awry. The loan is denied, the inspection reveals concealed damage, or the sellers withdraw. Suddenly, you no longer own your ideal home. However, why do properties slide out of escrow? Let’s examine some of the most common causes of homes falling out of escrow.
1. Financial Concerns
The inability of the client to obtain financing is among the most common causes of escrow failure. This may be the result of a number of factors, including a change in employment status, a decrease in income, or a problem with the property (such as concealed damage discovered during the inspection). Unless the buyer can secure alternative financing, the transaction will typically fall through.
2. The Purchaser Develops Cold Feet
Occasionally, purchasers have second thoughts about their purchase. They might experience buyer’s remorse or have second thoughts about their ability to afford the home. In other instances, they may discover a better-suited property and pursue it instead. If the buyer backs out for any reason other than those specified in the contract, the transaction is likely to fail.
3. The Seller Loses Interest
Not only can purchasers develop cold feet, but so can sellers! If the seller decides that they no longer wish to sell, perhaps because they’ve had a change of heart or discovered a superior property, then the deal will likely also fall through.
4. The Property Appraisal Does Not Support the Purchase Price
Unless the property appraises for at least the purchase price, the transaction is unlikely to conclude. The reason for this is that lenders will only finance up to the property’s appraised value; if it appraises for less than the purchase price, the buyer will need additional financing to close the transaction.
Contact Us Today
There are numerous reasons why transactions can fall through at escrow, including financing issues and a change of heart by one of the parties. However, if you are aware of these potential pitfalls beforehand, you will be better prepared should your transaction fail. Contact us for additional details on our escrow services.
