Unfortunately, contracts can fall apart before the keys are handed over... but why? Let's talk about it.
The Buyer didn’t get Financed?
Unfortunately, it happens. Having a pre-approval is not a guarantee, but it does come with less risk than a buyer without one. A pre-approval can be contingent upon certain qualifications, like property appraisal,
Home Inspection revealed Issues?
You hope for the best, but inspections can reveal nightmares. A leaking roof, foundation issues are not quick fixes and can dissipate a buyer's contract.
The Appraisal came in Low?
Especially in a sellers' market, homes may be overpriced to play the market. However, an honest appraisal can take the wind from beneath your wings.
The buyer can’t sell their current home?
Many times, a pre-approval is contingent upon the current home being sold. If the buyer's home will not sell, their approval will be denied.
Property liens or title issues?
Some properties have a shared driveway or a particular title issue that prevents the final steps from coming to fruition. When legality gets involved, unfortunately saving the deal becomes very challenging.
When an appraisal comes back low, there may be an attempt to remedy with further negotiation, such as repaving the driveway, putting up a fence, or including furniture or more appliances than originally agreed on. While the seller doesn't want the deal to fall through, sometimes a buyer will ask for too much. When an agreement can't be made, the deal can't stick together.
Is a For-Sale-By-Owner more likely to fall-through?
There is a higher risk of not making it to the closing with FSBO listings. This is usually due to any of the above situations. Not every contract can be saved, but having professionals involved with experience in navigating these common hurdles does help.
How can I prevent my closing from falling through(as a buyer/seller)?
As a Buyer: Be sure to get pre-approved. Be honest with your lender. If there are no surprises, you're more likely to secure your funding. Don't pull your credit right before closing! A new credit card, engagement ring, a car, or even furniture may jeopardize your closing. Your Cash Flow-to-Debt ratio is an important number to maintain once pre-approved.
As a Seller: Be open to repair requests. You don't have to do everything, but the more you are willing to do, the more likely your buyer is to stick through until the end.
This house has come back on the market twice after pending, is that a red flag or opportunity?
It can definitely go either way.
A home inspection could be the cause, which is a sign that the seller is not willing to fix an issue or negotiate price despite an obvious issue.
Funding could also be an issue on the buyer's end. This would be no fault of the home itself necessarily, but if the buyers cannot get the funding, the deal will not make it.