Why So Many Deals Are Falling Out of Escrow — And How to Protect Yourself

Picture this: you’ve found your dream home, the offer is accepted, and you’re already planning where the couch will go. Then, out of nowhere, the deal falls apart in escrow. If this sounds familiar—or if you’re worried it could happen to you—you’re not alone. In today’s unpredictable housing market, more deals than ever are falling out of escrow. Let’s explore why this is happening and, most importantly, how you can avoid heartbreak (and headaches) during your home buying or selling journey.

Why Are Escrow Deals Falling Apart?

Escrow is meant to be the calm between the storm of negotiations and the celebration of closing. But lately, it’s become more like a minefield. Here are some of the main reasons why deals are unraveling:

• Financing Falls Through: Even pre-approved buyers can hit snags if interest rates jump, lending rules tighten, or their financial situation changes unexpectedly.
• Inspection Surprises: A leaky roof, faulty wiring, or foundation issues can send buyers running for the hills—or back to the negotiating table.
• Appraisal Gaps: If the home appraises for less than the agreed-upon price, buyers may not be able to secure enough financing, or they might balk at making up the difference.
• Buyer’s Remorse: Sometimes, buyers get cold feet, especially in a fast-moving market where decisions are made quickly.
• Contingency Clauses: Sale of another property, repairs, or other contingencies can create delays—or outright cancellations—if not met on time.

Real-Life Escrow Twists

Take the story of Mark and Jenna, who thought they’d closed the deal on their first home. An inspection revealed major plumbing issues, and negotiations broke down. Or consider Lisa, who lost her buyer after a sudden job change meant her lender rescinded her loan approval. These aren’t rare cases—they’re becoming more common as the market shifts.

How Buyers and Sellers Can Protect Themselves

• For Buyers: Stay within your budget, get fully underwritten pre-approval, and build in time for thorough inspections. Don’t skip due diligence, even if you’re eager to close.
• For Sellers: Consider pre-inspections to catch issues early, price your home realistically, and vet buyers’ financial qualifications carefully.

Tips for Keeping Your Deal on Track

• Communicate openly and frequently with your agent and the other party.
• Be proactive about meeting deadlines and providing documents.
• Have a backup plan (and some emotional resilience) in case things go sideways.

Ultimately, while some factors are out of your control, being prepared and working with a trusted real estate professional can make all the difference. By staying informed and proactive, you’ll be in the best possible position to see your escrow through to a happy closing—and maybe even start planning that housewarming party. 🏡