If you’re buying or selling a home, you’ve probably heard about contingencies – contract terms that must be met for the sale to move forward. But how often do these conditions actually cause a deal to fall apart?
The short answer: it’s not as often, but it depends on the market. According to the National Association of REALTORS® (NAR), only about 6% of home purchase contracts were terminated in the three months leading up to June 2025. However, recent trends show cancellations are rising, with buyers and sellers being more cautious amid higher mortgage rates, shifting inventory, and economic uncertainty.
Below, we’ll break down how often contingent offers fall through, why some contracts get derailed, and what buyers and sellers can do to keep a deal on track.
The likelihood of a contingent offer falling through often depends on the housing market itself. When conditions shift – interest rates rise, inventory changes, or buyers gain leverage – the risk of a deal falling through changes, too. In today’s market, buyers are more price-cautious and hold greater negotiating power, which has contributed to an uptick in home-purchase cancellations.
A recent Redfin report found that roughly 56,000 U.S. home-purchase agreements were canceled in August 2025, equal to 15.1% of homes that went under contract – the highest August rate on record since 2017. The report also included a survey of 443 Redfin agents who handled cancellations in the prior three months, highlighting the main reasons deals fell through:
These findings show that inspection and repair issues are the top driver of recent home-purchase cancellations, followed by financing and home-sale challenges, reflecting a market where buyers are increasingly selective and cautious.
What is a contingent offer?
A contingent offer is a purchase agreement that only moves forward if certain conditions are met. These conditions – called contingencies – act as safety nets, giving buyers protection if something doesn’t go as planned or issues are uncovered. If these conditions aren’t met, the buyer can back out of the deal without losing their earnest money deposit.
Example: Imagine buying a home built in the 1940s. You make your offer contingent on the electrical system being updated because knob-and-tube wiring is outdated and unsafe. If the inspection confirms the wiring hasn’t been updated and the seller refuses to fix it, the contingency allows you to walk away without penalty.
Common reasons why contingent offers fall through
Contingent offers are designed to protect buyers, but some deals still fall apart. Most commonly, this happens because of issues tied directly to specific contingencies:
- Inspection findings: Major repairs or safety concerns that the seller won’t address.
- Financing issues: Changes in employment, debt, or credit during underwriting.
- Home sale delays: The buyer’s existing home doesn’t sell on time.
- Low appraisals: Buyers and sellers cannot agree on price adjustments.
- Title problems: Liens, taxes, or property ownership disputes that aren’t easily resolved.
How key contingencies can impact the deal
Let’s walk through some of the common contingencies that get written into real estate contracts. These will give you a better idea of what to expect for your own homebuying or selling process.
Financing contingency
A financing contingency is one of the most common contingencies. It just means that the buyer’s offer is dependent on their lender approving their home loan.
Even if a buyer is pre-approved, lenders conduct a detailed underwriting process after a contract is signed. During this process, lenders verify income, credit history, employment, and debt-to-income ratios.
If something changes, like a new job or an increase in debt, the loan could be denied. In that case, the financing contingency allows the buyer to back out and recover their earnest money. While financing issues are one of the most common causes of delays, they aren’t the main culprit for a contingent offer falling through.
Appraisal contingency
An appraisal contingency ensures the home is worth the purchase price and protects both buyers and lenders. Before finalizing a mortgage, lenders require an independent appraisal to confirm they’re not lending above market value.
Appraisers consider factors such as:
- Square footage
- The home’s condition
- Location
- Recent sales of comparable homes
If the appraisal comes in low – say a $450,000 home appraises at $440,000 – the buyer can bring extra cash or ask the seller to reduce the price. If no agreement is reached, the buyer can walk away without penalty.
Appraisals are a common reason closings get delayed. NAR data shows appraisal issues caused about 6% of delays, making them one of the most important contingencies to watch, especially in markets where bidding wars push prices above value.
Inspection contingency
An inspection contingency lets buyers hire a professional to check the home’s condition, including the roof, foundation, plumbing, electrical, and HVAC. If major issues are found, buyers can request repairs, negotiate a credit, or walk away.
Inspection and repair issues are the top reason deals fall through today, according to the Redfin survey: 70% of agents reported that inspection-related problems led to cancellations. Many buyers are leveraging contingencies to negotiate repairs or concessions, reflecting a market where buyers are cautious and selective after the pandemic-fueled buying frenzy.
Title contingency
The title of a home is essentially a record of its ownership. It shows who has owned it in the past, in addition to its current ownership. A title contingency ensures the home’s ownership is clear and free of legal claims. A title search can uncover liens, unpaid taxes, or disputes over property ownership.
If a problem arises that cannot be quickly resolved, the title contingency allows the buyer to step away from the contract. This is less common than financing or inspection issues, but it’s a critical safeguard that prevents a buyer from inheriting legal complications after closing.
Home sale contingency
For buyers who already own a home, a home sale contingency can provide breathing room. It gives the buyer a set period of time to sell their existing property before moving forward with the new purchase. If their current home doesn’t sell in time, they can walk away without losing their earnest money.
While this contingency protects buyers, it’s not very popular with sellers. From the seller’s perspective, it adds a layer of uncertainty. To make it more manageable, sellers sometimes include a kick-out clause or a first right of refusal. These clauses let sellers keep the home on the market and move forward with another offer if the original buyer can’t sell their home quickly enough.
Should you submit a contingent offer?
Contingencies are protections, not obstacles. They give you the option to back out or renegotiate if issues arise. Waiving them can be risky – without inspection, financing, or appraisal contingencies, you could face unexpected repairs, lost deposits, or covering appraisal gaps.
If you’re considering waiving, be sure your finances are strong and you understand the risks. A common compromise is shortening contingency timelines instead of removing them, which can make your offer more competitive while still providing protection.
How buyers and sellers can keep a deal on track
Even with contingencies, deals can fall apart, especially in today’s market where buyers are cautious and sellers may need to adjust expectations. Here are some strategies to help both sides reduce risk and keep the transaction moving.
For buyers:
- Confirm your financing: Make sure you are fully pre-approved for a mortgage and understand your monthly payment before making an offer. Avoid large purchases that could impact your credit during the process.
- Take a second look: Tour the home more than once to ensure you’re comfortable with your decision.
- Do your research: Ask about previous contracts, past inspection reports, and any potential issues before committing.
- Expect some negotiation: Inspections often reveal minor or major concerns; be prepared to work with the seller.
- Check costs and fees ahead of time: Get insurance quotes and review any HOA fees or condo special assessments to avoid surprises.
For sellers:
- Address potential issues early: Consider a pre-inspection so buyers are aware of any major repairs upfront.
- Plan for backup options: If multiple buyers are interested, ask your agent about securing a backup offer in case the first buyer cancels.
- Be willing to negotiate: Adjusting the price or completing requested repairs can help avoid cancellations.
- Manage timelines and deposits: Shortening inspection periods and ensuring a meaningful earnest money deposit can make it harder for buyers to walk away, particularly in balanced or seller’s markets.
FAQS: How often contingent offers fall through, and more
What happens if a contingent offer falls through?
If a contingency cannot be met, then the buyer can walk away from the deal and receive their earnest money back. Unless the seller has accepted a backup offer, the home will return to the market, and the seller will need to find a new buyer.
Does the market affect how often a contingent offer falls through?
It can. The market shapes how contracts are written — like how long contingency periods last or how much earnest money is required — which can make deals either more or less likely to fall through. In a competitive market, buyers sometimes stretch financially to win a home, which can increase the risk of financing or appraisal issues. Contingencies are more likely to be resolved successfully in balanced or slow markets.
Will a seller accept a contingent offer?
Yes, but it depends on the market. In slower markets with fewer buyers, sellers are more likely to accept offers with contingencies. In competitive or seller’s markets, they may favor offers with fewer strings attached.
Can sellers back out of a contingent offer?
Technically, a seller can change their mind, but it’s rarely simple or without risk. Once a purchase agreement is signed, they’re legally bound to its terms. If they back out without a valid reason, they’ll usually need to return the buyer’s earnest money and could face legal or financial penalties.
Do contingent offers take longer to close?
They can. Standard contingency periods typically run anywhere from 10 to 30 days, depending on the type – such as inspection, appraisal, or financing. Each adds steps to the process, which can extend the closing timeline. That said, some buyers choose to shorten contingency deadlines to make their offer more appealing and keep the deal moving forward.
What’s the difference between a contingent offer and a pending sale?
A contingent offer means the deal is still waiting on certain conditions to be met. Once contingencies are resolved, the home moves to pending status, which is one step closer to closing.
>> Read more: What is Contingent vs. Pending? Find Out the Difference