Reading Time: 2 minutes, 49 seconds
Having a sale fall through during the final stages of the transaction is not only disappointing and frustrating, but can also be potentially expensive. Here are some potential problems that sellers should anticipate, as they are the lead causes for cancelled offers. Buyers and sellers who are more aware of these common deal breakers can avoid them, simply by being prepared.
So why do home sales typically fall through ?
1. Buyer’s Remorse
Buyers remorse, or “cold feet,” is when the buyer backs out of a deal last minute. Once an offer has been placed, buyers are legally bound to respecting it…but a buyer who’s had an emotional U-turn may still look for loopholes or ways of negotiating themselves out of the contract. While there isn’t much that a seller can do to eliminate buyer’s remorse, they can plan for it in two ways. Firstly it’s important to be extremely thorough while outlining the seller’s declaration, making sure that there are absolutely no undisclosed points- no matter how trivial they may seem. Non-disclosure is grounds for a buyer to make their offer null and void. Secondly, when the option stands, favour buyers who seem the most confident in their desire to purchase a property.
Loan rejections are a main cause of deal falling through the cracks in real estate. But luckily, there’s an easy way to prevent it from happening. Request pre-approvals. Buyers who are pre-approved for an initial screening are far less likely to be rejected during the mortgage approval process. If you’re unsure whether a buyer has been pre-approved, check in with your agent or the buyer’s agent to ensure it’s been done.
3. Home Inspection Surprises
Home inspections can reveal serious flaws or hidden defects in the property, which may be a deal-breaker for the buyer. They can also a further negotiation on price. To prevent this from happening, sellers with older homes should organize their own inspection before placing their home on the market. A timely inspection will give them opportunity to renovate and fix any potential issues before listing the home. For more info on which renovations are worth executing, read this article.
4. Asking Price vs Appraisals
If an appraisal turns out to be lower than the asking price, it can cause a deal to fall through. This is because banks will only lend the appraised value of the property, and not all buyers can afford to pay the difference. In many cases this becomes a deal breaker for buyers. Sellers need to be prepared to negotiate down their price, or to justify their own appraisal with comparables in the area in order to defend their higher estimation. The best solution to this problem is to start out with a fair and accurate asking price. Read more about pricing a sales unit here.
5. Conditional Offers
Buyers sometimes put in an offer with a condition that they sell their current home before finalizing the purchase. If the sale on their home falls through, so could yours. The only thing a seller can do to avoid this is to reject contract contingencies. Whenever possible, prioritize buyers who aren’t relying on the equity from their own home to help finance the purchase.