Economists' Outlook

Housing stats and analysis from NAR's research experts.

Home Inspection Issues: Major Reason for Contract Terminations

In the February 2015  REALTORS® Confidence Index Survey, NAR asked  REALTORS® what problems they encountered in their most recent contract that either went into settlement or was terminated in the past 3 months.   

Among contracts that were terminated (7 percent of REALTORS® reported contracts that went into settlement or were terminated), the major problem encountered was home inspection issues, cited in 29 percent of reported contract terminations.  Obtaining financing was the next major problem cited for a contract termination (25 percent).  Meanwhile, only 8 percent of terminated contracts had appraisal issues, indicating that although appraisal issues can be a problem, they are less likely to lead to contract terminations than home inspection or financing problems.

What this Means for REALTORS®:  Home inspection issues are the biggest reasons for contract termination. Work with the seller to fix potential home inspection issues (e.g. structural, water damage, mold, lead paint, etc.) before putting the house on sale.

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