Top Reasons Buyers Cancel a Home Sale

Don't let a "clean" offer turn into a costly cancellation. I’m going over how to vet pre-approval letters and spot high-risk contingencies before you sign.

Getting an offer on your home is a big moment. It feels like the finish line is finally in sight. But here’s the truth: an accepted contract doesn’t guarantee a smooth path to closing.

Nearly one in four real estate deals falls apart before reaching the settlement table. That means thousands of sellers each year find themselves starting over after weeks of work and anticipation.

Why does this happen, and how can you avoid becoming part of that statistic? Let’s look at the five most common reasons buyers cancel a home sale and, more importantly, what you can do to keep your deal on track.

1. Home inspection issues.

For many buyers, the inspection is the first moment of real tension. They’re hoping for affirmation that their investment is sound—not signing up for a money pit. If the inspector flags roof damage, foundation cracks, aging HVAC systems, or plumbing red flags, it’s common for buyers to press for deep repairs—or in worse cases, pull out entirely. Even seemingly minor defects can breed fear if they’re swept under the rug.

That’s why I often call the inspection contingency the ultimate “get-out-of-jail-free” card. That’s also why I structure my listings around pre-listing inspections. It gives you a full, early-stage picture of your home’s condition—and lets us correct, disclose, or price accordingly before a buyer ever shows interest. In my experience, dealing with issues proactively is always less expensive than responding to demands once you’re under contract.

2. Financing falls through.

Pre-approval is just the beginning—not a guarantee. Even late in escrow, a job change, new car loan, or questions around visa or green card status (a growing issue in 2025) can raise red flags in underwriting.

“Most sales don’t collapse because of price; they collapse because of surprises.”

When financing fails, sellers are often left in limbo—after already pulling their home off the market. To avoid that, I insist on strong pre-approval letters from solid lenders, and I always propose that my clients’ agents dig in—ask tough questions, dig into debt ratios, employment stability, and credit history. I even prefer buyers to be approved through lenders I know and trust (when possible) so we have extra insight into the deal’s soundness.

In my experience, when financing fails, it is generally around an unexpected job loss or a calculation error by the mortgage broker. There are plenty of other reasons, and I can go into detail, just call!

3. Low appraisal.

If the appraiser comes in below the contract price, your buyer may have to make up the difference—or you’ll be asked to renegotiate down. When neither side can meet the gap, the deal dissolves.

That’s why pricing realistically from the start is non-negotiable. Overpricing often invites appraisal gaps and difficult renegotiation. A data-driven, defensible price not only helps keep appraisers happy—it signals serious buyers who can actually close. (Yes, we ran into appraisal shortfalls twice this year—but we had built in backup strategies ahead of time, and in both cases we prevailed.)

4. Cold feet or buyer’s remorse.

Homes are emotional purchases. Even after all due diligence, a buyer can hesitate, second-guess, overcompare, or feel suddenly uncertain. You can’t fully control emotions, but you can manage momentum.

Communicate clearly. Set smart timelines. Keep the process moving with confidence. And when structuring offers, limit contingencies so you don’t become a victim of over-outs. A tight set of realistic buyer contingencies gives you more assurance that this deal will actually see the finish line.

5. Too many contingencies.

Every condition or caveat you allow is a potential escape hatch. “I’ll buy if my existing home sells,” “I need two weeks for inspections,” “My financing might take up to 60 days”—that kind of language is a red flag.

When accepting offers, remember—it’s not always about the highest price. A somewhat lower offer with clean, strong terms will often beat a flashy, high offer with strings. My listing system is built to minimize unnecessary buyer contingencies from the outset, so you’re not stuck battling them later.

6. Homeowners insurance.

This has become a surprisingly common deal-breaker in 2025. I’ve seen contracts fall apart just days before closing because the buyer couldn’t secure insurance—or they saw premiums far higher than they expected. One key issue is roof age: many insurers now reject homes whose roofs are within ~5 years of replacement, or they quote premiums so steep they become unworkable. Major mechanical systems and attic condition also draw scrutiny.

Here’s a fresh example: a homeowner in Massachusetts was blindsided when his insurer canceled coverage after reviewing drone imagery of his roof, demanding costly repairs under a tight deadline. Despite decades of stable ownership, the policy was terminated because aerial photos revealed overgrowth, moss, and branch proximity. 

So when sellers are considering updates before going to market, the roof, attic, gutters, and mechanical systems often deserve top priority. Even small preemptive fixes and clean maintenance documentation can make the difference between a successful closing and a sudden collapse.

Getting under contract is exhilarating—but the real test is reaching the closing table intact and confident. If you’re thinking of selling soon (this year or next), the preparation you do now is what gives you control later. Address inspection red flags early. Vet your buyer’s financing with rigor. Price with precision. Watch the fine print in offers. And don’t forget the insurance handshake at the finish line.

If you’d like help prepping your home, reviewing offers intelligently, or structuring a deal that’s built to withstand surprises, let’s connect. Call or email anytime—and together, we’ll make sure your next contract crosses the finish line in style.