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Why Do Pending Home Sales Fall Through?
Selling a home can be a tumultuous process. While some offers may seem great upfront, it does not signify the process is almost over by any means. Between offer and closing, there is the actual sale that requires lots of time and persistence to make it through. It is often a rapid-fire time of answering and responding to emails, questions, and inquiries about credit histories and property values, and other things that can derail a home sale at any point before closing. Find out some of the top reasons why pending sales fall through and how to navigate this with an experienced realtor.
Pending Sales
Terminology is key when talking about property sales. A sale is considered to be pending when a seller accepts a buyer's offer until the sale is closed. Some agents also call this 'being under contract' or 'contract pending.' There may be contingencies that come up in the process, meaning either buyer or seller has requests that must be fulfilled as part of the contract. This prevents them from getting into the deal and being stuck if major repairs are needed.
Mortgage Application
A common reason for pending sales to fall through is the buyer cannot qualify for financing. Most buyers finance a home because they don't have enough equity to purchase one outright. A letter is often submitted that they are pre-approved or pre-qualified for a loan. This is not a guarantee, but an estimate of how much the bank believes the buyer can afford. This means checking credit history, getting verified documents of income, and making sure they have enough money to continue making payments after the purchase goes through.
Home Inspection
The home inspection is often where good sales deals go wrong. A professional home inspection can reveal concerns or problems a buyer is not aware of, maybe even the seller, until the report comes back. Some common issues they look for:
- Mold
- Foundational issues
- Roof damage or lack of upkeep
- Interior hardware like furnaces and water heaters including the age of these appliances
Buyer's Sale
When buyers look for a new home, they are usually trying to sell their primary residence. Doing this at the same time is tricky. If they find a home they love, they might write up an offer and include a home sale contingency. They will have sometimes up to 60 days to sell their home and keep the current offer on the table. Market conditions are important to this process to see if there may be other, better offers, or if the person is definitely a good candidate to sell their home, also, and move forward with the process.
Prevention Tips
When you know what to look for, you can often take preventative steps to keep the process going smoothly. Explore some proactive measures that might be helpful:
- Keep contingencies in mind: some sellers require a pre-approval letter and proof of funds prior to moving forward. A strong letter and good down payment are signs the buyer can get a mortgage without major issues
- Pre-inspection: this step will alert you to problems that might hinder the sale of your property and give you time to fix them before trying it out in the market. The older the home, more repairs there will so be/ aware this can actually save money in the long run
- Appraiser: give them a fact sheet with things like square footage and comps in the neighborhood. The appraisal may be subjective but let them know you are aware of what local averages and ranges are so you feel you get the best appraisal for your property
- Keep a list of repairs: if you made repairs and upgrades, you are on your way. If you have a good school district, this is often a selling point for families. Consider this a selling point and look at all the things that have been dong as potential upgrades to a buyer
Real estate transactions come with real risk and uncertainty. To have more certainty in the process, it helps to have some ducks in a row ahead of time to make the process go more smoothly on the back end and sell your home or buy the potential home of your dreams.
Trying to make the process easier is the job of a real estate agent, but there are some things sellers and buyers can do ahead of time to make it go more smoothly. If you are ready to jump into the transaction part of the journey, we will help you navigate the process of selling or buying a property. Choice Properties has experienced agents ready to answer questions and help you get started on the process. Call us to get started.