What Happens If Your Buyer's Financing Falls Through?

by Ryan Rose

You accepted an offer. You celebrated. Maybe you even started packing. Then, three weeks into escrow, your agent calls with news nobody wants to hear: the buyer's loan fell apart.

Deep breath. It happens more than you'd think. Let's talk about why, what it means for you, and what happens next.

Why Loans Fall Through

Buyers get pre-approved before they shop. But pre-approval isn't a guarantee. The lender still needs to verify everything during underwriting. That's where things can go sideways.

Common culprits:

Job changes. Buyer switches jobs, gets laid off, or goes from salaried to commission. Lenders freak out.

New debt. Buyer finances a car, opens credit cards, or makes large purchases before closing. Their debt ratios blow up.

Bank account issues. Unexplained deposits, insufficient reserves, or money moving around suspiciously.

Property issues. Appraisal comes in low, or the property doesn't meet loan program requirements.

Documentation problems. Missing tax returns, unexplained gaps in employment, or discrepancies in paperwork.

Sometimes it's the buyer's fault. Sometimes it's circumstances. Either way, you're stuck dealing with it.

Do You Get to Keep the Earnest Money?

Maybe. Probably not. Here's the deal.

Most contracts include a financing contingency. This protects buyers if they can't get a loan despite good-faith efforts. If they tried and the loan got denied, they usually get their earnest money back.

Now, if the buyer did something stupid, like buying a boat during escrow and tanking their own loan, you might have a case for keeping the deposit. But proving it requires documentation and sometimes legal involvement. Most of the time, it's not worth the fight. The money sits in escrow while everyone argues, and you can't sell to someone else until it's resolved.

My advice? Get the deposit released, move on, find a better buyer.

What Happens to Your Sale

When financing falls through, your home goes back on the market. The listing shows as "back on market" or "BOM," and buyers will wonder why.

It's not the end of the world. Plenty of homes come back on market through no fault of the property. But you'll likely need to explain to the next buyer's agent what happened. "Buyer's financing fell through" is a perfectly acceptable answer.

The annoying part? You've lost time. Three weeks, maybe four. That's time you could have been marketing to other buyers. In real estate, time costs money.

How to Protect Yourself Next Time

You can't eliminate this risk, but you can minimize it.

Scrutinize pre-approval letters. A letter from a reputable local lender beats an online pre-qual any day. Ask your agent to verify.

Look at down payment size. Buyers putting 20% down are safer bets than buyers scraping together 3%. More skin in the game usually means better-qualified buyers.

Prefer cash buyers when possible. No lender means no financing contingency. Obviously not always an option, but when you're comparing offers, cash is king for a reason.

Watch the timeline. If the buyer keeps asking for extensions on financing deadlines, that's a red flag. Qualified buyers close on time.

The Silver Lining

Here's the thing. A failed deal means that wasn't your buyer. Better to find out during escrow than after closing when they can't make payments and the house ends up back on the market as a distressed sale.

It stings. It delays your plans. But the right buyer is still out there.

Dealing with a complicated escrow or worried about your buyer's financing? Let's talk. I've navigated plenty of these situations and can help you figure out your best move.

Frequently Asked Questions: When Buyer Financing Falls Through in Las Vegas

Q1: How common is it for buyer financing to fall through?

It happens more often than most sellers realize. While exact statistics vary, financing issues cause a significant percentage of delayed or failed closings. Factors like job changes, new debt, or appraisal problems can derail even pre-approved buyers during the underwriting process.

Q2: Will I automatically keep the earnest money deposit if the buyer's loan is denied?

Not usually. Most purchase contracts include a financing contingency that protects buyers who make good-faith efforts to secure financing. If the loan denial wasn't due to the buyer's reckless actions (like taking on new debt during escrow), they typically get their earnest money back. Fighting for the deposit often delays finding a new buyer and may require legal involvement.

Q3: What does "back on market" mean for my listing?

When financing falls through, your property will be relisted as "back on market" (BOM). This status is visible to other buyers and agents. While it may raise questions, "buyer's financing fell through" is a common and acceptable explanation. The main downside is lost time—typically 3-4 weeks you could have spent marketing to other qualified buyers.

Q4: How can I tell if a buyer is financially qualified before accepting their offer?

Look for pre-approval letters from reputable local lenders rather than online pre-qualifications. Ask your agent to verify the pre-approval. Buyers with larger down payments (20% vs. 3%) are generally more financially stable. Also pay attention to whether the buyer requests multiple extensions on financing deadlines—this can be a red flag.

Q5: What are the most common reasons buyer financing falls through?

The top reasons include: job changes or loss of employment, taking on new debt before closing (car loans, credit cards), bank account issues like unexplained deposits, low appraisals or property condition issues that don't meet loan requirements, and documentation problems like missing tax returns or employment gaps.

Q6: Should I accept a cash offer over a financed offer?

Cash offers eliminate financing contingencies and the risk of loan denial, making them more reliable. When comparing multiple offers, cash buyers typically represent less risk and faster closings. However, this doesn't mean you should automatically reject financed offers—especially if they're significantly higher or come with better terms overall.

Q7: Can I continue showing my home while waiting for the buyer's financing to be approved?

This depends on your contract terms. Once you've accepted an offer and are in escrow, you typically cannot accept other offers. However, you may be able to continue showing the property and collecting backup offers. Discuss this strategy with your agent if you're concerned about the buyer's financing stability.

Q8: How long does it typically take to find out if buyer financing will go through?

Most financing contingencies last 17-21 days, though this varies by contract. The lender should provide status updates throughout the underwriting process. If you're approaching the financing contingency deadline and haven't received clear approval, that's cause for concern. Buyers requesting extensions may be experiencing loan issues.

Q9: What should I do immediately after learning the buyer's financing fell through?

First, work with your agent to understand why the financing failed and review your options regarding the earnest money. Next, get your home back on the market quickly with a clear explanation ready for prospective buyers. Finally, use the experience to better evaluate future offers—scrutinize pre-approvals more carefully and consider the strength of each buyer's financial position.

Q10: Does a failed sale hurt my chances of selling later?

Not significantly. Failed financing is common and doesn't reflect poorly on your property. As long as you can explain what happened honestly, most buyers and their agents will understand. The main impact is lost time on the market. Work with your agent to re-energize your marketing and attract qualified buyers quickly.