The Reasons Real Estate Deals Fall Through in the Current Market—and How to Avoid Them

Closing a real estate deal takes a lot of time, energy, and resources—and after investing that time, energy, and resources, the last thing you want is for the deal to fall through.

So why, exactly, do real estate deals fall through—and how can you make sure your deal ultimately closes?

A recent article from realtor.com outlined some of the most common reasons real estate deals fall through in today’s market—and, more importantly, how to avoid them—including:

• Rising interest rates. Smart buyers know to get pre-approved for a mortgage before they start looking for homes; that way, they know how much house they can afford. But interest rates are rising rapidly, nearly doubling in the past years—so even buyers that were pre-approved a few months ago may find that they’re not able to secure the financing they need to buy the home at their original price point. If you don’t want your real estate deal to fall through, talk to your lender to lock in your rate and loan amount before you start shopping, and see if you can lower your interest rate by purchasing points upfront.
• Increased debt. We’re currently in a period of high inflation—and to keep up with increasing expenses, many people are carrying balances on their credit cards. But if you’re in the process of buying a home, that extra debt could increase your debt-to-income ratio. And if that ratio is too high, your lender could view you as too risky, and not approve your mortgage. To avoid running into this issue, make sure to keep your debt as low as possible, and avoid accruing any new debt or making any major purchases before your real estate deal is complete.
• Better deals on the market. Real estate prices are dropping in many markets across the country, and as buyers see more affordable homes on the market, many are tempted to walk away from their more expensive real estate deals in favor of a better deal. If you’re selling your home and want to avoid this issue, talk to your real estate agent and make sure your home is priced competitively for the current market.