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Bloomberg
Spending months to find the perfect home in your price range, only to have your mortgage application rejected, or a home inspection turn up expensive repairs, is a nightmare—one that is coming true with increasing frequency, according to a new report from real estate listings website Trulia. A Trulia analysis of US listings shows that 3.9 percent of homes that moved from for-sale to pending moved back to for-sale again, nearly double the rate in 2015. Such “failed sales†increased in 96 of the 100 biggest US metros, with big swings in areas large and small, rich and poor. That includes Los Angeles and Charleston, S.C., as well as San Jose and Akron, Ohio.
In Ventura County, Calif., where the median home value is $548,000, 11.6 percent of prospective sales failed to close in 2016. That’s the highest in the US, up from 3.1% in 2015. Tucson, where median home price is $176,000, had the second-highest rate of failed sales, at 10.8 percent, up from 3.5% the year before.
The problem of failed sales has been most acute for cheaper homes and older ones: Some 6.3 percent of sales of starter homes fell through last year, according to Trulia’s analysis, compared with 3.6 percent of so-called premium home sales. Homes built in the 1960s had the highest fail rates, while sales of newer and older houses were more likely to go through. Trulia’s data don’t explain why listings reverted from pending to for-sale, but broadly speaking, a few factors can reliably torpedo a deal: The buyer’s mortgage doesn’t come through. This can happen even for buyers who have been prequalified, especially when a buyer has to stretch to outbid rival house hunters. It’s worth noting that borrowers are having an easier time getting mortgages: 77 percent of purchase mortgages made it to closing in October, according to mortgage software company Ellie Mae, the highest percentage since 2012.