25 Jan How to Prevent Home Purchase Cancellations (for Buyers & Sellers)

Understanding the top factors that derail contracts and how to avoid them

Fall-throughs or cancellations don’t just create frustration, they cost buyers and sellers time, money, and momentum. According to recent data from Redfin, the top three reasons contracts cancel are:

1. Home inspection or repair issues (70%)

2. Buyer financing falling through (27.8%)

3. Buyer inability to sell their current home (21%)

While cancellations can’t always be avoided, there are smart ways for both sides to reduce risk and build smoother transactions.

1. Inspection & Repair Issues (70%)

Inspections are designed to uncover issues and in nearly every transaction, they do. The goal is to prevent surprises, not create deal-breakers.

How Sellers Can Prevent Issues

• Pre-Listing Inspection: Identify major items before hitting the market (roof, HVAC, foundation, plumbing, electrical).

• Address Safety & Function Items: Fixing GFCIs, leaks, slow drains, and obvious trip hazards reduces red flags.

• Disclose Honestly: Full transparency builds trust and prevents buyers from feeling blindsided after the inspection. In Texas, all issues should be disclosed in the seller disclosure.

• Provide Service Records: Showing HVAC maintenance, roof warranties, foundation repair warranties, etc. reassures buyers.

How Buyers Can Reduce Inspection Shock

• Understand That No Home Is Perfect: Especially with older properties. Focus on safety + big-ticket items.

• Ask Questions Before Writing the Offer: If a roof looks older or siding looks worn, get estimates early.

• Bring a Solution Mindset: Credits, repairs, or closing cost adjustments can resolve most issues.

• Use Time Wisely: Schedule inspections quickly so resolution doesn’t compress the timeline.

2. Buyer Financing Falling Through (27.8%)

Financing issues tend to surface late often after appraisal or underwriting making them one of the most disruptive types of cancellations.

How Sellers Can Reduce Financing Risk

• Prioritize Strong Pre-Approval: A pre-approval with documentation carries more weight than a generic pre-qual.

• Ask Questions Through Your Agent: Type of loan, local lender vs. online lender, experience with the product, etc.

• Watch for Layered Contingencies: Financing + appraisal + home-to-sell increases friction.

• Request Lender Updates: Regular communication keeps the file moving and catches issues early.

How Buyers Can Protect Their Financing

• Get Fully Underwritten Early: This is stronger than pre-approval and minimizes surprises.

• Avoid Major Financial Changes: Don’t switch jobs, open new credit lines, finance cars, or make big purchases mid-escrow.

• Be Responsive With Your Lender: Underwriting is time-sensitive. Delays can trigger extensions or fallout.

• Understand Appraisal Strategy: If values come in low, know what options exist (re-negotiation, cash gap, second opinion, etc.).

3. Buyer’s Current Home Doesn’t Sell (21%)

This happens most often in transitional markets or when sellers overprice their listing.

How Sellers Can Protect Against This

• Understand the Buyer’s Timeline: When will their listing go live? How is it positioned?

• Evaluate Market Conditions: If their market is slow or saturated, risk increases.

• Request Documentation: Photos, list price, recent comps, or confirmation it’s under contract.

• Negotiate Backup Safeguards: Temporary leaseback, extended closing, or kick-out clauses can help.

How Buyers Can Avoid Getting Stuck

• Home is Priced Correctly: Time kills deals! Overpriced listings ripple into purchase delays.

• Prep Early: Declutter, pre-pack, update paint/fixtures/photos before shopping.

• Consider Bridge Loans or Temporary Financing: Not always necessary, but tools exist.

• List Before Buying (If Have a Home to Sell): Reduces stress and increases negotiating leverage.

Bonus Risk Factor: Communication Breakdown

Most cancellations aren’t rooted in one catastrophic moment. They are the result of slow, unclear, or reactive communication.

Both sides can protect themselves by:

• Asking questions early
• Setting expectations upfront
• Being proactive with disclosures, documents, and timelines
• Using an experienced agent who manages the moving parts

Final Thoughts

Real estate transactions are complex, emotional, and full of decision points. Cancellations may happen but many are preventable with preparation and good strategy.

For sellers, the goal is:
less surprise, more transparency, stronger positioning.

For buyers, the goal is:
less hesitation, stronger financing, clear priorities.

When both sides approach the process thoughtfully, deals tend to close smoothly, even when challenges pop up.