Many people think that once you get a home under contract, it's a done deal. But that's not always the case.
This past month or two has been especially crazy, I've seen more home sales fall apart than I usually do. But it all usually comes back to the same top 3 reasons that home sales fall apart.
1. Home Inspection Issues
After a home goes under contract, the buyer gets their home inspection done. At this stage, a buyer should know it's very important to work with an inspector that knows what they're doing. And they have to be licensed and insured. Buyers, work with your realtor to find a good home inspector. Make sure they have good online reviews, they're active and working, and they have some experience.
The problem is not always the home inspectors, as, it's their job to find potential problems with the home. The main issue is, a lot of buyers & sellers don't go into the home inspection with the right frame of mind. And that falls on the realtors to help coach their clients.
Buyers - you have to understand that no home is perfect. It doesn't matter if you're spending $500k or $150k, there will always be things that come up on the home inspection. Work with your agent & attorney to understand what you should and should not ask for. IE - don't sweat the small stuff. If it's a safety issue, then yes you'll want the seller to address it. And work quickly - many times these inspection periods drag out longer than they should.
Sellers - understand that buyers are spending a lot of money, this is a big investment. They're going to want a couple things fixed prior to closing, they're not going to take your home as-is. Work with them on a reasonable solution, or offer a fair credit, and work quickly.
Agents - set the right expectation with your clients going into the home inspection. A lot of times, it's our fault the deals fall apart during this period. And when issues arise, work with your clients to a fair solution for both parties.
2. Appraisal Issues
Once the home inspection period concludes, the buyer's lender orders the appraisal for the property. A 3rd part appraiser comes out, assesses the home's value based on comparable homes nearby, then submits it to the bank.
Home values have been on the rise for the past 8 years, and this can present an issue for appraisers. There is not a lot of inventory for sale in most markets, and sometimes homes are selling with multiple bids above the asking price.
If the appraisal comes back below the sale price, then this presents a problem. At this stage, both parties have to agree on either on the price, whether it's the original price, new negotiated price, or just accepting the appraised value. There is no right or wrong way to go about this, and it's a case by case situation. If you're a buyer or seller in this situation, consult with your agent and attorney on what to do.
This is a problem I've seen more recently - buyers are just rejecting the contract during the attorney review period. Many times, the buyers don't even conduct a home inspection and just cancel the contract a day or two after it's accepted. There can be a number of reasons this happens - buyers get scared and have instant buyers' remorse. Or maybe a family member talked them out of it (common with 1st time buyers). Or, it's possible they found another home they liked better.
These are the Top 3 Reasons Home Sales Fall Apart in this market. If you have any questions about selling or buying a home, let's chat and I'd be happy to walk you through the process.
Realtor / Owner
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