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Deals that fall apart at the last minute

It seems lately that more deals are falling apart right before or on the day of closing. Lenders are checking for credit credit reports and appraisals sometimes hours before closing. How do we prepare our clients for this? I would love to hear from the lenders on this board as well as fellow Realtors on how they have handled these situations.

Can we prevent this?

What should we be looking for?

Are particular loans more prone to this?

I still believe this market is definitely teaching us to be better agents.

Posted by Christina Bennani Realtor® The House For You on 10/04/2007 07:12 PM

Comments (8)

deals that fall apart

8 Comments on Deals that fall apart at the last minute

OCT

2007

Hi Christina! Yes I believe this is definitely teaching all of us how to be the best we can possibly be. That is a really good point. I have also had a deal fall through on closing day - luckily the deal was saved and closed two weeks late, but still - like you I wonder if there are things I could have done to better prepare my client from the devastating news.

The market has under gone alot of changes so now I tell my clients that nothing is for sure until we get to the closing tabel. Most are very understanding. I explain that the buyer has met all of the guidelines at the time of pre-qual but with all the changes lenders are short handed, and they are still on going changes in guide lines. I also explain that I will stay in close touch with the lender and keep them informed of any potential problems that may arise. What I am seeing is not deals falling apart but prolonged closing.

I like lots of others have had deals fall through at the ninth hour. I have spoken with some lenders who have informed me that due to the recent changes they have to go back towards the end of the transaction and get final loan approval. They re-check with the invesors to make sure everything is okay. The issue seems to be that if any loan program has changed even slightly or any of the borrowers situation, it can set everything topsy turvy. This was the last explanation I was given. NOT FUN!

I've only had one settlement fall through in over 20 years "knock on wood", but it was a DOOZY to end all DOOSIES! It ended in a big lawsuit being filed on my sellers, the selling agent and me. It was all over nothing - the buyer made it to settlement with his loan too - The buyer just didn't finish the settlement! He refused to go thru with it. The lawsuit was dropped pretty quickly against me and the selling agent because it was considered a "nuisance lawsuit". The lawsuit between the seller and buyer however, went on for over a year. It was finally all dropped and I resold the sellers house in a week after putting it on the market again.

I have had many many settlements get delayed or almost fall thru the day of or during a settlement. I have had loans rejected or not fund on the day of settlement. They all eventually worked themselves out. If the buyer wants to buy and the seller wants to sell - A way can always be worked out for it to happen. Last minute craziness happens all the time in Real Estate! It's just Murphy's Law of Real Estate working it's magic - Just hang in there - find another lender or wait until the deal can be done!

There's also the aspect of a bountiful marketplace offering too much choice. I've been driven crazy by buyer clients who can't/won/t make up their mind because they always think there's a better deal available tomorrow. How do we motivate people to 'get off the dime'?

I have had this happen to me, I had the buyer. The seller's flew in from out of country to be here for closing. Day of closing, the mortgage broker could not be found and would not answer phone calls made every 15 minutes to her. The title company had yet to receive any loan package. What to do?

Luckily, the seller's owned the property free and clear and agreed to do a short-term seller finance deal. We closed the following day and they were paid off six months later after my buyer refinanced (through a different mortgage broker).

We just need to explain to the seller's that in the current marketplace, there are no guarantees regarding the buyer's loan. If the seller owns the property free and clear, suggest may be having them do seller financing for a short period.

OCT

2007

I try to do everything in my power to keep a deal from falling through. However, it takes two to tango. If my buyers aren't in it 100% there's nothing I can do.

OCT

2007

This happened to an agent in my office this week. Two offers on the same home. Accepted the 2nd - Buyer's Agent didn't have a lot of experience. When the repair list came back the buyer's freaked and withdrew their offer.

As the market becomes more of a buyers market clients are trying to get more for their money. In addition, they are certainly more skittish about the market also.

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