Real estate deals fall apart. Buyers and sellers want sales to go smoothly, but the reality is that it's not uncommon for real estate deals to fall apart. Nearly 4% of home sales fell through in 2016. There are a lot of reasons why deals fall apart, and these are the most common:
1. Property Appraisals are Lower Than the Agreed Price
A seller may believe their home is worth $300,000, the buyer may agree to pay $300,000, but when an appraiser comes back with a lower home value, problems can occur. A licensed appraiser will know about local trends, the state of the property and the comparable home sales in recent months.
Lenders may come back and not agree to pay the amount agreed upon in the purchase agreement because the property's price is higher than the fair market value.
Buyers may come up with cash to cover the difference, but when they can't, the deal will fall through.
2. Repair Refusals During Inspection
Sellers often end the deal because they refuse to correct issues that may come up during the inspection process. The refusal to make these repairs is quite common. Buyers have a right to have a home inspected for issues with:
The market trend will dictate how many repairs or fixes ought to be made. A market where homes are selling quickly allows the seller to make fewer repairs. In this case, the buyer may be able to overlook some minor repairs because the market is short on inventory.
The demand for the property is another factor.
Sellers that are unable to sell their homes may decide that it's better to make the fixes and repairs rather than let the sale fall through.
Inspections can be done before listing the home so that the seller has an idea of what costs will be when the buyer's inspection is performed.
If something is wrong with a sewer line or roof, the costs may be even higher because another inspection specialist may need to come and assess the issue.
"A sloppy plumber will guess at what’s wrong with your pipes; an expert will inspect them. Knowing exactly what’s wrong will save you time and money in the long run," writes Next Level Pipe Lining.
3. Buyer's Financing Falls Through
A buyer's financing may fall through, and when this occurs, the buyer is left with little-to-no option but to let the property go. There are a few reasons why financing may fall through, and these reasons include:
The buyer made an offer, but they were not pre-approved for the amount offered and failed to qualify for the mortgage.
Interest rates increased, so the borrower can no longer receive a mortgage for the same amount.
Buyers came up short on the money needed at closing.
Changes in regulations and laws make borrowing more difficult.
Buyers and sellers can both be responsible for a deal falling through, but with the right guidance, it's possible for buyers to land in a home that suits them best.