How Often Do Contingent Offers Fall Through?

Having an offer accepted on a home is a major milestone, but it doesn’t always mean the sale is guaranteed to close. Before the keys are handed over, buyers and sellers still have to navigate inspections, financing, appraisals, and other conditions that can affect whether a deal moves forward.

These conditions, known as contingencies, are designed to protect buyers and sellers during the homebuying process. But when a contingency isn’t met – or another issue comes up – a home purchase can fall through.

So how often do contingent offers actually fall apart? The answer depends on the market and the circumstances behind the cancellation. Understanding the most common reasons deals fail can help buyers and sellers know what to expect and how to avoid surprises.

What is a contingent offer?

A contingent offer is a purchase agreement that moves forward only if specific conditions – known as contingencies – are satisfied.

Think of contingencies as protections that allow buyers to complete important due diligence before finalizing a purchase. Depending on the terms of the contract, a contingency may allow a buyer to cancel the agreement and recover their earnest money deposit if certain conditions are not met.

For example, imagine you’re buying a home built in the 1940s. You make your offer contingent on an electrical inspection because older knob-and-tube wiring can pose safety hazards. If the home inspector confirms the system is outdated and the seller refuses to fix it or offer a credit, the inspection contingency allows you to cancel the contract without financial penalty.

How often do contingent offers fall through?

A contingent offer can fall through for many reasons, including inspection issues, financing problems, appraisal concerns, or a buyer’s changing circumstances. How often this happens depends on the market and the specific challenges that come up during the closing process.

While Redfin’s data does not track contingent offers specifically, it does track pending home sales that fall out of contract before closing. This provides insight into how often home purchases that were already under contract fail to reach the finish line.

According to Redfin’s Home Purchase Cancellation Data, 13.6% of pending U.S. home sales fell out of contract before closing, down slightly from the previous year. This means that roughly 1 in 7 pending home sales did not make it to the closing table.

Market conditions can also influence how often deals fall through. When mortgage rates rise, affordability becomes more challenging, or buyers have more homes to choose from, buyers may feel more comfortable walking away from a deal or negotiating after issues come up during the closing process.

Top reasons contingent offers and home sales fall through

Contingencies are one of the main ways buyers can exit a contract when issues arise before closing. However, not every canceled home sale is tied to a contingency.

According to a Redfin survey of 443 Redfin real estate agents who handled cancellations, the top reasons home-purchase agreements fell apart were:

• Inspection or repair issues: 70.4%
• Buyer financing fell through: 27.8%
• Buyer’s existing home didn’t sell: 21.0%
• Changes in buyer’s financial situation: 14.9%

Let’s look at how these issues can affect a home sale and which contingencies may come into play.

Inspection contingency

An inspection contingency allows the buyer to hire licensed professionals to perform a detailed home inspection assessing the structural integrity, mechanical systems, roof, plumbing, and general safety of the property.

Inspection and repair disputes consistently represent the #1 reason deals fall through, accounting for over 70% of canceled deals in Redfin’s agent survey. In buyer-friendly or balanced markets, buyers are far less willing to take on deferred maintenance. If major problems are found and a seller refuses to offer repair credits or perform work prior to closing, the contract often falls through.

Inspection concerns may become more common in slower or buyer-friendly markets, like the current market, when buyers often have more leverage to negotiate repairs or reconsider a purchase. 

Financing contingency

A financing contingency gives the buyer a specified period to secure mortgage loan approval.

Even if a buyer enters the deal with a mortgage pre-approval, lenders still review income, assets, credit history, and other financial details before final approval. If a buyer changes jobs, takes on new credit debt, or experiences other financial change during the closing period,  the loan could be denied. 

If financing falls through, this contingency lets the buyer terminate the contract and recover their earnest money.

Appraisal contingency

An appraisal contingency helps protect buyers if the home’s appraised value comes in below the agreed purchase price.

For example, if a buyer agrees to purchase a home for $450,000, but the appraisal comes back at $440,000, there is a gap of $10,000. The buyer and seller generally have three options:

• The seller lowers the purchase price to $440,000.
• The buyer pays the $10,000 difference out-of-pocket in cash.
• Both parties negotiate a split of the difference.

If the buyer and seller cannot reach an agreement, the buyer may be able to cancel the contract if an appraisal contingency is included.

Home sale contingency

For buyers who need the equity from their current residence to purchase the next one, a home sale contingency allows them a set window of time to market and sell their current home.

If their current property fails to sell, the buyer can terminate the agreement. Because this contingency introduces significant risk and uncertainty for sellers, it is less common in competitive seller’s markets. 

Sellers who accept this condition often include a “kick-out clause,” which allows them to continue showing the home and kick out the original buyer if a stronger, non-contingent offer comes along.

Title contingency

A title contingency guarantees that the seller has clear, marketable ownership of the home. A title company conducts a public records search to check for unpaid property taxes, contractor liens, undisclosed heirs, or boundary disputes. 

While title issues are less common than inspection or financing snags, an issue that cannot be cleared quickly gives the buyer a clear legal right to cancel.

Should you submit a contingent offer?

Contingencies are important protections for buyers. Waiving them entirely can expose you to major financial risks – such as losing your earnest money deposit, absorbing tens of thousands of dollars in hidden repairs, or having to cover significant appraisal gaps out-of-pocket.

If you are buying in a competitive housing market and want to make your offer stand out without waiving protection entirely, consider:

• Shortening contingency windows: A shorter inspection period or financing timeline can give sellers more certainty while still allowing you to complete your due diligence.
• Limiting repair requests: Some buyers agree to focus only on major structural, mechanical, or safety issues rather than requesting minor cosmetic repairs.

How buyers and sellers can keep contracts on track

Whether you are buying or selling a home, taking proactive steps can help prevent surprises and keep the transaction moving toward closing.

For buyers:

• Get fully pre-approved (or conditionally approved): Work with your lender early so your finances are reviewed before you make an offer.
• Keep your finances stable: Do not change jobs, open new credit cards, or make major purchases (like buying a car) while under contract.
• Review seller disclosures carefully: Ask for past inspection reports or disclosures prior to submitting an offer so you aren’t surprised during formal inspections.
• Focus on major concerns: Reserve negotiation requests for structural, mechanical, or safety hazards rather than minor cosmetic flaws.

For sellers:

• • Consider a pre-listing inspection: Identifying and fixing repairs before going to market prevents surprise negotiations or buyer cancellations later.
  • Price accurately: Avoid overpricing, which significantly increases the risk of low appraisals and buyer remorse.
  • Understand your options if a deal falls apart: Depending on your contract and local rules, backup offers or continued marketing may help you move quickly if a buyer cancels.
  • Be flexible with concessions: In cooler or balanced markets, granting reasonable seller concessions or repair credits is usually far cheaper than having a deal fall through and re-listing the home.

FAQs: Contingent offers and canceled home sales

What happens if a contingent offer falls through?

If a contract is canceled under a valid contingency clause, the purchase agreement terminates, and the buyer may be able to recover their earnest money deposit, depending on the terms of the contract. The seller can then typically re-list the property on the market or move forward with a backup offer.

Does the market affect how often home sales fall through?

Yes. In a seller’s market with low inventory, buyers may have less leverage and fewer opportunities to negotiate or walk away from a deal. . In balanced or buyer-friendly markets with more inventory or affordability challenges, buyers may have more flexibility to request repairs, renegotiate terms, or reconsider a purchase, which can contribute to higher cancellation rates.

Will a seller accept a contingent offer?

Many sellers accept standard inspection, appraisal, and financing contingencies. However, sellers are generally more hesitant to accept home sale contingencies because they add uncertainty to the transaction.

Can a seller back out of a contingent offer?

Once a purchase agreement is signed, a seller is generally legally bound to the contract. A seller cannot cancel simply because they received a higher offer later, but the exact rules depend on the terms of the contract and local laws. Some agreements may include provisions, such as a kick-out clause, that affect the seller’s options.

Do contingent offers take longer to close?

They can. Standard contingency periods typically run anywhere from 10 to 30 days, depending on the type – such as inspection, appraisal, or financing. Each adds steps to the process, which can extend the closing timeline. That said, some buyers choose to shorten contingency deadlines to make their offer more appealing and keep the deal moving forward.

What is the difference between contingent and pending status?

A contingent offer means the deal is still waiting on certain conditions to be met, whereas pending status means those conditions have been resolved and a transaction is moving towards closing. >> Read more: What is Contingent vs. Pending? Find Out the Difference