Approximately how many pending sales fall through?

Asked by D, Minnetonka, MN Tue Jun 2, 2009

Approximately how many pending sales fall through and end up back on the market or going to the back upoffers?

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Rob Saxe, Agent, Rocklin, CA
Tue Jun 2, 2009
Hi D,
There could be several things at play here. The buyer with the FHA financing could be represented by a buyers agent of the listing agent or by the listing agent. When the listing agent told you that there were no other offers, that may have been true at the time. If he didn't let you know to come in with your highest and best, it's a good bet that the listing agent may represent the financed buyer. It's also equally true that he or she may not.
Here is the thing about REO listing agents: The majority of them are highly unorganized. It could have gotten lost in the shuffle. My advice going forward is to offer your highest and best contingent upon an appraisal to verify market value. This way you can offer higher without significant risk of paying too much and ask for an adjustment if the appraisal comes in lower.
Another approach is if this does fall out, in the financing terms of future offers, enter in a clause that reads something like "buyer to pay $1000 over any other bona fide offer. Seller to substantiate approved sales price upon acceptance." It works great especially if you're all cash. Insist the seller show evidence of other offers before going forward if possible and legal in your area.
Generally speaking, unless your offer is SIGNIFICANTLY lower than the financed offer, the bank is going to want to go with the offer with the least path of resistance, aka, an all cash offer. On a 203K though, the appraiser should take the condition into account that's why they are doing the 203K. At the end of the day, when financing, the seller doesn't care what the loan terms are as long as they get paid.
I hope that helps. If you have any other questions, please feel free to contact me.
Thanks!
1 vote
Ed Rowles, Agent, Wilmington, NC
Tue Jun 2, 2009
The fall through percentage is not a statistic that is routinely tracked and reported by all MLS systems. There are many things that can cause a fall through including financing, inspection or physical condition issues and buyer remorse. In today's market, financial issues are larger than ever in determining whether a say goes to settlement or not. A lot depends on how well the buyers agent and sellers agent are able to work together with the buyer and seller to resolve inspection and other non financial issues. Careful qualification of potential buyers by the listing agent can help minimize the risk of a financial issue leading to a fall through. That being said, the listing agent frequently has imperfect information with which to advise the seller when accepting an offer. I have personally experienced a low percentage of fall throughs, but every situation is different. Your Realtor(R) is the best source for local information. If you are not currently working with one, I suggest that you do so to get the best answer for your local area.
0 votes
Bill Eckler, Agent, Venice, FL
Tue Jun 2, 2009
D,

There are any number of reasons why deals can fall apart.......this is elusive information that is hard to comment on. We would estimate that between 10 & 20% would be a fairly accurate approximation for sales that go in the tank.
0 votes
D, Home Buyer, Minnetonka, MN
Tue Jun 2, 2009
Here is the story. My husband and I put a cash offer in on an REO home. The selling agent said no other offers were in and he would let us know if he recieved any other offers so we could do our highest and best offer. He never notified us and the bank accepted another offer using our offer as a back up offer. The house has trouble and will probably not pass FHA appraisal b/c of safety issues with the pool, flooring, electrical trouble in the kitchen etc. The other people have stated they can do a 203k loan but that wasnt mentioned in their offer. So I guess I am trying to figure out if they try to go back to the bank after the appraisal to say ok there are all these work orders, we need to do 203k will the bank cancel the sale and go to our cash offer? I really want this house but dont want to wait around for it to go through and miss another house...although this is the only one I have found that I love.
0 votes
Rob Saxe, Agent, Rocklin, CA
Tue Jun 2, 2009
Hi D,
What percentage of pending sales fall through is generally predicated on the financing of the purchase if financed at all. So that said, I'll address this from the loan perspective in terms of risk.
VA and FHA loans have a higher "failure to close" ratio than conventional loans which have a higher "failure to close" ratio than cash buyers.
Also, escrows fall out all the time because of other than loan issues but loan issues, especially now, are the main reason pending sales fail.
If I had a gun to my head, in our market, I would say that maybe 15% to 25% of pending sales fall out overall. That's a tough question but if you explain your situation, if you have one, maybe I can be of more help.
Thanks!
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