Be aware of these potential problems to keep your home sale from falling through.
What is more frustrating than having your home sale fall apart within the final steps of the process? Even when you feel that your home sale is a done deal, there is possibility that the sale will crumble. The sale may fall apart for a number of reasons: title-insurance problems, buyer financing rejections, failures of inspections, low appraisals, or even buyers remorse.
Fortunately, when buyers and sellers have knowledge of these deal breakers they can prepare early to avoid or work on these issues. There is no telling what could happen in Escrow. Here are the major reasons home sales fall through.
1) Buyer Financing Troubles
While in the housing market boom, buyers did not struggle receiving and getting approved for loans. Due to the simplicity of receiving loans, the seller would not have to worry about the buyer's financing. However, outside of the housing market boom, buyer financing is one of the most common reasons behind home sale failures.
You can avoid this problem by looking for buyers who are preapproved for a loan. It is still possible that they get rejected in the approval process, but they are more promising to be approved than a buyer without an initial credit screening. Another way to avoid the buyer financing woes would be to look for cash buyers. Cash buyers often demand lower selling prices than those who need financing.
Make sure to check in with your agent. Your PorchLight Real Estate Team agent will monitor the approval process to check if the loan is on track. This will help you avoid any surprises and are aware of concerns before closing the deal.
2) Low Home Appraisals
When a home gets appraised for lower than the contract price, your deal may fall through. A lender will lend up to the value of the property, and no more.
The buyer will have to use personal finances for the difference between the lower appraisal and contract price. Sellers will need to negotiate a lower price if they would like to close, or have a second appraisal so that the buyer is able to qualify for a full mortgage.
3) Be ready for home inspection and title insurance surprises
Title insurance ensures that the owner's home is theirs to sell. Lenders need title insurance to protect the home that secures the loan. The bank will have no way of having their money returned in the situation that the homeowner defaults on the loan and a title shows that it is not in their name. Make sure to get your own report to confirm your home is fully in your possession.
4) Look out for buyer's remorse
The buying process can be an emotional one. Buyers are investing a large amount of money into their dream home. The buyer will be in this home and community daily, and this thought can cause cold feet. As a seller, there is not much you can do to rid of buyer's remorse, however look for signs of anxiety and hesitation. If you are given the chance, it would be safer to to chose excited, confident buyers.
5) Don't allow the sale of a buyer's home as contract contingency
Many buyers need equity in their home in order to purchase a new one. If your buyer's home sale falls apart, yours will too. It is easy to avoid this common cause. Choose buyers who have either sold their home, or do not need the equity in their current home to finance your home.