WHAT HAPPENS WHEN A HOME SALE FALLS THROUGH?
- johnathanmcquoid
- Jan 18
- 2 min read
Closing day is supposed to be exciting — the day ownership officially transfers to YOU.
But sometimes, a home sale doesn’t close as planned… and the fallout can be stressful and expensive.
Here’s what you need to know 👇
❌ Why a home sale might fall through
Most deals close smoothly, but here are the most common reasons a deal collapses:
• Buyer fails to qualify for financing
• Buyer’s offer was conditional on the sale of their current home — and it didn’t sell
• Appraisal comes in lower than the purchase price
• Title issues or major inspection defects
• Buyer gets cold feet and walks away
👉 Tip: A solid pre-approval + home inspection can prevent most of these issues.
⚠️ What happens if YOUR deal falls through?
If things start to go sideways, your first call is always your REALTOR®.
They may send a mutual release form to the seller’s agent.
If both parties sign it:
✔️ You get released from the contract
✔️ The seller is free to re-list the home
✔️ You attempt to recover your deposit
😬 But what if the seller refuses to sign?
This is where problems begin.
Your deposit will remain locked in trust until:
✔️ both parties sign the release, OR
✔️ a court orders its release
A seller can also choose to sue for damages, especially if:
• The home sells later for less
• They incur extra costs (bridge financing, carrying costs, legal fees)
• Their own purchase collapses because you didn’t close
💰 Who gets the deposit?
If the seller refuses to sign the mutual release, nobody gets it until a legal resolution is reached.
It just sits in trust.
This is why failing to close can become extremely complicated and expensive.
💡 How to avoid this situation entirely
You can dramatically reduce your risk by:
✔️ Getting a proper mortgage pre-approval before house hunting
✔️ Booking a pre-offer inspection
✔️ Working with an experienced realtor + mortgage professional
✔️ Avoiding conditional offers you can’t realistically satisfy
💬 Final Thought
A failed home sale is rare — but when it happens, it can lead to legal issues, financial losses, and major stress.
If you want help understanding your financing options, getting pre-approved, or avoiding these pitfalls, send The Frontline Mortgage Group a message anytime. We’ll guide you safely from offer to closing. 💬