Say it ain’t so! Fall Through Deals. Why Real Estate transactions sometimes fall apart.  


We have previously discussed some of the fundamentals of Real Estate in this blog.  When to list a property for sale, Open Houses and Negotiations.  So what about once an offer is accepted?  This stage of the transaction is known as the conditional period and not every conditional deal will firm up, some, unfortunately do fall apart or “fall through” as Realtor jargon usually describes.  

A small percentage of real estate transactions will be completely unconditional, as in the Buyer is purchasing the property with no conditions to protect him/her, this is rare.  The majority of deals contain a number of conditions to protect both the Buyer and Seller.  Most commonly these conditions would pertain to allowing the Buyer time to due their due diligence and ensuring they can proceed with the sale.  Some common examples of conditions in a residential real purchase agreement would be:

-Allowing the Buyer a number of days to conduct a physical inspection of the home.

-Allowing the Buyer a number of days to arrange financing to purchase the home.

-Allowing the Buyer a number of days to arrange Insurance coverage for the property.

So what happens if a deal falls through?

Should the Buyer not be able to fulfil his/her conditions, to their complete satisfaction, they can choose to not proceed with the purchase.  This is done by the parties signing a document called a Mutual Release and Termination of Agreement.  The parties do exactly that, mutually release each other from the obligation to complete the transaction.  Once this document is signed by the parties the deposit that was given by the buyer upon acceptance of the Agreement of Purchase and Sale is released back to the Buyer and the Seller will go back on the market as an active listing.

How does this affect the Seller?

Fall throughs can definitely hurt a Seller.  Firstly, there can be weeks spent off the market in a conditional period with a Buyer that ultimately does not complete the purchase.  This loss of crucial marketing time and exposure to other Buyers can be quite detrimental.  While Sellers are able to continue having showings and even accept other offers while in the conditional period, most Buyers would not bother seeing a property that was conditionally sold let alone submitting a backup offer.

Further, there is the Stigma of having a deal fall through on a property.  Was there something wrong with the home?  Did the inspection reveal too many issues?  If a major material defect was found during a previous inspection, the Listing Agent is required to disclose this once it is known but otherwise there is no requirement to explain why a deal fell through so Buyers are often left speculating and assuming the worst.

The best way to protect yourself from fall through deals as a Seller is to hire a professional Realtor who can anticipate any issues that may arise with respect to the property and bring an offer from a qualified buyer who has been financially approved to purchase Real Estate.  A professional Realtor is also equipped to negotiate any problems and find a solution that works for both parties.  Check out our Seller’s page here  for more info.

As a Buyer, your Realtor has a network of lawyers, tradespersons, mortgage advisors and more who can rectify many issues that you may encounter along the road to home ownership. Check out our Buyers page here  for more info

Have a great weekend!