Real estate agents typically speak of great net sale proceeds, smooth transactions, seamless closings, but not all deals work that way. Sometimes it can take two or three buyers until a contract sticks, and if this happens to you, it’s better you understand up-front what you can and can’t control during the process.

Buyers can cancel a contract for a variety of legal reasons under the purchase agreement, and some will even walk-away just due to having “cold feet.” Some common reasons to cancel are not approving of items on the home inspection report or seller’s property disclosures, title issues, loan hiccups…and so on. Understanding these issues in advance will help you in maneuvering your offer(s) in the future.

HOME INSPECTIONS

Home inspections are commonplace, and most real estate agents will highly recommend and require that they are completed in the timely manner outlined in the contract. This is tough; it’s your house that you have taken care of and built memories in. Now, a stranger is going to come in and look for everything wrong with it.  It’s best to stay emotionally neutral during this period that may involve multiple inspections.

In our market, the inspection period is ten days long, so you could have pest, pool, roof, mold and general inspections all separately.  Also, it’s highly suggested that you are not in the home during the inspections but arrive home afterwards. The inspections are paid for the buyer, so without written authorization from the buyer in advance, the inspectors typically will not share any info with the seller until after the inspection is done and it’s been shared with the buyer. Typically, the seller receives the list of items to be discussed in a written notice of buyer’s inspection a few days afterwards.

If you can’t fix the issues that come up during the inspection and the deal falls through, consider listing the home in as-is condition. This will ensure that you only attract buyers who are willing to accept the property in its current condition.

BUYER LENDER ISSUES

Pre-approval letters from the lender supplying the loan for the buyer are standard to accompany an offer on property. However, a pre-approval is not an iron-clad promise that the lender will be able to perform. Weekly updates from the lender to the seller’s agent are commonplace so the agent can keep an eye on the loan progress, and most states supply real estate forms to request these updates if not being supplied in timely manner. Some issues that could cause a delay in closing or cancellation by the buyer can revolve around the loss of a job, a change in loan program requirements or not meeting a special condition of the loan before closing.

LOW HOME APPRAISAL

Home appraiser are third-party companies hired to give an impartial value for the seller’s home. This is based on factual closing data supplied by recently closed transactions in MLS and the state recorder’s office, of like-kind properties. The appraiser adjusts up and down comparing your properties qualities and features to the others to produce the value supplied to the loan institution.  In a brisk sellers’ market like Phoenix and Scottdale have had recently, it is more common now than before for a home to not appraise at full price, due to the low supply of properties and the high demand driving prices up over the market threshold.

There are a few ways this could play out. Keep in mind, the buyer has the legal right to walk away from the property if the home does not appraise for full price.

• Scenario 1: Buyer chooses to pay the difference between the approved purchase price and the appraised value, bringing more money to the closing table to make up the difference.
• Scenario 2: Buyer and seller split the difference by seller lowering the price if the buyer doesn’t have the money, to save the deal and close escrow, versus putting the home back on the market and repeating the sales process.
• Scenario 3: The buyer may choose to pay for another appraisal. The seller can offer to split the costs of the appraisal ($450 to $600), if you feel your home is worth more then what the first appraiser documented.

BREATHE EASY   Over 96% of real estate contracts close escrow successfully. If your homes contract falls through and needs to go back on the market, it’s highly unlikely to happen again. Understanding these possible hurdles or pitfalls when selling your home will help you understand your real estate journey in advance and hopefully, you’ll never need to refer back to this article!