(Corrects spelling of real estate company's name to Dunes from
Dune in paragraph 11)
By Beth Pinsker
NEW YORK Jan 11 Dan and Kelly Neubeck do not
know what sunk the deal to buy their dream house in Chicago last
fall. The process was rolling along after they signed the
contract for a full-price offer, but somehow their love was
The sellers abruptly pulled out and left them bereft.
"It is difficult to not quickly become attached to a home
that you really want," said Dan Neubeck, 37, who works for the
city of Chicago. "I would definitely advise home buyers to stay
open-minded and not fall in love with a property until the whole
process is complete."
Home sale deals always fall through from time to time, but
in today's tight housing market, the numbers are jumping. A new
study released on Wednesday from housing website Trulia.com
compiled data on homes that were reported to be "in contract"
before their status changed back to active.
Nationally, the failed sales rate nearly doubled in 2016.
Many sales that never closed involved first-time buyers
eager to jump into a hot market. Starter and trade-up housing
was on the shakiest ground, while deals for new homes and those
built before 1920 were the least likely to unravel.
Some metropolitan areas exhibited bigger failure rates than
Since 2014, when Trulia began to aggregate data from local
multiple listing services all over the country, Las Vegas has
led the pack with 7.6 percent of listings reverting back to "for
sale" at least once.
Last year, Charleston, South Carolina, had the biggest rise
in failure rates, jumping to 10.2 percent from just 1.6 percent
in 2015. Other hot spots include Ventura County, California;
Tucson, Arizona; and Atlanta.
In Charleston, real estate agent Mark Mitchell attributes
most of the failed sales to buyers' rushing into an extremely
popular market where few homes are available.
Mitchell, as associate broker at Dunes Properties, had two
sales fail in the last 30 days. One couple was moving to the
area from Indianapolis to retire and start a business on the
side. Even though Mitchell tried to send them to a mortgage
broker before signing a contract, they skipped that step and
missed out on a purchase because they did not qualify for the
financing they sought.
"They were making an emotional move," Mitchell said, and now
they are downsizing their dreams from a $500,000 house to condos
in the $250,000 range.
Another Charleston broker, Jan Snook of Carolina One Real
Estate, said her office had about seven failed contracts out of
more than 50 last year. Some were because of mortgage problems
on the buyer's side, but more often than not, sales failed
because of issues with the houses.
One buyer was intent on a house that Snook knew would have
problems because of the age and condition of the roof. The
client wanted to try anyway, but lo and behold, the inspection
said the roof would need to be replaced to qualify for a loan
insured by the Federal Housing Administration.
"It was unrealistic expectations on both sides," Snook said.
"But that's why those FHA protections are there."
Felipe Chacon, the Trulia housing data analyst who authored
the sales failure study, said buyers need to do their homework
and be willing to wait for the right home at the right price.
"You want to get your preapproval for a mortgage and ask a
lot of questions because you don't want surprises to come up,"
From the seller side, Chacon said the most important thing
is to be honest about problems and fix what you can.
Also, list the house at a reasonable price so the appraisal
does not come back lower than that and cause banks to deny a
David Liu, a 33-year-old who works in healthcare information
technology, learned that lesson when he put a house on the
market near San Francisco in 2014.
Despite the hot market there, two deals fell through because
the buyers had financing issues. He eventually sold the house
after several price cuts.
Sellers may also want to get a pre-emptive inspection on the
property they are trying to sell and start making the needed
repairs, said USRealty.com Chief Executive Officer Colby
This is key in a market like Austin, Texas, said Redfin.com
agent Andrew Vallejo. He said most of the failures he has seen
recently are because the topography of the area causes
foundation problems for concrete slab homes that are 50 to 80
Vallejo has hopes for better houses coming on the market
this spring. "It almost feels like it was leftovers on the
market this past year," he said.
(Editing by Lauren Young and Lisa Von Ahn)