Securing a real estate deal can be challenging even in the best of times, when everything seems to go right. More often, though, some issues will crop up during the process that threaten the deal or even put a halt to it entirely.
Some real estate purchases or agreements fall through for reasons such as a simple inability to sell the home due to a lack of buyers, but more commonly, the following five reasons may be at play.
Common Reasons Real Estate Deals Don’t Work Out
Here are a few of the most common reasons that real estate deals don’t go through.
Issues Found During Inspection
One of the most frequent killers of a real estate deal is an inspection that uncovers more than the buyer bargained for. While most homes will have some negative marks during their inspection, such as a couple roof shingles that could do with repair or an electrical outlet that doesn’t seem to work, buyers are likely to work around these minor inconveniences.
However, major renovations can scare off potential buyers, which is why sellers should consider having a home inspection before they put their property on the market. The opportunity to fix major issues such as pest infestations or foundation damage can help to land a buyer when the time comes.
A Mortgage Rejection During Vetting
Perhaps the single most common reason that an interested party fails to buy a house is that their application for a mortgage on the home is rejected. A pre-approval letter can be extremely helpful in showing that the bank is likely to approve a mortgage, but it is not a guarantee that the buyer will make it all the way to closing.
A massive change in debt-to-income ratio between pre-approval and mortgage approval can change matters—and this is not uncommon if, for example, the eager family begins pre-ordering furniture for the home on credit. It is always recommended to make as few purchases as possible between preapproval and closing. Additionally, a partner who separates from their spouse or loses their job can see their approval fall through.
Title And Closing Issues
If an issue with the title crops up during closing, buyers may quickly turn down the sale. Knowledge of missing heirs or outstanding liens can place more burden on the buyers than they are willing to accept. Title insurance can go a long way toward preventing these issues from having a lasting financial impact on buyers, but they may be unwilling to pay extra for these services if they suspect that something is already wrong with the title.
The Buyers Experience Second Thoughts
People will be people, and that means that they will sometimes change their minds. There is nothing that a seller can do to remedy a potential buyer who simply experiences anxiety or regret about committing to a home purchase.
Your real estate deal may fall through if the buyer is having second thoughts about purchasing the property or decides that their current living situation may be better for them after all. Since this is an uncontrollable aspect of real estate deals, it is best to simply keep it in the back of your mind as a possibility; remember that nothing is set in stone until closing has occurred.
Real Estate Agent Inexperience
The vast majority of buyers and sellers elect to rely on the experience of a real estate agent to help them navigate the buying and selling process. However, an experienced agent can cause issues ranging from slight hiccups to complete deal-breakers that can kill the arrangement.
If the real estate agent fails to confirm the appraisal or work with attorneys to review and prepare closing documents, these critical steps may not be completed on time. Without them, the deal cannot continue, and so it is important to be sure that you select a real estate agent with experience. Contract dates and follow-ups are critical, and a real estate agent who drops the ball can stop a deal right in its tracks.
Rely On Real Estate And Mortgage Experts To Improve Your Chances
You cannot control every possible scenario in which a real estate deal may fall through. However, it is within your power to control at least some of the possibilities, such as issues with a property’s title and history.
Mathis Title Company would be happy to help you understand how title insurance can protect you from liens and other outstanding issues that you may not discover until it is too late. Title insurance is a one-time fee that protects you from the financial repercussions of a title issue on a property; reach out to schedule an appointment to discuss what might fit into your budget and what title insurance can do to help your deal go through seamlessly.