Buyers are increasingly backing out of home sales, and it’s not just because of high mortgage rates and high home prices, according to a report from Redfin.
The firm’s data show that roughly 56,000 U.S. home-purchase agreements were canceled in August, which is about 15.1% of homes that went under contract that month.
That’s up from 14.3% a year earlier and marks the highest August rate in records dating back to 2017, the firm says.
Buyers frequently back out of deals when they find issues during the inspection, have trouble selling their existing home, or financing falls through. But according to the report, many deals are also falling through because buyers and sellers aren’t on the same page and aren’t willing to compromise.
Faced with high prices and economic uncertainty, buyers are asking sellers for all sorts of repairs, price reductions and other concessions, the firm says.
What’s more, some sellers are still operating like it’s 2021, assuming their home will sell as-is for top dollar.
Whereas during the pandemic homebuying frenzy – when buyers were waiving every contingency just to have a chance at winning a bidding war – deals are now falling apart during the inspection period if a seller doesn’t concede to repair requests.
Of 443 agents surveyed, 70.4% say home inspection or repair issues caused deals to fall through, Redfin says. The second most common response was buyer financing falling through (27.8%), followed by a buyer’s inability to sell their current home (21%), a change in the buyer’s financial situation (14.9%), a buyer finding a different property they liked better (12.9%) and concerns about the economic climate (12.2%).
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