On Real Estate & More – September 2017
According to Wikipedia, “It ain’t over till the fat lady sings,” is an expression that means you shouldn’t presume to know the outcome of an event which is still in progress. Although the phrase is generally understood to be referencing the stereotypically overweight sopranos of the opera, it is certainly true about real estate transactions.
Although it may be exciting when you accept an offer and your property is considered “pending,” it’s important to understand when a buyer and seller agree to terms in a contract that it is not a done deal. There are still many things that must happen between the contract and closing, and sometimes things occur that cause a real estate deal to fall though. There are many reasons why; here are some of the most common:
Buyers Can’t Sell a Home—Buyers can lose a home sale if the contract is contingent upon selling the buyer’s home and that home has not sold in the time specified. Few buyers can afford to own two residences at the same time by making double mortgage payments. Contingent offers can create a domino effect.
Mortgage/Appraisal Issues—Having a pre-approval letter is a must when buying a home, however it does not guarantee the buyer will be approved for the mortgage. Since there are many reasons why a mortgage is rejected, it’s important to keep in mind that until the closing has occurred, a buyer isn’t guaranteed to receive the loan.
There are situations when a buyer is rejected that a mortgage lender or bank has no control over. Having a real estate deal falls through because there are issues with the bank appraisal is most common, especially if a bank appraiser determines that the value of the property is less than the agreed upon sale price.
Inspection Issues—Once a home inspector points out problems in a home, buyers tend to panic. It’s important to remember that every home will have issues and that the primary reason for inspections is to make sure the home doesn’t have any major deficiencies. Since home inspectors will find issues with every home, having a pre-listing home inspection may give a seller the opportunity to correct issues beforehand.
Issues with Closing Documents—The most common issues with the closing documents relates to the title of the property, including outstanding liens, public record errors, past bankruptcies, missing heirs, or short sale/pre-foreclosure issues.
Buyer’s Remorse—Buyers get cold feet. To avoid buyer’s remorse, make sure to do your homework before making an offer, understand the sales contract you are signing, think of potential problems about the home you want to purchase, and make sure you can afford the home.
It’s important to keep in mind that real estate deals can fall through. Writing a contract for the purchase of a house is a serious thing with lasting ramifications. As described above, some of the reasons real estate deals fall through are completely controllable while others are not. If you are aware of the above common reasons, you will put yourself in a much better position from the start!