Some of the nation’s home sellers are partying like its 2021, and as a result — at least in part — 15% of sales contracts written in August fell through before reaching the closing table.
There are other reasons, of course, that deals were called off. But a major one, according to new research from Redfin, is that some sellers are having a tough time adjusting to today’s market realities.
Some assume their places will sell as-is for top dollar, the brokerage company says. While “it seems like just yesterday that homes were getting dozens of offers and fetching tens of thousands of dollars over the asking price,” it says, the truth is “it’s no longer a seller’s market.”
Others are holding fast on their asking price, not willing to give an inch. Those who bought their places during the peak of the pandemic buying frenzy are “often unwilling to negotiate because they need to sell their homes for a certain price to avoid taking a loss.”
It’s not all on sellers, though. Buyers, too, are having misgivings. Many are skittish. Others are asking sellers for all sorts of concessions, including repairs and price reductions.
“It’s a buyer’s market, meaning buyers hold the negotiating power,” Redfin notes. “There are roughly 500,000 more sellers than buyers in the market, which empowers buyers to negotiate because they have options.”
Although most sellers are holding fast, their deals eventually fall through. Roughly 56,000 fell through in August, to be exact, according to Redfin — up from 14.3% a year ago — setting the highest August rate of sales falling through dating back to 2017.
Home sales generally crash during the inspection period. Of the 443 agents polled by Redfin, 70.4% said the home inspection or repair issues caused deals to fall apart.
That’s a far cry from just a few years ago, when buyers were waiving every contingency just to be able to bid on a property. Now, if the sellers do not acquiesce to the repairs buyers want, boom, no sale.
“I worked with one seller who received 78 repair requests from a buyer following the inspection, and that was after the seller had already agreed to lower their $375,000 asking price by $25,000 because the house needed some improvements,” said Dawn Liedtke, a Redfin agent in Tampa. “The buyer came back and said they would handle the cost of the repairs, but only if the seller was willing to lower the price by another $100,000.”
Needless to say, the deal didn’t work out.
Other buyers cancel their contracts because a better house comes up for sale, and others simply get cold feet.
Nearly one in eight Redfin agents who have dealt with a contract cancellation in the past three months cite the seller backing out as a reason their deals fell through.
“One of my buyers almost canceled a contract because she accidentally flushed her engagement ring down the toilet during the home inspection,” said Manny Bermudez, a Redfin agent in Phoenix. “The seller came home and both parties searched for the ring for two hours. The buyers never found it and took their bad luck as a sign to back out of the deal.”
Another big factor is financing. Nearly 29% of the agents surveyed said the buyer’s financing fell through.
Other frequently cited reasons include a change in the buyer’s financial situation (15% of those polled stated this); the buyer found a different property they liked better (13%); and concerns about the state of the economic climate (12%).
