Things That Could Go Wrong With a Real Estate Sale
You’ve just sold your house or acreage in Spruce Grove, Stony Plain or Parkland County in Alberta. That is, you’ve accepted the Offer to Purchase, and now all you have to do is wait for the proceeds to be deposited into your account, right? Not so fast! There are many things that could undo a sale.
- Buyers not pre-approved for a mortgage. After making an offer, the buyers discover they can’t get a loan for the amount they need. (Mortgage approval is influenced by buyers’ source, size and stability of income; their debt load, or “debt to income ratio”; credit history; size and source of down payment; value of the property being purchased, and so on. A mortgage specialist can inform you about these things.)
- Interest rates increase; buyers no longer qualify for a mortgage.
- New government legislation. Ottawa recently announced a decrease in the length of time a mortgage can be amortized, from 35 to 30 years, making monthly payments higher and therefore out of reach for some buyers.
- At closing, buyers are short of cash for the down payment and closing costs.
- Change in life circumstances: job loss, illness, injury, divorce, death, anything that affects the desire and means to purchase the property.
- Buyers change their minds about the property: family members don’t like it; buyers are unhappy with home inspection report; on “final walk-through” they discover damaged or missing property or agreed-upon repairs not made; etc.
- Buyers’ conditions, such as sale of their current home, cannot be met.
- Sellers change minds about selling: job transfer falls through; marriage reconciles; suitable replacement home cannot be found; etc.
- Financial concerns: proceeds from the sale will be less than anticipated; sellers discover they owe more than they will net from the sale; sellers learn their mortgage differential or penalties are much higher than expected; etc.
- Unable to meet contract terms such as move-out date.
- Problems with the property: title not held free and clear; sellers short on cash and unable to clear up liens on property; sellers unable to complete agreed-upon repairs; undisclosed defects come to light; etc. (Sometimes property problems are even more severe. It’s rare, but occasionally an inspection reveals that a property is uninsurable or even unsaleable due to being structurally unsound, infected with mold, and the like. And the ultimate problem affecting a sale: destruction of the property before the final sale goes through!)
Circumstances Involving Other Parties:
Buying and selling real estate is a complex business involving not just buyers and sellers and their REALTORS®, but also lawyers for each side of the transaction, mortgage specialists, appraisers, home inspectors and others. If any one of the individuals is unavailable when needed, misses a deadline, or fails to complete accurately all the required paperwork, this could be enough to cause a sale to fall through.
A REALTOR® can often salvage a negative situation. For example, if the buyer complains that the home is not in the condition in which he viewed it, the first step is for the REALTORS® on both sides to confer about how to make things right. And – don’t tell anyone – I admit that I’ve taken it upon myself on occasion to personally make required repairs so that a sale will not be lost. I also recently dealt with a situation where I knew that a buyer’s home was not going to be sold by the specified date or for the price required to get the buyer into the home he’d made an offer on. Negotiating a later possession date for my client (the buyer) was easy. Getting the sellers and their REALTOR® to recognize that the sale would be lost unless they were willing to renegotiate the selling price and accept less for their property was harder, but ultimately, this allowed both buyer and sellers to reach their goals.
While it’s impossible to prepare for every eventuality, it is possible to minimize the potential for problems. My best advice is to choose your REALTOR® carefully and leave the lines of communication open. A successful end to a real estate transaction almost always occurs when everyone involved proceeds with good faith, patience and good will.