Acquiring the real estate contract for a property doesn’t mean that the deal is already done and successful. Of course, it is definitely something that can be celebrated after all that you have gone through in the process. But you need to remind yourself that there are still many things that can happen between the contract date and the closing date. There are possible problems that may arise. It can be an issue with the real estate agent, the buyer, the mortgage, the seller, or a combination of all. To ensure the success of your real estate deal, it is best to know the common reasons real estate deals fall through.
Here are the things that you should watch out for:
1. Home inspection issues
The home inspection is an important part of the homebuying process. It is where you can assess whether or not there are issues or repairs that need to be done in the home. In most cases wherein major issues are found during the inspection, real estate deals fall through. These major issues can include molds, pests, foundation or structural issues, electrical issues, water pressure issues, roof damage, and building code issues.
If you are a home seller, it is best to have your home inspected even before listing your property on the market. This will give you a chance to address possible issues before a potential buyer knows about them. It will help you avoid problems that could cause your buyer to withdraw their offer.
2. Buyer’s failure to sell their current home
Another common reason real estate deals fall through is when a buyer fails to sell their current home on time. When buyers purchase a new home while still waiting to sell their current home, they submit an offer with a home sale contingency. This means that they can withdraw their offer if they aren’t able to sell their current home within a certain period. Some homes take a longer time to sell than other homes. If this happens, the real estate deal has a high chance to fall through.
3. Rejection of mortgage application
Getting pre-approved for a mortgage is a must when buying a home. However, a pre-approval doesn’t necessarily mean that you will be approved for the mortgage. While lenders do their best to ensure that the pre-approvals reach the closing date, sometimes, there are just some things that the lender has no control over. Some of the reasons that make the mortgage rejected are the buyer’s loss of job or sudden health issue.
4. Bank appraisal issues
If there are issues with the bank appraisal, a real estate deal can fall through. Real estate deals that involve obtaining a mortgage will need to undergo a satisfactory bank appraisal. If a bank appraiser determines that the value of the property is less than the sale price, it can be a problem. The buyer and the seller can negotiate and come to terms depending on the difference of the amount. So if the value of the property is much lesser than its sale price, the real estate deal will most probably fall through.
5. Problems with closing documents
Before closing a real estate deal, there are various documents that need to be reviewed. Common problems usually involve problems with the title of the property such as outstanding liens, public record errors, past bankruptcies, or missing heirs. For both the buyer and seller, it would be best to prepare the needed documents early so you will have enough time to address possible issues. Ask your real estate agent for the documents that you need to prepare.
6. Closing costs
Another reason that causes a real estate deal to fall through is when a buyer fails to foresee and prepare enough money for closing costs. Closing costs include attorney fees, appraisal fees, escrow fee, homeowners’ insurance, transfer fees, and property taxes among others. The amount of the closing costs can be significant and failure to set aside money for it can cause your real estate deal to fall through.
A competent real estate agent is essential
It is not just about finding the perfect home and looking for the right deal. It is important to have a trusted real estate agent who will guide you throughout the whole process and prepare you for any issue that could arise during the real estate deal. With a competent and knowledgeable real estate agent, you are guaranteed that there is someone who will efficiently help you address all possible concerns.