What To Do When the Buyer Backs Out of Buying Your House

When the Buyer Backs Out of the Purchase of Your House

Selling your house?  While the market is hot and houses are selling quickly, there is still no guarantee, nor any way to estimate when the sale of your home will close. Or if it will close!

We’ve had it happen several times when selling a house, all appraisals, inspections, repairs, and renegotiations are done. All that is left is for everyone to go to closing and at the last minute, the transaction falls apart.

When Your Buyer Backs Out of Buying the House

So what can you do if, at the last minute, your buyer falls through? It’s a big letdown when you believe you’ve sold your home and moved forward with plans for your new home. While it doesn’t happen often, it’s wise to be aware as you enter the real estate market, of the many reasons a buyer falls through and what, if anything you can do to avoid it. 

Backing Out

Once upon a time, we had a buyer call us 10 minutes before they were scheduled to close. Everything was ready. But this buyer told us that after a heart-to-heart talk with God the night before he changed his mind. (This did happen.)

It’s especially disheartening to learn that a buyer backed out because of buyer’s remorse. Sadly, there’s nothing you can do to save the deal for this reason. The buyer will typically forfeit their earnest money deposit and any money they have spent on appraisals and inspections, but at the same time, you are out whatever you have spent getting the house ready to close and all your time and holding costs.

In this situation, you are pretty much back at square one and will have to start marketing the house again. And now when you start marketing it again, any inspections you now have in your posession are now disclosable to any new potential buyers. And if you have already moved out you might be now stuck with 2 house payments or house payment and rent or possibly you can’t close on your new home purchase.

Credit Changes

Most lenders will work all the way through the approval process for the person getting the loan and then the day before or the morning of closing they will run a last minute credit report. The lender does not want to be in a position of the buyer doing some things to temporarily raise their credit score that then falls off a few months later. What we see happen is the buyer is all excited for the new house and goes out and orders and pays for a bunch of new furniture to be delivered the day of closing, it lowers their credit score and suddenly the lender backs out.

There is not a lot you can do in this situation either other than try see if the buyer can find more money to still get the loan, possibly change lenders which will cost time, or cancel the contract and start over.


Just this past year we had a lender change their underwriting guidelines at the very last minute. So the offer from the prequalified buyer we had accepted, had a buyer that no longer qualified and was not going to close.

Now if you are selling you will always want to find a buyer that is pre-qaulified for a loan. This means the lender is ready to work with them, having verified their credit and ability to afford the down payment and all of the costs associated with the transaction. While this will limit the number of buyers who pass through your the door when you are selling your house,  it is in your best interest. But it is not a 100% guarantee of success. In the case of this buyer, their agent attempted to find an alternative lender and ask for us to extend the closing by another 30 days to do so. We gave them 5 days to find a new lender, but they were unable to do so. After almost 60 days of working with this buyer, with 60 days of holding costs, we had to start over and find a totally new buyer.

Title Issues

Get your own title report, this is legal proof that you are the rightful owner of the home with clear title. If you get your home under contract to sell and then order title to find out there are issues you didn’t know about this can cause delays. And when you have delays, often your buyer will back out.

When you work with a buyer like kcmoHomeBuyer, however, we are used to issues and we have a great team of title people who can help us figure out problems and solve them, sometimes without delays. Other times there are big issues that must be resolved and we work with our seller, our title people and sometimes outside experts to help get the resolved.


It’s advisable to have an independent inspection done by a professional when you’ve decided it’s time to sell your house. In any event, when you’ve found a buyer using conventional financing, you can be certain there will be an inspection. Depending on the age and condition of your home, the buyer will have more or less items they want fixed and sometimes they just decide there are to many things wrong and back out. If they want items fixed, sometimes they will want you to make the repairs before closing or reduce the price so they can make them after closing. Be aware whether you hire professionals or are capable of doing the work yourself, you’ll need to invest even more in the property in time, money and all of the headaches repairs bring.

And keep in mind if the buyer backs out because of inspection items, you now, by law have to disclose those items to all new buyers. It may be in your best interest to try to work with your current buyer, who at least liked the house and find a way to make the repairs needed or adjust the price down. This will not always work, but sometimes it might.

Low Appraisal

We had this happen this last year on the house we were actually buying for ourselves. We were moving into one of the houses we had bought and fixed up and the appraisal came in $60,000 less than what we thought it should.

Should the house you’re selling fail to appraise for enough to meet the desired loan to value (LTV) ratio of the lender, the loan will be denied. We were able to appeal the appraisal and they came up some, but not enough and we as the buyers of our own house had to decide, did we want to bring more money to the table to get the loan? Another option when a house does not appraise for enough is for the seller to lower their sale price.

One way to have a very realistic picture of what you will be able to sell for would be to have your home appraised before you sell it. But it’s not a guarantee.

Two More Reasons for a Buyer to Back Out of the Purchase

These are new items to add to this article. When disaster strikes the buyer might back out. For example when COVID hit a lot of buyers who were supposed to close on the purchase of a house backed out. Perhaps war issues in Ukraine or Israel have affected a few sales. And this past few months, quite a few sales got canceled due to tax assessments increasing too much.

Starting Over

This seems to be the main course of action when the buyer backs out at the last minute. Sure there may be a few options of working with the current buyer to save the transaction, but quite possibly at a lower price. But more often than not, when the buyer backs out you are just out the time and money spent on marketing the house, finding the buyer, and making inspection repairs. And now you are back at square one in finding a new buyer.

But what if you have your own house purchase depending on that sale? Or if you have already bought a new house or moved into a rental property? What if you have financial obligations depending on that sale and you don’t have time to spend another 30 days marketing and 45 days in the closing process, what are some other options.

If you are finding yourself facing time restrictions, don’t want to invest even more into your property, or you want to simplify the process of selling your house, one thing you can do is to consider a direct sale as your exit strategy.

Wanting to avoid such an awful experience and all of the emotional turmoil that’s attached is understandable. Want to know the best way to avoid your sale falling through? Sell directly to kcmoHomeBuyer. Send us a message if you have any questions today!

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