The top 5 reasons that home sales fall through may surprise you!

By
Property Manager with Double K Property Management

Pop the champagne! Take your partner out for a celebratory meal! The deal is done! You’ve accepted an offer on your house. But how close are you really to that coveted closing? It’s true that, according to the statistics, over 96 percent of home sales closed without any hiccups and in a timely manner in 2016. But then, there’s that pesky 3+ percent of the time when the unthinkable happens. So, it’s a pretty good idea to prepare yourself now for that unlikely possibility.

During that eternity while your offer is pending, there are a lot of things happening behind the scenes, not the least of which is your respective real estate agents clearing any unforeseen events. Whenever you see the term “contingent” on your listing, it means that your buyer is working hard to clear up any snags that they haven’t planned for. These can take the form of failed home inspections, financing, or that they simply haven’t sold their own home yet. Let’s take a look at some of the most common.

The appraisal comes in too low

When the market is in the seller’s favor, like when there’s a limited availability of houses in the area, it’s not uncommon for bidding wars to erupt. Hooray for the seller, right? But bidding wars often lead to offers that are higher than the fair market value of your home. This can lead to financing trouble when the appraisal comes in too low. Everybody knows that a bank won’t finance a property for more than the appraiser says it’s worth. If the buyer can’t come up with the extra cash for the down payment, either the seller is forced to reduce the price, or the buyer has no choice but to withdraw. Remember the old saying, a bird in the hand is worth two in the bush? Don’t price yourself out of a sale.

Mortgage issues

The buyer must get a mortgage, usually within a specified period after signing. Often, there is a condition written into the contract where 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 document before the ink is dry at signing.

Inspection problems

Buyers have the option to have more than one type of inspection performed on your home. As the seller, it may be worth your while to have an inspection done to identify potential concerns before you’re under contract. It’s very common for inspectors to flag issues that you might consider minor. Having a fresh set of eyes taking a look at things will provide an opportunity for you to correct any problems before they become … problems.

Infestation irksome

Here’s another situation where a few pre-emptory dollars spent on an inspection can head off closing issues. Most of us have contracts with pest control companies, but there are a stubborn few who consider the risk nominal. If this is you (and I hope it isn’t) it’s always a good idea to head off surprises before they can put a kink in the system. Depending on your inspector’s experience and diligence alone may not pay off, so if the home you’re selling isn’t under a pest control contract, it’s a good idea to get a second look from someone who’s skills are specific to infestations, so the route to the closing doesn’t get all buggy.

Buyers experience cold feet

The percentage of first-time home buyers has been increasing steadily for the past several years. The majority of these buyers are utilizing FHA loans, which can determine the type of home they can purchase. These loans are typically scrutinized more closely due to the potential risk and lower down payments. Many of these people aren’t familiar with all of the ins and outs of the process. If they don’t have their finances in order or they haven’t been made aware of the initial costs involved, all of the details might keep them awake at night. A good agent will sort most of these issues out for you, but on occasion, the potential buyer can become overwhelmed, or they may learn that they simply aren’t prepared to be a home owner, causing them to back out.

The costs

When you have a contract in hand, there are risks that you will suffer if the potential buyer is either unable or unwilling to complete the deal. Probably the most frustrating thing about a home sale falling through is the time that’s been wasted. During the time that your contract is pending, other potential buyers have moved on to other prospects. If your buyer backs out, you’re forced back to square one to start over with another buyer—whenever one happens to come along. What about that new home that you were on a timeline to move into? If you’re under contract yourself, and your prospective buyer backs out, you might have an additional and unforeseen expense for breaking your contract. If you’re making payments on your current mortgage—on the house that you’re selling—then all that money is wasted too. Don’t even get me started on the ongoing maintenance costs of your current house.

So, do yourself a favor, do your diligence. A small investment in an inspection and a little pre-planning of what you require of any potential buyer can save you a lot of aggravation in the long run.  If you have a house to sell in Middle Georgia, I can help you avoid these problems.

 

Comments (10)

Graziella Bruner
NCS Premier Real Estate - Detroit, MI
Associate Broker - Serving Wayne & Oakland County

Welcome to Active Rain and congratulations on your first post! Since being in this business for 24 years now, I've learned to celebrate after my check is in my hand.  I've seen people walk out from the closing table, not a good sight, but it has happened.  Every client, whether a buyer or seller is different, every deal is different w/their own little hiccups, but it's a day to day operation.  Great list, good for those starting off in the business. 

Jun 12, 2020 01:35 PM
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Welcome to the ActiveRain community. Congratulations on your first post.

Jun 12, 2020 09:43 PM
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Don Chambers very good list of tips for home sales fall through may surprise.

Jun 12, 2020 09:46 PM
Matthew Klinowski, PA
Downing-Frye - Naples, FL
Golf Community Real Estate Specialist

Good morning Don Chambers, congrats on your first post and welcome to ActiveRain! I hope you find the platform helpful. 

Jun 13, 2020 05:12 AM
Brian England
Vacasa - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

This is a well-written post and a good one for your first entry to ActiveRain.  Will you be active?  Will you perhaps post a picture for your profile?

Jun 13, 2020 07:32 AM
Brian England

I hope to be active, but it's always a struggle.  I am a little different that most people here.  I am a full time software developer, but I buy a lot of houses and I'm a property manager.  I'm up to 66 rentals and I do 4-5 flips a year.  I used to have my own blog but it's been dormant for a long time.  It gets very time consuming.  I do like writing about it, and I now have someone to proof my work.  I know this is more geared to Realtors, but there are not many places for investors to participate that aren't scams.

Jun 15, 2020 04:53 AM
Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

Welcome to Active Rain, a great place to learn, share, and network. I'm having issues with the inspection phase now. So they are out looking at other homes while we go through the inspection negotiations. And we are seeing more inventory going active each day.

Jun 13, 2020 10:13 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Through the years I’ve seen several of these ! It can be frustrating for all to have to start over 

Jun 14, 2020 06:01 AM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

Thank you for sharing your thoughts with us. Welcome to ActiveRain!

I hope this Tuesday has been rewarding Don Chambers 

Jun 16, 2020 09:31 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Don Chambers welcome to ActiveRain and congratulation on successfully posting your first blog on this site.

Jun 17, 2020 10:00 AM
Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

Welcome to Active Rain, looking forward to reading many more of your posts, let me know if there is anything that I can do to help as you get started here.

All the best of success to you.

Bob

Jun 27, 2020 06:33 PM