Falling out of escrow? Buying or selling a home is a big milestone, and getting into escrow often feels like the finish line is in sight. But in today’s real estate market, many buyers and sellers are finding that deals don’t always make it to closing. Escrows can and do fall through — sometimes unexpectedly. Understanding why escrows fall through and how to prevent it is key to protecting your time, money, and goals.

Understanding Why Escrows Fall Through and What It Means for Buyers and Sellers

In the world of Santa Clarita real estate, hearing that a home is “falling out of escrow” is more common than you might think. But what does that really mean?

When a property falls out of escrow, it means the home was under contract — an offer was accepted, and the process of transferring ownership had started — but the buyer backed out before closing. Escrow fallout can be frustrating for both parties, especially if you’re a seller counting on the timeline or a buyer who’s already invested money in inspections or appraisals.

According to recent data, around 13% of escrows are currently falling through in the Santa Clarita Valley. That’s about 1 in every 7 home sales — a significant number that both buyers and sellers should be aware of.

Why Do Escrows Fall Through?

There are several common reasons why homes are falling out of escrow:

1. Buyer’s Cold Feet

Sometimes buyers simply change their minds. It could be nerves, second thoughts, or a sudden shift in their financial situation.

2. Loan Denial

A pre-approval doesn’t always guarantee loan funding. If the buyer’s credit changes or new debt is added, the lender may no longer approve the mortgage.

3. Low Appraisal

If the property doesn’t appraise at the agreed-upon price, the lender won’t approve the full loan amount, and the buyer may not be willing (or able) to pay the difference out of pocket.

4. Major Repair Issues

After the home inspection, if major issues like foundation cracks, roof damage, or plumbing problems are revealed, buyers may walk away instead of negotiating.

5. Insurance or HOA Issues

In high-risk areas, buyers may struggle to secure homeowners insurance — a growing issue in California — or they may uncover HOA rules that don’t align with their lifestyle.

What Happens When an Escrow Falls Through?

For Sellers

An escrow fallout can mean lost time, stress, and temporarily pulling your home off the market. You may have already planned your next move, hired movers, or even entered escrow on a new property yourself.

For Buyers

While you have the right to cancel within contingency periods, backing out after those deadlines can mean losing your deposit. You may also be out money from inspections, appraisals, and other upfront costs.

How to Prevent Escrow Fallout

Working with an experienced Santa Clarita real estate agent can help minimize the risk of escrow cancellations. At Home661, we:

  • Vet buyers carefully

  • Communicate proactively with all parties

  • Guide negotiations after inspections

  • Ensure timelines and contingencies are properly managed

  • Set expectations so everyone is on the same page from Day 1

Don’t Panic — Be Prepared

While no one wants their deal to fall through, the good news is: most escrows do close successfully. If you’re working with a professional who knows how to navigate these situations, an escrow fallout is just a bump in the road — not the end of your real estate journey.

Thinking about buying or selling in Santa Clarita? I’m here to help you prepare, negotiate, and protect your investment.

Learn more about navigating the escrow process at Home661.com
Let’s keep your deal on track.