Why do some home sales fall through? Sometimes the buyer or seller walks away from the deal causing it to fall apart and come back on the market. Here are some common reasons why sales don’t always get completed.
As a seller, you may have signed a contract with a buyer, agreed on a final purchase price and expect everything to go smoothly until the buyer gets rejected for a mortgage.
It’s important to remember that a mortgage is not guaranteed until the buyer has signed a final agreement with the lender. In order to avoid this, it is best to only accept offers from buyers who have been pre-approved for a mortgage. This means that they are less likely to be rejected for a loan and can most likely secure the financing they need to close on the property.
Buyers looking to secure a mortgage have to get an appraisal on the property, with banks only lending them the appraised value of the home. However, sometimes the appraised value of the home can come in at less than the asking price. This is common in seller’s markets where limited inventory and bidding wars will drive the price of the property up.
In this situation, not all buyers can afford to pay the difference in the price and if they cannot come to an arrangement with the seller or secure funding elsewhere, they will be forced to walk away and the sale will fall through.
Home inspections can sometimes reveal serious issues with the property. Things like leaky roofs, mold, or structural issues can often be deal breakers for buyers. As a seller, it’s important to get your own home inspection so you are aware of everything upfront and can either fix the problems or factor them into the selling price of the property.
Flaws in the home inspection can often panic buyers and cause them to negotiate on price or walk away altogether.
Home sale contingency is a clause in which the buyer makes an offer depending on the successful sale of their own home. This contingent offer will give them a set number of days to sell their current home in order to be able to afford the new property.
However, if they are unable to sell their property in the set timeframe the deal can fall apart and the seller will have to search for another buyer or proceed with a backup offer.
Buyer’s remorse is a real thing and can happen to anyone, after all buying a home is a huge decision. Once an offer is placed then the buyer is legally bound, however, buyers can get scared and when this happens they will do everything to get out of the contract.
In these cases, the buyer will normally lose their deposit – typically 1% of the sales price. The seller is now left in a position where they have to resist their home and start from scratch.