If It Is Not Signed on the Dotted Line…
It seems like a great day because a buyer has agreed to purchase your property at a specific price and you’re ecstatic so you decide to take them up on their offer. Maybe they have even agreed to pay your asking price without any haggling whatsoever. So you’re feeling really good about yourself and your deal right now.
Guess what? The deal is far from done my friend. Everything may seem good at the moment, but there are a number of different things that can happen that can unfortunately kill your deal. So until your buyer has agreed to terms and signed their name on the dotted line of the contract, your deal is nothing more than a beautiful dream until it becomes official.
You know it as well as we do. Real estate deals fall through all the time. So don’t count your chickens before they hatch because you may end up losing your buyer in the blink of an eye when you least expect it. In fact, there are a number of ways that real estate deals tend to fall through and we’ll tell you about them below.
Reason #1: Inspection Problems
Potential inspection problems are one of the biggest reasons why real estate deals have a tendency to fall through at the last minute. Your buyer may be fully prepared to purchase your house, but once they inspect the property they may change their mind very quickly because of something that shows up on the report that they weren’t expecting.
As an example, a friend of mine recently had a buyer for their house who gave them their asking price. They were excited to move into their new home and they were really looking forward to meeting their new neighbors.
Unfortunately, the inspection report turned up that the house had a combination of aluminum wiring and copper wiring. The inspector said that because the wiring was in such close proximity to one another, it could lead to potential fires.
Instead of immediately squashing the deal, the young couple called an electrician and asked them for a consultation. The electrician said that it would cost $20,000 to replace the wiring and the formerly happy couple was no longer interested in purchasing the property.
After getting a second opinion, it turns out that the electrician overcharged them with their estimate and other electricians would do the job cheaper. But it didn’t matter because they already asked to be released from the contract and they took their down payment back.
The story does have a happy ending though. My friend found another buyer in about a week and they aren’t particularly concerned with the copper and aluminum wiring situation so it looks like the deal is going to go through with the new buyer. But this is a cautionary tale that sellers need to be aware of because issues can show up on the inspection report when you least expect them and they can create all kinds of problems for you as a seller.
So don’t start spending your money until the deal is done. Otherwise you can find yourself in even worse financial dire straits.
Reason #2: Your Buyer Is Having a Tough Time Selling Their Home
It’s never too easy to sell your home and buy another one at the same time. Millions of people run into this problem every year and it often creates issues during the purchasing process.
You may immediately find the home of your dreams and make an offer on the property. If the owner accepts it, they are accepting it based on the contingency that you’re closing once you sell your existing property. Otherwise you aren’t going to qualify for a mortgage and you’ll never be able to purchase their house.
Unfortunately, many real estate deals have a tendency to fall through for this very reason. The buyer may have a difficult if not impossible time selling their home for one reason or another.
Maybe they need to sell their property for a higher price and the market just isn’t willing to pay said price at this time. Or maybe they live in a remote area and there just aren’t enough buyers looking to purchase a house in their neighborhood. Or maybe one of many other potential issues arises that prevent this homeowner from selling their house and buying yours.
So, remember even if you are under contract with a potential buyer, if they have to sell their home it doesn’t guarantee they are going to buy your property. They may enter into the agreement with the best of intentions, but things happen and through no fault of their own they may need to be released from the deal.
Reason #3: Buyer Can’t Obtain Financing
Life is really crazy and things have a tendency of going haywire when least expected. Maybe you agree to a handshake deal with a couple and they are completely qualified to get a mortgage. But then suddenly out of nowhere one of the buyers loses their job and they no longer have the income to justify the loan.
This is just one reason of many as to why mortgages are rejected each and every day. Just because your buyer happens to have a pre approval letter, it doesn’t necessarily mean they are going to qualify for a mortgage when all is said and done.
Also Worth Reading: What are the differences between a conventional and FHA loan?
So, you have to remember that your home isn’t sold until the actual closing occurs. Just having a handshake agreement or a tentative contract does not mean your property is guaranteed to sell. Pre approvals are great but actually getting an approval is an absolute must if your buyer is going to have the means to purchase your property.
When your first offer comes through and it’s a good one you definitely experience a moment of joy and relief. But, while it’s great to experience the highs that come with selling a property, you have to come back down to earth. Because the deal isn’t done until all of the papers are signed at the closing. So try not to get too far ahead of yourself until your buyer has actually signed the closing paperwork on the dotted line.