I cannot speak for the entire market, just the buyers & sellers that I am working with. Whenever you do hear information like this on networks like CNN, they are really speaking about the entire country as a whole. In Richmond, our housing crisis (in terms of foreclosure rates, etc) are not nearly as bad as they are in other places like Miami, Las Vegas, even northern Virginia. From my experience with the buyers that I am working with, none of them have backed out of signed contracts before closing. And with my listings this has not occurred.
One thing that may be happening is that if a buyer begins to look for homes and has not made loan application and has been pre-qualified prior to finding a home, as we always recommend that they do, sometimes the loan program that they were originally pre-qualified on may go away. For instance, on Friday VHDA took several rate increases, putting the interest rate over 7%, which is the highest I can remember VHDA being in the 12+ years I have been a Realtor in Richmond. If the buyer I was working with had been pre-qualified for a loan on a VHDA mortgage and the rate was in the 6% range, as they had been, then if I did not check on the rates before writing up a contract and the contract was then accepted and then the buyer went to make loan application and then found out what the interest rate then the buyer may end up not getting financed or the financing contingency may be used to try to get out of the contract.
Always keep in mind that when the buyers sign a contract, and then decide to just walk away from the deal, there may be penalties for breaching the contract. There will also be contingencies in the contract which may allow the buyer to void the contract, but most buyers don't want to breach a contract.
I hope that helps answer your question. In this market, you will want to make sure that you are qualified to purchase the home, that you have a financing contingency in your contract that protects you and that you check what the rates and loan program is before you write up a contract on a home. You want to make sure that your Realtor stays on top of the various changes that are happening in the mortgage market, on all types of loan products (FHA, VA, VHDA, Conventional).
If you are not working with a Realtor and have any other questions, please don't hesitate to call me or email me. Good luck to you in your home search.
Barbara A. Reagan
Long & Foster Realtors
ABR, GRI, ePro, CRS
It definitely is occurring more often then in years past. I personally haven't had any contracts not close. ( knock on wood !) I do have co workers that have experienced it. Two other reason : buyers remorse or buyer finds another house they feel is a better deal.