Surprise! Your home sale just fell through!
Surprise! Your home sale just fell through! But why?
By: Don Chambers
It’s a done deal! You’ve accepted an offer on your house, so it’s time to celebrate! Or is it? According to the statistics, in 2016 over 96 percent of home sales closed without any issues and in a timely manner. But in over 3 percent of the sales, the unexpected happens. So, it’s a pretty good idea to prepare yourself now for that unlikely event. During that time when your offer is pending, there are a lot of wheels turning behind the scenes, not the least of which is your respective real estate agents clearing any unforeseen events. If the term “contingent” is stamped on your listing, it means that your buyer is working hard to clear up any hitches that they haven’t foreseen. These can be anything from failed home inspections, lost financing, or the fact that your buyer simply hasn’t sold their current home yet. Let’s look and see which are most prevalent.
Buyers can always opt to have more than one kind of inspection performed on your home. As the seller, it may be worth your while to have an inspection done prior to signing in order to identify potential problems. It’s not difficult for some inspectors to find issues that you might consider negligible. Having a new set of eyes taking a look at your home will provide an opportunity to correct any problems before they arise.
This is a big one. The percentage of first-time home buyers has been increasing over the past several years. Most of these buyers are utilizing FHA loans, which can determine the type of home they can buy, and these loans are often scrutinized more closely due to the lower down payments and the potential risk. Many of these people don’t know all of the ins and outs of the process. If they haven’t been made aware of the up-front costs involved, or their finances aren’t in order, the minutiae might put them in a tizzy. Good real estate agents will sort out most of these issues, but on occasion, the buyer can be overcome by the details, or they may have to accept that they aren’t prepared to be a homeowner yet, causing them to back out.
Most of the time, the buyer has to get a mortgage, usually within a short period of time after signing. Almost always, there is a written condition in the contract that if the financing falls through, the contract is nullified. It’s very important that you, as the seller, require the buyer to provide a mortgage pre-approval letter before the signing.
Lower than expected appraisal
Bidding wars are great for the home seller, right? Especially when there’s a limited availability of houses in the area. So, it’s not at all uncommon. But bidding wars often lead to offers that are higher than the value of the home you’re selling. This can lead to financing issues when the appraisal is low. The bank won’t finance a property for more than the appraisal, so if the buyer can’t come up with the higher down payment, the seller must either reduce the price, or the buyer has to back out. So, don’t get greedy and price yourself out of a sale.
Bugged by bugs
Here’s another situation where a few dollars spent can head off closing troubles. Most homes are under contract with an extermination company, but some folks consider the risk low. If this is you, it’s time to rethink your decision. But, in the meantime, it’s always a good idea to eliminate any surprises. Frankly, your inspector’s experience and diligence alone may not be enough. So, if the home you’re selling isn’t currently under a pest control contract, it’s a good idea to get a professional who’s skills are specific to pest control, so that the closing goes smoothly.
When you have a contract in hand, there are still risks. If the potential buyer is either unable or unwilling to complete the deal, that’s money you didn’t plan for. The most maddening thing about a sale falling through is the time that you’ve wasted. During the period when your sale is pending, other potential buyers are moving on to other prospective buys. If your buyer gets cold feet, you’re forced to start over again, whenever that next potential buyer happens along. What about your new home that you were scheduled to move into? If you’re forced to break your contract, that could mean another unforeseen expense for you. If you’re still making payments on your current mortgage, then that’s money down the drain too. And then there’s the ongoing maintenance costs of your current house to consider as well.
So, in the long run, a little pre-planning of what you need from any potential buyer, and a small investment in an inspection can save you a lot of headaches on your sale.