An offer is accepted and all parties have signed the required
documents to begin the process of selling your home. Then bam! The deal falls through and you’re
back at square one and wondering what happened and what should you do now.
Contracts are not fail proof. Especially
real estate contracts which are full of contingencies that must
be met before the deal can be finalized. The most common contingencies that
fall through are the following.
Loan
Contingencies
Unfortunately, if the buyer is unable to secure a mortgage loan, the
seller is the one to suffer. Hopefully,
the seller’s agent has back up offers ready to fill in the gap. If not, then
the home goes back on the market which can lead to misconceptions about the
property.
A home that is on the market for 0 to 1 days is attractive to buyers
but one that is on the market for weeks or months gives the impression that
there are issues with the home even if that’s not the case.
To avoid this pitfall, work with buyers who are already pre-approved
for a mortgage loan that meets your selling price or with buyers who are paying
cash. Today, it’s common for buyers
provide pre-approval letters to sellers and is highly recommended by real
estate professionals.
The Home
Inspection Reveals Problems
The home inspection may reveal multiple issues or a large ticket
repair that may cause the buyer to back out of the contract. This leaves the seller with a couple of
options: pay to fix the issues or negotiate with the buyer to share the costs.
This is a tricky contingency to avoid.
If you as a seller are aware of issues, make sure you let your agent
know so they can be included in the disclosures. Then the buyer is aware of the
issues before committing to a contract.
If you are not aware of the issues until the home inspection, then try
to negotiate before ending the contract. Make sure your agent is a skilled
negotiator. This can save you thousands of dollars.
The Buyer’s Home
Sale Falls Through
Occasionally a sale is contingent on the buyer selling a home. If
you’re willing to hold off your sale, you can renegotiate and provide more time
for the buyer to sell his/her home. Otherwise, there’s not much you can do in
this situation.
The Appraisal Is Less Than the Selling Price
When the home is appraised less than the selling price, you can split
the difference with the buyer or lower the selling price to meet the
appraisal.
If the home is located in a market with bidding wars, the appraisal
may come in higher in a short period of time so negotiating with the buyer is
optimal. If not, then lowering the
selling price may be the best option.
How to Minimize
the Risks
Avoiding all risks when selling a home is unrealistic, but you can
minimize the potential of a contract falling through.
First, request mortgage pre-approval letters with each offer.
Second, get a home inspection before listing your home. You can make
repairs before listing or include any issues in your disclosures.
Third, work with your real estate agent to make sure your selling
price is comparable to the market.
Finally, make sure you have an experienced and trusted real estate
agent who communicates with you throughout the process and who has strong
negotiating skills.
Be an informed seller by knowing your contract and minimizing the
risks ahead of time. Work closely with your real estate agent and go sell your
home!
