It's hard to pinpoint exactly how many buyers back out from a purchase after home inspection but If you’ve ever put a house on the market, you know just how arduous the entire process of selling a property is. For starters, you’re required to fix up the grounds to ensure everything is presentable for a potential buyer. Furthermore, you have to endure hours and hours of viewings before someone finally decides to take the next step.
So when a buyer backs out at the last second, it can leave a bitter taste in your mouth. What’s more, this can even happen after the contract is signed and the home inspection is wrapped up. But how often do buyers back out after home inspection?
Are Buyers Legally Allowed To Back Out After An Inspection?
Let’s get straight to the point. Here’s how often do buyers back out after home inspection - around 3.9% of the time.
As a matter of fact, most contracts you sign with a buyer will include a home inspection contingency, according to which the buyer has the right to have the home checked by an impartial professional before the contract goes into effect. To put it differently, if any unforeseen problems are revealed with the home during the examination process, parties are legally allowed to leave the agreement.
This is perfectly legal under certain circ*mstances. The majority of real estate contracts include a variety of contingency clauses that allow the parties to breach the contract if some of the conditions aren’t met.
Still, the buyer can only conduct the checkup during the due diligence period when they can freely investigate the home, as well as the surrounding area at their discretion.
Moreover, this timeframe also includes financial contingencies. For instance, contracts can include different stipulations, including appraisal and financing contingency, which make it legal for the buyer to back out in cases in which they’re denied a loan or a mortgage.
In Florida, this period is often ten days from signing the contract or ten days from the binding date.
Lastly, contracts often implement a contingency regarding a due diligence period, which states that a third party such as a real estate broker should hold this money in escrow throughout the period. These funds will be returned to the buyer once they notify the listing agent they are backing out while the due diligence fee is in effect. Generally speaking, this fee can be between 1% and 5% of the asking price, depending on the local market.
Common Reasons Why Buyers Back Out After Home Inspections
Now that you’re familiar with how often do buyers back out after home inspection, it’s time to look at the most common reasons.
1. The inspection revealed hidden issues
In the majority of situations, buyers pull the plug because the examination revealed something wrong with the home and they’re not comfortable dealing with.
Let’s say the house looks great on the surface but the home inspector finds signs of mold.
As you’re likely already aware, mold isn’t exactly easy to remediate as it grows in inaccessible areas. The seller may have replaced damaged items and sprayed over the walls, but the chance of mold returning is still high. Additionally, it may be found deeper within the walls, which means resolving the issue will be expensive.
2. Structural issues
On the same note, buyers also tend to back out due to structural issues. For example, if an inspection reveals a rotten column, the seller may offer to fix the issue before the sale. Yet, the buyer may still find one rotten column a huge red flag that opens up the possibility that the home will be susceptible to developing similar issues in the future. As a result, they may pull out of the deal.
3. Seller’s inflexibility
Another recurrent reason why buyers avoid purchasing a home is the seller's unwillingness to change or compromise. For instance, if a house sells way above the asking price after a bidding war and the inspection finds an issue that will take $5k to address, the buyer may ask the seller to deduce this amount from the price. Refusing this compromise can be seen as unfair by the purchasing party, and they may ultimately decide they don’t want to proceed with the purchase.
What Can You Do If The Buyer Backs Out?
Starting from square one after what seems a set deal can be challenging. Considering how often do buyers back out after home inspection, you should prepare yourself mentally for this possibility.
Unfortunately, re-listing the home after a deal will affect the reputation of the home, which is why it’s best you consult with your realtor. They most likely dealt with these issues in the past and can guide you through the process of re-listing the property.
On your end, you should conduct a thorough review of the inspection report. If you disagree with the assessment, feel free to consult another home inspector. If the second inspection corroborates the first, you should make as many repairs as you can. Although the prospect of wasting time and money may not seem favorable, look at the big picture - you won’t have to haggle with future buyers over the price of repairs, and you can avoid another buyer from backing out due to troubles.
Since your home will now have a negative reputation, be prepared for potential buyers to assume something is wrong with your property. They will most likely have more questions than the previous buyer, so be forthcoming with the inspection results and demonstrate what you did to resolve the issues. That’s pretty much the only way to find a buyer and eventually, close the deal.
Schedule A Pre-listing Inspection With Certified Inspectors
Since re-listing your home after a buyer backs out can make it more difficult to entice a new buyer, it’s best you see to it that everything is accounted for before even listing your home.
Here at Certified Inspectors, Boca Raton FL we offer pre-listing or seller inspection that can help you achieve a smoother sale. By knowing what needs to be done from the get-go, you can address any problems before listing, adjust the price accordingly, and minimize the chance of any surprises occurring in the selling process.
Schedule an inspection at (561) 570-6311 and list your home with a newfound level of confidence.
