Why Are Buyers Backing Out of Real Estate Deals?

By Bryan David

Bryan David is one of the best REALTORS® serving Ocean Springs, Biloxi, Gulfport and the entire coast. He is a Biloxi native, military veteran and retiree, and a multi-year top-producing agent with hundreds of satisfied clients.

It’s official: Contract cancellations are on the rise in most markets across the country, and we are no exception. Here’s what’s shocking: Cancellation rates can hit as high as 30%. We know that listings with a lot of contract cancellations end up selling for less money, so today, I want to explain why buyers are canceling deals and share the best strategies to minimize the risk of having a buyer walk away.

1. Buyer’s remorse. One of the leading causes of contract cancellations is buyer remorse. Even though the market has slowed, buyers can still make quick decisions, only to regret them later. Economic news, elections, and market conditions can pressure buyers into acting hastily out of fear they might miss out. To prevent this, you need to vet the buyer properly. Ensure that your agent obtains a pre-qualification letter from a lender if the buyer is financing or proof of funds if it’s a cash deal. Have your agent call the lender to verify the buyer’s financial situation and their commitment to the transaction. Buyers who are properly vetted are less likely to back out, increasing the likelihood of a successful deal.

2. Pre-listing inspection. The number one reason deals fall apart is due to issues uncovered during the home inspection. Buyers may initially fall in love with a home, but a poor inspection report can quickly turn them away. This is especially true in today’s market, where buyers may have less disposable income due to high interest rates and housing prices. To avoid surprises, I highly recommend getting a pre-listing inspection. This will allow you to address any problems before listing the home, making it more attractive to buyers. Not only can this prevent cancellations, but it may also give you more leverage during negotiations.

3. Drawn-out negotiations. Another factor that causes buyers to walk away is lengthy negotiations, which often result from low appraisals. When negotiations drag on, buyers may become frustrated and lose interest. The best way to avoid this is to ensure your agent conducts a thorough market analysis and sets a realistic price for your home. A well-priced home is more likely to appraise correctly and sell quickly. If an appraisal does come in low, your agent should have market data ready to argue the value with the appraiser.

4. Insurance costs. Insurance costs can be a deal-breaker, especially in coastal markets where flood and hurricane insurance rates are rising rapidly. In some cases, the cost of wind or flood insurance can be prohibitively high, causing buyers to back out of contracts. To mitigate this, take steps to lower your home’s insurance rates before listing. Trim any overhanging branches, fix roofing issues, or even replace the roof if necessary. Obtain insurance quotes ahead of time so that buyers have a clear idea of what they’ll be paying. Additionally, if the contract is contingent on the buyer obtaining satisfactory insurance, ensure that this due diligence period is short—just a few business days—so the process doesn’t drag out unnecessarily.

Whether you’re planning to sell soon or a few years down the road, it’s never too early to start planning now. If you’d like to discuss how to prepare your home for sale or have any questions about the current market, feel free to call us at 228-215-1861. We would be happy to sit down with you and develop a strategy to make your selling experience as smooth as possible. I look forward to hearing from you!