Are More Contracts Falling Because of Bidding Wars?

A contract on one of my listings fell on inspection last week, but the buyer would not say why and would not release the inspection report. Meanwhile, the inspector had met the seller during the inspection and expressed shock when told that the contract was terminated. The logical conclusion was that the contract fell due to buyer’s remorse, i.e., a change of mind about buying the home.

The buyer and their agent could have simply stated that, because it’s a perfectly valid reason for terminating under the inspection contingency. It practically says as much in the contract itself. (By the way, the home quickly went under contract again with a new buyer.)

The seller asked me how common buyer’s remorse terminations are, given the way buyers are being rushed into making purchase decisions (at inflated prices) due to bidding wars.

So I did some research and found that contracts are not falling at a statistically significant higher rate than they did, say, two years ago during the same week.

Here are the specifics from my   research on REcolorado.com:

Of the 100 highest priced closings in early July that were on the market 1 to 20 days, 8% had a contract fall before a successful closing. During the same time period in 2019, 7% listings had a fallen contract before their successful closing.

Of the 100 lowest priced closings in early July that were on the MLS 1 to 20 days, 15% had a contract fall, compared to the same time period in 2019, when 16% had a contract fall before a successful closing.

It was a reasonable theory, but not true.

Author: Golden Real Estate, Inc.

Golden Real Estate is a prominent member of the Denver/Jefferson County real estate scene. Based in Golden, we service both Denver and Jeffco, representing both buyers and sellers. We're well known for Broker Jim Smith's weekly "Real Estate Today" column published in the Denver and Jeffco editions of the Denver Post's YourHub section each Thursday. The column also appears in several weekly newspapers and is archived at www.JimSmithColumns.com. We have nine agents, all of whom are Realtors and EcoBrokers. Our office is Net Zero Energy since December 2017, and several of us drive electrics cars. Known for our sustainable practices, we accept polystyrene (aka "Styrofoam") for recycling, keeping 200 cubic yards per year out of area landfills.

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