While most home sales close smoothly and in a timely manner, there are a number of things that happen between the contract date and closing date. However, reality is that not every real estate deal is going to make it to a happy ending.
According to Trulia, 3.9 percent of sales failed in 2016, meaning that the majority of sales close, but some deals still fall apart for different reasons.
Putting a home back on the market is no fun for the seller and can provoke a lot of questions from potential buyers and their realtors.
“A very small fraction of seller(s) terminate the sale for a number of reasons,” Skip Johnson with The Platinum Group REALTORS® said. “More often than not it’s because they couldn’t find a new property to replace the one they are selling, or because a new job that they were moving for didn’t work out and still others that were being transferred with their current company that fell through.”
Sometimes it’s completely out of the seller’s control. A few of the reasons sellers are forced to re-list their home include the following:
1. Home inspection contingency
A bad home inspection is the number one reason why a house comes back on the market. Once a buyer finds the right home, they will need an inspection of the property to make sure everything is in good condition. A home inspection contingency allows potential buyers to renegotiate the price or walk away because of items of concern found in the inspection report.
2. Low appraisal
In markets with a limited housing inventory, some home prices have increased beyond home values. This can result in trouble with financing if the pre-closing appraisal report comes back short of the purchase price on the contract.
A lender won’t finance a home for more than the appraised amount, so the buyer will have to pay the difference in cash, the seller will have to come down on price, or the buyer can walk away.
3. Buyer remorse
Buyer’s remorse is real and some buyers have changed their minds after they submitted an offer. Almost half of all buyers are first-timers (42 percent, according to the Zillow Group Consumer Housing Trends Report) and some first-time buyers simply get cold feet. They may be able to void the contract based on a contingency to cancel their offer.
4. Property title issues
The buyer’s lender will check the property title to make sure there are no liens for unpaid debts or outstanding financial responsibilities on a property. Title defects can include things like illegal deeds, errors in public records, unknown easements, forgeries and more. The main reason to purchase title insurance is to help you overcome these defects should they arise.
5. Financing falls through
One of the most common reasons a sale fails is that the buyer’s financing falls through. Mortgages are not fully guaranteed until the buyer has signed a final agreement with a lender. If a buyer has been pre-approved and has a change in their status, such as difference in employment, new negative credit issue, accrual of additional debts, or a change in lender guidelines can cause the lender to cancel the financing.
Realtors would love to avoid home sale contingencies if at all possible, but there are many types of contingencies that can be attached to the sale. For instance, a buyer home sale contingency would allow the buyer to pull their offer if their current home doesn’t sell within a certain time period. Such contingencies may not kill the deal completely, but can cause your sale to be pending for a very long time.
7. Incompetent Realtor
An unqualified realtor can easily get in the way of a successful transaction. Whether you’re a buyer or a seller, an experienced and competent real estate agent is critical. An inexperienced or inept real estate agent will neglect to stay on time with contract dates and proper follow ups and may drop the ball in a manner that results in the cancellation of the contract.
The experts at The Platinum Group, REALTORS® have years of experience and unlimited resources to help you evaluate your best options and local market conditions. With the connections and knowledge Platinum Group REALTORS® are able to provide, buyers and sellers can feel confident knowing their transaction is in the best hands.
With over 80 percent of their business coming from referrals, it’s clear that The Platinum Group, REALTORS® deliver top quality customer service the utmost honesty, integrity and attention.