Why might a house sale fall through?

By Jennifer Harrison, Content Lead

With so much energy and time put into house purchases, it can be incredibly frustrating – and costly – when a property sale falls through. But, with no legal commitment from either the buyer or the seller until contracts have been exchanged, this blog will answer the question, ‘Why might a house sale fall through?’, as well as suggest some measures you can take to help lower the chances of this happening.

Do house sales fall through often?

Quick Move Now declared that last year, in 2023, 35% of house sales collapsed, with managing director Danny Luke attributing this to a ‘mismatch between buyer and seller expectations.’

A house purchase falling through can happen at any point in the process and can be the result of several factors. There are many parties involved in the sale of a property – solicitors, surveyors, estate agents, as well as the actual buyer and seller – and if there are issues with any part of the transaction, the whole sale can break down. Although it can be as simple as the seller finding a better buyer willing to offer more, or the buyer finding a more suitable property, there are many reasons either party might change their mind. We’ve collated some of the most common reasons here.

Why might a seller pull out?

After accepting an offer, the seller still owns the property that’s for sale and can therefore still change their mind should they choose to. Typically, this will happen for one of the following reasons:

• They receive a higher offer from another buyer: Although this may seem unfair to some, it is not illegal for sellers to accept another offer if one is made that’s higher than the one they’ve already accepted.
• There are problems with their onward chain: If the seller is buying another property and that sale falls through, then they may no longer be able to move. As a result, they might have to delay the sale of their property whilst they look for a new one.
• They become impatient if the sale is taking too long: If the process is taking a long time, and the buyer is the reason for this, the seller may pull out and look for another buyer who can complete and move sooner.
• The buyer wants to renegotiate the price following a survey: If the buyer issues a survey, and the survey flags any problems with the property, they might want to reduce the offer they have made. The seller can call off the sale and look for an alternative buyer if they’re not willing to lower the price.

Why might a buyer pull out?

Buying a home is a huge commitment, financially and emotionally, and so there are many reasons why a buyer might change their mind. This includes the following:

• The survey results may be poor: A survey might highlight problems with the property that the buyer doesn’t wish to take on, for example, structural problems. Even if the seller is willing to reduce the price, some buyers may prefer to look for another property without these issues.
• The buyer has problems with the sale of their own home: Despite being keen to complete the sale, if a buyer is struggling to sell their current property, they may not be able to go ahead with the transaction in a timely manner.
• They find a different property: Although they’ve made an offer, lots of buyers will continue to look at other properties until they’ve completed. This is particularly common if the purchase process is slow. Should the buyer find another property that they prefer, the original sale can fall through.
• The buyer has financial issues: The buyer might have made the offer on a property based on the mortgage in principle (MIP) they received from their lender. However, securing an official mortgage offer can be difficult, and there is no guarantee the buyer will be granted a mortgage, despite having a MIP. If the lender decides not to offer the amount stated in the MIP, the buyer might have to pull out.

Can I reduce the risk of the sale falling through?

If the sale of your property falls through, it can be particularly challenging if you were planning to use the money from that sale to finance the purchase of your next property, or if you’re selling your current property and need the onward property to move into. Although many of the reasons for the collapse of a sale will be out of your hands, we have pulled together a few tips, for both buyers and sellers, that might help to lower the risk:

Tips for buyers:

• Arrange your searches and survey as quickly as possible once the offer is made. Don’t wait until you’re about to complete to have these checks carried out.
• Start the formal mortgage application as soon as your offer is accepted.
• Request that the property you’re buying is taken off the market once your offer is accepted to reduce its exposure to potential new buyers who may make a higher offer.
• Do not make any major changes to your financial circumstances once you’ve started the mortgage process. For example, reducing your contracted working hours or purchasing a car on finance could negatively impact the amount you can borrow.
• Take out Home Buyer’s Protection Insurance. If the seller pulls out, this sort of insurance will help you to claim back some of the money you’ve spent on things such as lender fees, mortgage valuation costs, and survey costs.

Tips for sellers:

• Be certain your buyer has a mortgage in principle before accepting their offer. It doesn’t guarantee they’ll be given a formal mortgage offer, but it is less risky than if they haven’t even started the mortgage process.
• Make sure your asking price is fair. Have a look at the local market and consider what else is available, and for what sort of price. Carrying out any major repairs before putting the property up for sale will reduce the chances of the buyer wanting to renegotiate after the survey is carried out. However, if you don’t wish to carry out these repairs, make sure you have factored in the cost for a potential buyer and considered this in your asking price.
• Be willing to compromise. If the survey does highlight some issues that you weren’t aware of, the buyer may want to renegotiate the price. Your estate agent is best placed to advise you on whether their new proposal is reasonable.
• Try to have more than one potential buyer in place. Pinning the sale of your house on one buyer is risky, so it’s a good idea to have a buyer in reserve who might be able to step in should the original sale fall through.
• Take out Home Seller’s Protection Insurance. This sort of insurance might help you get back some of the money you’ll have spent (on solicitors, estate agents, admin fees, etc.) should the sale fall through.

Tips for both parties:

• Reply to your solicitor as quickly as possible. Prompt responses to your solicitor’s questions will reduce delays, which can – as stated above – cause sales to fall through.
• When choosing your solicitor, choose a firm who have good reviews and a strong reputation for facilitating a smooth mortgage process.
• Consider the risks if you are going to enter into a transaction with a long chain.

All information contained on this blog is for general information use only. It does not provide mortgage advice and should not be construed as being mortgage advice, which can be provided by your mortgage broker and advisor only.