- Rate of canceled purchase agreements hit a new high in August.
- Buyers are often backing out over inspections.
- Here are tips for sellers and buyers.
Home buyers are backing out of deals at a record rate, a new analysis shows.
Some 56,000 purchase agreements for homes in the United States were canceled in August, according to the online brokerage Redfin, with buyers acting “skittish and selective due to high prices, high mortgage rates and economic uncertainty."
That’s equal to 15.1% of homes that went under contract that month, the highest percentage for August since record keeping began in 2017, up from 14.3% for the same month a year earlier. A similar record was set earlier this year.
As Redfin puts it: “Homebuyers in America are getting cold feet.”
Buyers typically change their minds during the inspection period of a sale, backing out of a deal if they can’t get a seller to “concede to their repair requests, a better home comes up for sale, or they’re simply suffering from a case of buyer’s remorse,” Redfin said.
In a September survey of 443 Redfin real estate agents who’ve had deals cancelled in the past three months, more than 70% cited home inspections as a cause. In part, that may be because cost-conscious buyers are shopping for lower-priced homes, which may have more issues.
With some 500,000 more sellers in the market than buyers, Redfin said would-be home owners are feeling empowered to push for price cuts, repairs or other concessions and walk away if they’re not satisfied.
Here’s the tips Redfin offered to help keep deals together.
For sellers:
- Do a pre-inspection
- Seek a back-up offer if multiple buyers express interest while the home is actively listed
- Be flexible about the asking price
- Shorten the inspection period and/or work out “a substantial enough (but still reasonable) sum of earnest money” to make it harder for a buyer to back out
For buyers:
- Get pre-approved for a mortgage and avoid making other big purchases or borrowing money
- Tour the home more than once
- Not sure you love it? Sleep on it
- Check if the home was recently under contract and ask for previous inspection reports
- Know that inspections will likely find issues
- Seek quotes for home insurance ahead of time as premiums are rising
No places in Utah were part of the Redfin analysis, which looked at 47 of the nation’s most populous metropolitan areas. Atlanta had the highest percentage, with the number of purchase agreements cancelled in August equal to 21% of home sales.
Next on the list were three Florida metro areas, Jacksonville, Orlando and Tampa, followed by Las Vegas. The places where home buyers were least likely to stop a sale were Nassau County, New York; San Francisco; San Jose; Montgomery County, Pennsylvania; and Oakland.