No one wins when a home sale transaction falls through on inspection.  The failure to negotiate inspection items creates a frustrating situation for all involved.  Buyers experience the disappointment of losing out on a house they may have had their hearts set on.  They may also receive a shocking lesson regarding the cold hard realities of purchasing real estate (perhaps even a bruised ego to boot!).  However, they can take comfort in the knowledge that many other houses await their discovery.  Wise buyers will learn from the experience, drawing upon it to manage future expectations.

For sellers, the stakes are higher.  Where a buyer can simply move on and start over with a new house, the seller has only the one property with which to work.  If it falls through and returns to the market, a notice to that effect will get posted on the MLS.  Buyers will want to know what derailed the deal.

Don’t expect sympathy or understanding.  The fact that the house inspected beautifully but the buyers unreasonably dug in their heels and insisted you replace a perfectly sound furnace because they thought it looked old probably won’t resonate with the next party viewing your home.  However unfairly, listings that fall through on inspection develop a taint.

When that taint sets in, count on the market responding.  Many buyers will assume the worst about the house, steering clear of it altogether.  Those who do express interest will smell blood in the water, making offers far below your asking price.  The longer the house remains on the market the worse it will get.  Let this downward spiral continue long enough and a price reduction becomes all but inevitable.

To avoid this scenario, sellers must stay at the negotiation table.  Don’t let your emotions prevent you from working to come to terms with the buyer.  Seek as much information as possible, and, if difficulties persist, make a rational determination as to what outcomes you can expect if you allow this deal to go under.  Your listing agent can advise you along these lines.  He or she can also tell you if or how the market has changed since you went under contract and how those changes may affect your chances to recover if you decide to drop your current buyer.

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