Real estate deals are only completed after the title has been recorded. Before that time, the transaction can be filled with unpredicted issues which need to be addressed, on both the side of the seller as well as the buyer.
Preparing as best as you can is the best way of preventing any deal from going sideways. Whether you are a buyer or a seller, you have to do as much due diligence as you can before entering a transaction. This may at times involve performing some work upfront, having tough conversations, as well as having an open mind to collaboration when things get a bit challenging. Below are some of the biggest things that could cause real estate deals to fall apart; and how you can avoid them.
Ever since the housing crisis, the issue of homes not appraising at the contract value has been a serious problem and is even likely to continue plaguing the industry for many years to come. In strong markets where several buyers compete for a single property, sometimes the price sets up a new comp for the area. A third party appraiser (one that is not part of the deal) may at times fail to agree on the price of the seller even after the multiple buyers have agreed to pay the price.
When the deal is in contract, it is best for both the buyers and the banks to closely work together so as to avoid appraisal issues. In case you possess a property which hit a number that may not be supported by the comps, consult a mortgage professional as soon as possible. Be conversant with the appraisal process and ensure that the listing-agent is present during the appraisal time so as to pass on the story to the appraiser. Seeing the address and the price of the contract on paper is one thing; but knowing that there were 100-people through the home in 3-days and 6-offers received presents color and context.
No seller, seller’s agent or buyer’s agent ever wants to get a call informing them that certain major problems were found with the home. Such can easily cause the deal to fall apart. Unforeseen inspection issues, especially the large ones, may cause anxious buyers to get out of the deal. For buyers that are still willing to purchase the home, it means asking the seller for credits-back or renegotiating the buying price. The additional round of negotiations increases the chances of the deal going south in case both parties cannot work together.
In case this happens, the best thing that both the parties need to do is to set their sentiments aside and instead work together. If the seller wants to sell, and the buyer wants to buy, it implies compromising, for the seller in particular. In case the current buyer walks, the next one (buyer) could face a similar problem. Avoid the deals from going south because of inspections by having the property inspected before putting it on the market. Sort out all the issues that may crop up and then price the home accordingly. In this generation of real estate, every seller ought to carry out a pre-sales property inspection.
Remorse of the Buyer
This is a common occurrence in real estate. The buyer gets excited about a home and even makes an offer, only to change his or her mind after the seller and the buyer have come to terms. It occurs in situations that involve several offers as well as bidding wars. The buyer gets excited and wants to compete; but after the dust has settled, they start feeling scared and remorseful.
For Buyers: Before making an offer or coming to the final round of counteroffers, be sure that you love that home. If the deal changes and the price goes up to a value that is greater than the original offer by 10%, make sure that it (the price) makes sense to you. You better walk away before getting too emotionally involved in the entire process.
For Sellers: You are recommended to only sign on the dotted line after evaluating your buyer. If they do not look like they are fully committed, don’t have their dough in a row, or haven’t seen the house enough, you better wait for another buyer to avoid tying up the listing and having to go back on the market.”
Some of the issues that come up are uncommon and totally unexpected. Such issues may include: a neighbor making a random disclosure, an inspector discovering something that was missed by a previous inspector, and others. In all those cases, have an open mind and always have an alternative plan. All the good and renowned listing agents are known to never change a listing’s status to pending if the deal is not truly done.