5 Reasons pending home sales fall through
You’re ready to celebrate. After months of hard work, you’ve finally received a good offer on your home, and you can’t help but feel relieved and excited. But you might consider waiting before busting out the champagne glasses – a lot can go wrong before a sale closes.
According to Realtor.com the average sale takes roughly 50 days. During this time a lot can go wrong. Understanding the risks and having a plan to deal with them can help you increase your chances of a successful home sale.
Pending – What does it mean?
A pending sale occurs during the time between when an offer is accepted and when the sale is closed. Sometimes during this pending period a buyer may have a list of agreed upon contingencies, or requests that are required to be met for their offer to be valid. Most commonly these are home inspections and financing contingency periods. If during these contingency periods a buyer is unable to obtain financing approval for any reason, or if the inspector finds that there is major damage that may need to be repaired, the buyer can back out of the deal – leaving you back where you started when you first decided to sell your home!
So why do pending and contingent home sales fall through?
We’ve outlined five of the most common reasons deals fall through when home selling. Understanding the nature of each of these scenarios will ensure you prepare for the worst – although you should always still hope for the best!
1 – Home inspection finds major issues
Most buyers will often pay for a professional home inspection as a protection against any unseen issues that would require major repairs. Sometimes these inspections uncover things even you aren’t aware of, and depending on the contingency language in your contract, the buyer may be able to renegotiate or even back out of the deal!
2 – Your home fails to appraise
Many buyers and most lenders will obtain an appraisal on your home prior to closing the sale. If the home appraises below the sales price the buyer may be inclined to walk away from what they see as a bad investment. In-fact if the home appraises below the sales price many lenders will simply refuse to finance the deal altogether.
3 – The title isn’t clean
No, we don’t mean that you got the title paperwork dirty. A clean title means that there are no liens or other issues that might “cloud” your title. These issues could include improper title work from a previous sale, or other heirs or claimants to your home that may have otherwise been unknown to you, or maybe you inherited the house and haven’t gone through probate yet. Sometimes, a clouded title can take months to clear, and during that time you might find yourself in breach of contract and with your potential buyer walking away from the sale.
4 – The buyer has a problem selling their current house
Some sales and financing types may be contingent upon a buyer selling their own home. Consider how much difficulty you might be having getting your home sale to close – they are likely struggling through the same problems while they act as home sellers. This is even more problematic for FSBO sellers.
Unfortunately, if they can’t close on their own home sale, they likely won’t be able to afford to close on yours, and you’ll be left with a decision to wait it out, or go back to the drawing board.
5 – The home buyers’ mortgage application is denied
This is one of the most common and frustrating situations you can find yourself in while selling your home. You’ve listed your home with a realtor, received a good offer, and the next thing you know those perfect buyers are getting denied for their mortgage. Many factors can contribute to a mortgage application denial such as: undisclosed debts, credit changes, loss of income, or issues with the home a buyer is trying to purchase. If this happens to you, you can either wait for the seller to find a lender that will approve them, or go back to square one. Either way that time is going to cost you!
How do I avoid my sale falling through?
There’s only one surefire way to ensure your sale closes – and we’ll get to that in just a moment! However, there are a few steps you can take to better vette out your buyer to ensure a higher probability of success.
- Review the contingency period language in your real estate contract and consult your real estate agent if you have questions.
- Ensure your buyer is pre-approved by their lender. This isn’t a guarantee, but it is a good indicator that they are loan worthy.
- Be selective when picking out the offer you accept. Pay special attention to closing costs, and if you are trying to go the FSBO route, you may consider biting the bullet and hiring a real estate agent.
Selling your home without complications
Remember above when we mentioned that there was one guaranteed way to ensure your home sale gets to closing? Well that way is by selling to a trusted cash buyer, like Duval Home Buyers! If you are selling your home in Jacksonville, or anywhere in the Northeast Florida area you can sell your home fast, with a guaranteed offer! Cash home buyers are able to skip financing and inspection contingencies, and because they are paying cash, selling a previous house won’t be necessary. You’ll close when and how you expect to!
Every home sale carries a degree of risk, but understanding those risks can help you prepare. If you take the necessary steps to help minimize pending sale pitfalls that aren’t in your control, your sale will be more likely to close.
This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Duval Home Buyers always encourages you to reach out to a real estate attorney regarding your own situation.