3 Reasons Real Estate Transactions Fall Through (and How to Avoid Them)

In Toronto, real estate transactions are far from an overnight process. Whether you’re buying or selling a home, after navigating the many variables of the market, finally reaching the negotiations stage can feel like you’ve reached the finish line. However, it’s not time to celebrate just yet. 

As the city transitions into a balanced market, contingencies have become a more prominent factor in the offer process. Contingencies help both buyers and sellers protect themselves from potential pitfalls, but they can also cause the transaction to fall through – leading to stress and disappointment.  

As West Toronto real estate experts, we’ve closed countless transactions over the years and know the process inside and out. This post will analyze common contingencies, how they can cause a transaction to fall through, and what you can do to avoid a delayed or terminated sale. 

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Something is Uncovered During the Home Inspection 

Today, home inspections are a fairly common part of real estate transactions. In most cases, the buyer includes a home inspection as a contingency in their offer. After an offer is accepted, there’s a 3-5 day period for the buyer to have the home inspected. 

During this process, a professional inspector will analyze the property from top to bottom, evaluating key elements such as the structural integrity of the home, HVAC and electrical systems, plumbing, the roof, and more. If the inspector discovers a significant issue that will be expensive for the buyer to repair, they may choose to walk away. 

Reducing Risk

Ensuring there are no unpleasant surprises during the home inspection process is mostly up to the seller. In West Toronto, many homes are close to or more than a century old. If you’ve lived in your property for many years and are looking to sell, it may be worth obtaining a pre-market inspection. This proactive step can uncover any hidden issues with your home before buyers see it, reducing the chance of a jeopardized sale down the road. 

In need of helpful tips for selling your home in West Toronto? Explore some of these resources from our blog. 

• Selling After a Divorce: What You Need to Know
• The Power of Staging a Home to Sell
• How to Sell Your Toronto Home in a Balanced Market

Delays With the Buyer’s Home Sale

Unless you’re entering the market for the first time, there’s a good chance that selling your current home will factor into buying your next one. Buying and selling a home simultaneously is easier said than done, and in order to reduce the risk of getting stuck with two mortgages at the same time, some buyers will elect to include a home sale contingency in their offer. 

This means that the transaction is conditional on the buyer’s current home selling within a set timeframe. If their existing property doesn’t sell, the buyer is able to walk away from the agreement. 

Reducing Risk

As the sale of the buyer’s home relies on a number of variables, delays or setbacks with this type of contingency can be somewhat common depending on the market. That said, there are a few things both buyers and sellers can do to avoid finding themselves in stressful circumstances.

For buyers, the best way to optimize your odds of a fast and profitable home sale is by working with the right selling agent. An experienced agent with local expertise can help you prepare, price, and market your home to maximize your chances of market success. 

For sellers, the best way to protect yourself from this hazard is by being as selective as possible in which offers you consider. Of course, in certain market conditions, it may be worthwhile to accept an offer with this type of contingency. However, you should always trust your gut, and if necessary, include an escape clause in the agreement. 

Thinking about entering the housing market for the first time? Check out these blog posts to make the most of your first home purchase in Toronto. 

• How Buying a Condo is Different From Buying a House
• How to Maximize Your First Home Without Going Over Budget
• Everything You Need to Know About Canadian Interest Rate Hikes

Financing Setbacks

Another common contingency in Toronto real estate transactions pertains to mortgages. In short, this contingency makes the home sale conditional on the buyer being able to secure adequate financing for the home. If the buyer is unable to obtain mortgage approval from their lender within the established timeframe (often a week) then the agreement is terminated. 

Reducing Risk

As a buyer, one of the best steps you can take to prepare for your home-buying journey is obtaining a mortgage pre-approval. Not only can getting pre-approved help you establish an appropriate budget for your home purchase, but it can also help you avoid future disappointment by ensuring you don’t place an offer on a property you can’t afford. To assist you in this process, a well-connected real estate agent can refer you to a trusted local mortgage broker. 

Looking for a compassionate West Toronto team who can assist you in accomplishing your real estate goals? We’re here for you. Send us an email or call 416-769-6050.