As a Windsor Ontario real estate agent for over 25 years, I have seen my share of home sales go down the drain. It’s not fun and no one is more disappointed than the homeowner selling the home. There are some circumstances that just cannot be avoided nor foreseen, but fortunately, there are some issues that can be resolved, especially if you have hired a well experienced agent who knows how to negotiate.
I know the excitement for homesellers when they see a “Sale Pending” on their “For Sale” sign. For a brief moment, everyone is breathing a sigh of relief before the paperwork, inspections, appraisals and everything-in-between begins. But it is here where problems can arise, so hold off opening the bottle of champagne until the final papers are signed. Here are just a few things that can happen and what you can do to avoid it:
1. Bad home inspection:
Buyers today want to move into a home that needs little or no work. But take it from me, you will never see a home inspection that doesn’t reveal some problems. I have yet to see an inspector walk up to me or the buyer and say, “There’s nothing wrong with the house! It’s perfect!” Even new construction almost always has an issue, so count on something being wrong. Where things can fall apart is the severity and costs of such a repair. If a new roof is needed, or the foundation is falling apart, these are often deal breakers if a seller won’t repair. For homeowners, negotiations are critical at this point if you want to sell your home. You must be willing to make repairs or lower the price of the home if the demands are reasonable and the repairs critical. For buyers, don’t make unreasonable repair requests for minor issues if the home is properly priced.
Home sales can fall through when an appraisal comes in below the sales price because banks won’t hand over the money on a property that is worth less than the loan. However, that doesn’t mean it’s over as there are several things that can happen next.
First, make sure the appraiser did not make a mistake, though rare, it happens. If the appraisal remains the same, then the buyer can make up the difference with cash or ask the seller to reduce the price. Finally, a buyer can ask for another appraisal from a new appraiser but the bank must agree.
3. Buyer’s remorse:
This is a problem that may be difficult to foresee. One day, the buyer will be fine, the next, he or she wants out. It could be for a number of reasons, such as job insecurity, cold feet, personal problems or they found a home that suits them better.
4. Loan rejection:
There is no doubt that banks are more careful about who they are loaning money to these days, so being turned down does happen. There are several real estate agents who will not show properties to prospective buyers who don’t have pre-approval from a mortgage company in order to avoid the waiting period to see if a buyer is qualified. But buyers must also be aware that increasing their debt during escrow can backfire on them as well. Remember, banks do one final credit check prior to closing, and if the ratios are increased, the loan may very well be declined. So even if you have a pre-approval, it might not be worth the paper it’s printed on if you buy a bunch of stuff and lower your credit score! Hold off on any major expenses until the home has closed.
5. Contingent sales:
Buyers can lose a home if the contract is contingent upon selling their current home. It’s a risk many buyers are willing to take since most cannot afford two mortgages. However, if another offer comes along, and depending on the agreement, sellers may opt to accept the new offer if they feel a buyer won’t be able to sell their home quickly.
6. Seller’s remorse:
Some sellers are simply not ready to sell though they had every best intention to do so. Maybe a seller can’t find another property they like as much, or maybe the emotional tug of a home is too strong for them to ignore. Regardless of the reason, a seller should always talk with their real estate agent, prior to listing, on what would happen if they decided not to sell while in escrow. Is the seller liable? What are the rights of the buyers? What will it cost? Is it too late? Again, your real estate agent can answer those questions. But a seller must always think the entire process through before they list the home and be 100 percent committed to avoid any legal ramifications or bad experiences.