One day you notice that your neighbour has a “Sale Pending” on their for sale sign and the next thing you know, you hear the deal fell through and the house is back on the market. What happened? Why did the deal fall apart and can this happen to me if I want to sell my house?
For many who watch the “For Sale” signs in their neighbourhood with an eager eye, questions arise and rumours start when a deal goes through. Here are some of the more common reasons home sales go bad.
1. Buyer’s Remorse:
While this is not a common occurrence, it does happen. Buyers do get cold feet. The fears of such a large financial commitment, or maybe job security are just a few reasons why this happens. Using an experienced real estate agent who can walk a buyer through this experience is often helpful.
2. Home Inspections:
This is one of the more common reasons why a home sale doesn’t go through. Once a home inspector discovers potential problems, buyers tend to panic. While every home, even new construction, has problems, some buyers demand that every item be corrected or replaced or credit from the seller as compensation. A seller may choose not to do this, so the buyer cancels and the house is back on the market. A word of advice to buyers: do not make unreasonable repair requests if the home is properly priced. You would be surprised at what some buyers demand and sellers will just plain walk away if it’s too ridiculous.
3. Low Appraisals:
When an appraisal comes in below the sales price, banks won’t loan the money beyond the appraisal price. A buyer has several options:
- Make sure appraiser didn’t make a mistake. It happens.
- Pay the difference in cash
- Ask for another appraisal from a new appraiser
- Ask the seller to reduce the price.
If both parties can’t agree on any one of these options, then the pending sale will cancel. Again, this is where a good real estate agent may be able to make a difference. Make sure the comparable comps are reviewed before you sign a purchase contract and always hire a strong negotiator to get the offer accepted at the lower price.
4. Loan rejection:
Banks are much more careful in loaning money these days. It also doesn’t help if buyers increase their debt while looking for a home, such as buying a new car or furniture or taking that vacation. Word of advice: don’t take out any loans while you are buying a home. Even if you have a pre-approval letter, it won’t be worth the paper it’s written on if you go out and charge a bunch of stuff before your loan goes through.
Buyers can lose a home if the contract is contingent upon selling their home. Most buyers cannot afford two mortgages. If another offer comes through and depending on the agreement, sellers may opt to accept the new offer if a buyer can’t sell their property.
But what about seller’s remorse? Can a seller decide at the last-minute that they no longer want to sell their home? Like buyers, they get cold feet as well. Usually this happens because sellers were not that motivated to sell their home in the first place.
Lots of homeowners get very emotional when their home sells. It’s because they have developed wonderful memories with their home and it’s a passing of an era. So sellers instead will try to get out of the deal as they just can’t imagine living any place else.
Sellers should always think the entire process through before they list their Windsor home. Draw up a pro and con list. If the pros outweigh the cons, then consider selling. But if the cons far exceed the benefits, then chances are, you are not ready to sell. Some of the more popular reasons for selling include:
- Home too small
- Job transfer
- Neighbourhood changes
- Empty Nest
- Move closer to family
- Health concerns
- Cash in Equity
- Lifestyle change
But sometimes seller’s remorse happens even when every intention is a good one. Always discuss with your real estate agent, prior to listing, what would happen if you decide not to sell your Windsor home midway through the process? Will you be liable for any costs? If it goes to closing, what can the buyer legally do if you decide to negate on the deal? Again, only your real estate agent can answer these questions.