How Often Do Contingent Offers Fall Through?

Zillow’s 2024 Consumer Housing Trends Report found that half of sellers reported at least one offer falling through during their selling process. 

Among sellers who experienced a fall-through, the most common reasons were money, mortgage or financing issues; the buyer being unable to sell their home; appraisal issues; and inspection issues. Understanding why contingent offers sometimes don’t work out — and what you can do to prevent complications — can help make the path to closing smoother.

What is a contingent offer on a house?

A contingent offer on a house means the buyer has made an offer that the seller has accepted, but the final sale depends on specific conditions being met first. Think of real estate contingencies as safety nets that protect buyers from losing their earnest money or getting trapped in a deal they can’t complete.

These conditions typically include financing approval, satisfactory home inspection results, and appraisal confirmation that the home’s value matches the purchase price. Until all contingencies are satisfied or waived, the sale remains uncertain.

How does a contingent offer work?

When a buyer submits a contingent offer, they’re essentially saying, “I want to buy your home, but only if these specific conditions are met.” This approach protects buyers from several risks, including committing to a purchase they can’t afford, or discovering major issues with the property after it’s too late to back out.

Sellers can choose to accept, reject, or counter the contingent offer. The goal is to reach an agreement that works for both parties. Once a seller accepts a contingent offer, they typically take the home off the market while the buyer works through their contingencies, hoping for a smooth path to closing.

How long does a house stay in contingent status?

The duration of contingent status varies widely based on the specific terms outlined in the purchase agreement and the types of contingencies involved. Contingency periods can range from as brief as one week to as long as three months.

Here’s what you can expect for common contingencies:

• Inspection contingencies typically allow buyers 5 to 10 days to conduct their inspection and request repairs in writing. This relatively short window helps keep deals moving while giving buyers adequate time to uncover any major issues.
• Appraisal contingencies usually span 7 to 20 days, providing enough time for a professional appraisal to confirm the home’s value meets or exceeds the agreed-upon purchase price, which is crucial for mortgage approval.
• Financing contingencies generally last 30 to 60 days, giving buyers sufficient time to secure the necessary funding by completing the mortgage application process.
• Title contingencies typically require 10 to 14 days for the title search process, though this can vary significantly depending on the property and any complications that arise.
• Home sale contingencies tend to be the longest, often ranging from 30 to 90 days, as they depend on the buyer successfully selling their current home before purchasing the new one.

Can a seller accept another offer while contingent?

Yes, sellers do have options even after accepting a contingent offer. Some sellers include what’s called a “kick-out clause” in their agreement, allowing them to continue marketing their home and accept backup offers.

If another attractive offer comes in, the kick-out clause requires the seller to give the current contingent buyer a specified window (typically 24 to 72 hours) to remove their contingencies and proceed with the purchase. If the buyer can meet this deadline, the sale moves forward. If not, the seller can “kick out” the original buyer and accept the new offer.

Reasons why a contingent offer may fall through

Even with the best intentions from both parties, several factors can derail a contingent offer before it reaches the closing table.

Home inspection contingency

When buyers discover significant issues during their professional home inspection, they may choose to renegotiate the price or walk away entirely. Issues like structural problems, electrical concerns, or major mechanical failures can be deal-breakers for many buyers.

Low appraisal

In competitive markets, bidding wars sometimes push home prices beyond their actual appraised value. When the appraisal comes in low, buyers must either pay the difference in cash, negotiate a lower price with the seller, or exercise their appraisal contingency to exit the deal.

Buyer remorse

Purchasing a home represents one of life’s biggest financial decisions, and some buyers simply change their minds. With 44% of buyers being first-time homeowners, cold feet are more common than you might expect, leading some to use contingencies as an exit strategy.

Property title issues

Title searches sometimes reveal liens, unpaid debts, or other legal complications tied to the property. Major title issues can significantly delay closing or cause buyers to abandon the purchase entirely.

Financing falls through

Changes in a buyer’s financial situation — such as job loss, credit score drops, or taking on new debt — can cause their lender to withdraw loan approval. Even pre-approved buyers aren’t immune to financing issues that emerge during the loan process.

Buyer home sale contingency

When buyers need to sell their current home before purchasing a new one, deals can stall indefinitely. If their existing home doesn’t sell within the agreed timeframe, these buyers will typically exercise their home sale contingency to exit the purchase.

Protecting your sale from contingent offer pitfalls

While you can’t eliminate all risks associated with contingent offers, you can take steps to choose stronger offers and minimize potential complications.

1. Carefully evaluate each offer’s strength. 

Work with a real estate agent to assess not just the dollar amount, but also the number and types of contingencies, the buyer’s financing strength, and their proposed timeline. Sometimes a slightly lower offer with fewer contingencies proves more reliable than a high-priced offer loaded with potential deal-breakers.

2. Consider avoiding home sale contingencies when possible. 

These contingencies create the most uncertainty since you’re essentially waiting for another property to sell before your deal can proceed. If you receive multiple offers, prioritizing those without home sale contingencies can lead to faster, more certain closings.

3. Complete a pre-inspection before listing. 

By conducting your own inspection upfront, you can address major issues beforehand and provide buyers with a comprehensive disclosure. This transparency helps prevent surprises during the buyer’s inspection period and reduces the likelihood of renegotiation or contract termination.

Remember, there’s no foolproof way to guarantee that a contingent offer won’t fall through. However, understanding the process and working with an experienced agent can significantly improve your chances of a successful closing. The key is finding the right balance between accepting competitive offers and protecting yourself from unnecessary risks.