If you’ve ever tried to sell a house before, you know what a disaster it can be when a sale blows up. You’ve done everything you need to get the home sold, but something gets in the way and prevents it from happening. Let’s talk about the most common reasons home sales blow up – and how to avoid them.
Getting Hung Up on Details
The home buying process is an incredibly emotional one, for both the sellers and the buyers. That can manifest itself in the form of relatively small details taking on exaggerated importance. It can be especially true for the sellers. After all, if it’s your home and you’ve lived in it for many years, it’s not like you’re selling any old commodity. You’re selling an asset that has been a part of your life, and even a part of your family and maybe the homestead where you raised your children.
It’s important to understand this if you’re planning to sell your home. You need to be especially careful that you don’t let your emotions rule in the selling process. This means that you have to be prepared to be insulted – or more particularly, for your property to be insulted – and be ready to move on toward the sale anyway.
The buyers may not like certain aspects of the property, but that’s just part of human nature. You can’t get caught up defending personal preferences with regard to your home. The fact that you chose hardwood floors and the buyers want tile – don’t take it personally. When the right buyer sees your home, those aspects will either match or they will overlook it. Other details that can cause an issue is taking entrenched positions on minimally important issues, such as the closing date, the location of the closing, use of certain attorneys or escrow agents, or even the need to perform certain minor repairs.
Remember, your purpose in selling your home is to:
- Get the home sold, and
- Get as close to your desired sale price as possible
Everything that does not directly affect those two objectives is nothing more than a detail that needs to be worked out. Never let it be an obstacle to the overall sale!
The Buyers Mortgage Approval
Any offer that you accept on your property should be accompanied by a mortgage pre-approval for the buyers. This will give you a solid indication that your buyers are in a position to actually complete the sale.
Unfortunately, many pre-approval letters are so loosely worded that they are close to meaningless. What they mostly indicate is that the buyer’s income and credit have been reviewed and are considered to be acceptable to the lender. But they don’t usually tell you whether or not the buyer will qualify based on the purchase of your property in particular.
This is because the pre-approval is issued prior to the selection of a property. Specifics relating to the transaction were not available to the lender at the time the letter was issued.
You can work around this. Add a stipulation in the sales contract that the buyer needs to provide an unconditional mortgage approval within a certain specified time frame.
An unconditional mortgage approval will be an approval in which all of the major stipulations of the loan have been satisfied, and the only remaining conditions are procedural ones, such as title search, tax service, and any issues related to closing documents.
What you don’t want to see are substantial conditions that could cause the approval to be revoked if they are not satisfied by the buyers. This can include conditions such as selling certain assets in order to come up with the down payment, or paying off certain loans.
The reason that you want an unconditional mortgage approval is so that you can move on to another set of buyers in the event that the current buyers are unable to meet the mortgage conditions for any reason.
Appraisal problems can take two forms:
- Under-appraisal – this is where the property appraises for less than the agreed-upon sale price, and
- Property deficiencies
An under-appraisal creates an obvious problem since it is an indication that an independent third-party valuation service doesn’t feel that the agreed-upon sale price is supported by market factors. Should this be the case, you’ll either have to appeal the valuation by supplying evidence that refutes it (typically this is done by providing evidence of closed sales of comparable properties). Or you will have to renegotiate a lower sales price.
More than likely, you will need to lower the sale price since appealing an appraisal these days is close to impossible.
Property deficiencies will depend upon the specific issue. You should be fully prepared to correct any minor deficiencies. But the existence of major ones can become an obstacle to the closing, and even cancel it.
If that’s the case, you may be forced to take the property off the market until the deficiency is cured. It doesn’t happen often, but it can be a serious issue if it does. But before you go that route, you usually have the option to get a second look by a certified professional, like a structural engineer, a waterproofing expert, roofer, electrician, etc.
For example, if the appraiser indicates a problem with the plumbing, an inspection by a certified plumber can override the appraiser’s objection. It may cost you a few hundred dollars to have the plumber take a look, but it can be money well spent.
An Extended Closing
Most sales transactions close within 30 to 45 days of the signing of the contract. If you get much beyond this, there’s a real possibility that the sale will blow up. Simply put, the longer it takes for a sale to close, the more potential there is for things to go wrong. For this reason, you should do your best to make sure that the closing occurs within the typical time frame.
Even though the buyer may be contractually obligated to purchase your home, they can often find ways to wiggle out of the contract. Sometimes the strategy is accomplished by having a lawyer get involved to obstruct the sale.
Even though the attempt is baseless, the delay and the cost to fight the claim could make the deal unworkable. It’s an unfortunate outcome, but one that can happen if the closing is delayed and the buyers decide to change their minds.
Any of these problems could cause your sale to blow up. This can happen whether you list your home with a real estate agent or sell your home yourself. And, surprisingly, there is no guarantee when hiring an agent that they will provide the wisdom and guidance needed to prevent these issues – the difference of course is you will still need to pay them a 6% commission.
If you are thinking of selling your home yourself, you will find all the information you need to sell your home easily – including tips like you found in this article – by clicking here. Let ListingDoor show you how to easily sell your home and save the 6% commission.
( Photo by Maxwell Hamilton )