Whether you're selling your home or buying a new home, you're probably excited as you look forward to the deal closing. Most pending home sales are completed without any issues, but a lot can happen between the time when a buyer makes an offer, and the purchase of the home is complete. In some cases, the result is a delay, and for others, the sale may completely fall through.
Our REALTORS® share the following common reasons why a pending home sale can go wrong:
- The home appraises at a lower value than its sales price.
A lender will require a professional property appraisal before a home loan is approved. This is done so that a lender can be sure to get its money back if you default on the loan and it needs to foreclose on your home. Sometimes an appraisal will come in for less than the home's asking price, especially in a seller's market where home prices are driven up. When this happens, a seller may agree to take less money, or the buyer may agree to pay the difference between the asking price and the appraisal value. If this situation can't be resolved, the sale won't go through.
- The home inspection uncovers major problems.
It's common for a home inspection to discover some minor issues, even in a new home. But if the problems are very serious — such as foundation issues, extensive roof damage, or pests like termites or carpenter ants — the buyer may be able to back out of the sale. In some cases, the seller will offer the buyer money to cover the cost of repairs, but if the buyer refuses, the sale can fall through.
- The home's title isn't clear.
Before approving a home loan, a lender will make sure a title company researches the title on it. This ensures there are no liens or judgments against the house where the seller owes money, and the house can't be sold until these debts are paid off. In addition, title research can reveal that someone else — such as an heir, a spouse, or even the IRS — has a claim to the home. When problems with a title occur, they can be difficult and time-consuming to unravel and straighten out. This delay may cause the buyer to walk away from the sale.
- The mortgage loan falls through.
Even if a buyer has gotten pre-approved for a home loan, that's not a guarantee that the loan will go through. Changes in the buyer's ability to secure the loan can result in a higher interest rate that the buyer can't afford or even outright denial of the loan. If it's discovered that a buyer has acquired more debt, now has a significantly lower credit score, or has changed jobs or become unemployed, loan approval may be denied.
- The buyer's current home hasn't sold yet.
Sometimes a contract will have a clause that makes the sale contingent on the buyer selling their old home. If that's the case, the seller is usually allowed to accept a backup offer from another buyer. Sellers can try to figure out how long it may take a buyer's home to sell by researching how many days on the market homes for sale in the area usually spend. This is no guarantee, however.
Contact Ayre/Rhinehart REALTORS® today to see Midland homes for sale or to sell your home in the area. We can help your real estate transaction proceed as smoothly as possible and help you avoid common issues that can cause a pending sale to go wrong.