You’ve kept your house clean for weeks. You’ve endured numerous showings. And it’s all been worth it because you finally have a deal in place to sell your home!
Don’t celebrate yet. About one-third of sale contracts never make it to closing. Until you sign those papers and hand over the keys, there are a number of issues that can derail that sale. Here are three of the most common reasons a real estate deal may fall apart so learn about them, remember them and AVOID them.
Not so many years ago, it seemed the only qualification to get a mortgage was having a pulse. However, things have certainly changed! Lenders that were burned with foreclosures and short sales are now much more selective with regards to whom they’re willing to finance. Make sure your buyer is pre-qualified or—better yet—pre-approved. Keep in mind, that being pre-approved does not mean your buyer is guaranteed a loan. Once the lender starts an in-depth examination of the buyer’s finances, they could find something they don’t like—the next thing you know, the loan could be denied. Additionally, there’s always the chance the buyer’s financial situation could change; he or she could lose their job or have a business investment sour.
If your buyer needs a mortgage to be able to buy your home, the lender will want an appraisal performed to make sure it’s worth the selling price. During the housing boom, appraisals often consisted of little more than rubber stamps. Whatever someone was willing to pay was what the house was worth.
These days, however, appraisals are more likely to come in lower than before, in large part due to the foreclosures and short sales dragging down values of comparable properties. If your home doesn’t appraise for the purchase price, the bank isn’t going to lend the full amount, which means you will either have to lower the price or the buyer will have to come up with more cash. If these things don’t happen, the deal will fall through.
Anything that throws a wrench into the process and delays the closing could cause your buyer to walk away. For example, an inspection that raises serious issues that will require extensive repairs could scare off the buyer. If you’re trying for a short sale, delays from your bank in approving it could also cause your real estate deal to fall apart.
Though these points may seem grim, they’re important to have in mind when trying to sell property. We’ve presented you with a cautionary note, and, since knowledge is indeed power, you can now look ahead and avoid the obstacles that may negatively affect your closing.