According to a 2016 survey, nearly 4 percent of pending home sales failed to close. So while the majority close, we’re looking at why some don’t and what can be done to prevent it.
Hi, I’m Matt with ReHive and I find that by understanding why contracts fall apart we can better prepare your home purchase agreement to stay strong and get to the closing table.
#1. Inspections
A home inspection contingency allows buyers to renegotiate the price or walk away because of concerns found in the inspection report.
How can this be prevented?
Be thorough with the condition of your home with your agent so that the sales price can be defended in “as is” condition. This will give you the strongest position to stand firm on your price or anticipate counteroffers.
#2. Low Appraisals
Lenders won’t finance a home for more than the appraised amount, so buyers either have to pay the difference in cash, the seller lower price, or the buyer can walk away.
How can this be prevented?
Start by listing your home at a price you can defend through similar past sales. This is what appraisals are based on so in most cases it will prevent under appraisal and if not, you can dispute it with good data.
#3. Financing Falls Through
Any change in employment status, a new negative credit issue, new debts, or a change in lender guidelines can cause the lender to cancel the financing.
How can this be prevented?
Most of the time this one is out of our control. But you can have your agent check a potential buyer’s financial status before accepting an offer.
#4. Title Issues
A title attorney will check to make sure there are no liens, unpaid debts, or outstanding financial responsibilities on a property. Title-related issues can seriously prolong closing — or cause a deal to be canceled overall.
How can this be prevented?
This one is a hard one to prevent because most title issues come as a surprise even to the seller, but they are very rare in the case of single-family residential homes. Gathering the title work and send it to your agent if there is any doubt there are issues.
#5. Home Sale Contingency
Offer’s contingent on the sale of the buyer’s home is often another case where sales can fall through. Buyers can walk after their home doesn’t sell in a certain time period.
How can this be prevented?
The most surefire way to prevent this is to not accept offers with this type of contingency, but unless you’re in a first time home buyers market you may not be able to avoid them. The best you can do is have one of our agents ask the right questions about the home they need to sell and gauge the likelihood of that happening.