The number of contract terminations are growing at a face pace in the United States.

Amid rising consumer prices and economic uncertainty, many homebuyers in the US are cancelling deals with developers or homeowners. According to survey by John Burns Real Estate Consulting, 17.6% of contracts (63,000) were terminated in July 2022, while this figure was 8% in April and 7.5% in July last year.

This trend is especially noticeable in regions that enjoyed increased popularity during the pandemic: Texas and the Southwest (27% and 25% of terminations, respectively). Many contract cancellations are also in Northern California and the Northwest (23% and 19%, respectively).

The reasons for terminating a contract to purchase vary. Some can no longer qualify for the required credit at current rates and ohers are worried about inflation and the rising cost of living expenses.

According to Redfin, around 63,000 contracts were terminated across the country in July, or 16% of the total available inventory. For comparison, this figure was 12.5% in July 2021. As rates are increasing and after Hurricane Ian destroyed a signficiant portion of Florida real estate, many are rethinking buying homes in Florida.

If you are a seller in today’s market, you want to make sure that you are working with a highly qualified buyer who understands the existing market conditions and is ready, willing and able and qualified to proceed forward with the purchase of your property. It is extremely important to verify mortgage pre-approvals and review proof of funds if you have a cash sale.

If you want to protect yourself from a buyer who may not be fully qualified contact Paul Turovsky!