Definition
Fall-through rate is properties under contract that don't close. If 100 go under contract and 15 fall through, your fall-through rate is 15%. High rates indicate risky deals or market uncertainty. Low rates indicate stable, reliable closings.
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Fall-through rate is the inverse of contract-to-close ratio. If 200 properties go under contract and 30 fail to close, fall-through rate is 15%. Fall-through rate indicates deal risk and market health. Higher fall-through rates indicate: stricter lending standards (financing more difficult), more inspection failures (properties in poor condition), or market uncertainty (buyers getting cold feet). Fall-through rate varies by market condition and buyer profile. Markets with strict lending, appraisal problems, or inspection failures have higher fall-through rates. Understanding fall-through rate helps with contingency planning: if fall-through rate is 20%, don't assume your contract is binding—there's meaningful risk it won't close. Fall-through rate also affects pricing: markets with high fall-through rates might need aggressive pricing to move inventory. Sellers in high fall-through markets should be more cautious about accepting contingent offers. Real estate professionals monitor fall-through rate as key market indicator.
Pro Tip
High fall-through rates suggest market is challenging. Don't assume your contract equals closing—understand your market's deal reliability.
Example
Market has 15% fall-through rate (85% contract-to-close ratio). Of 100 homes sold, 15 went under contract but failed to close, creating uncertainty for sellers and agents.