Why do pending transactions fail? During a real estate transaction, there are many reasons a transaction does not reach the closing table. These can range from issues on the seller side, the buyer side and unforseen issues on a lien and title report. The top 3 reasons a transaction does not close are home inspections, financing, and appraisal.
Home Inspactions
An essential part of any house purchase, an ideal home inspection reveals no surprises. However, if too many issues or something major gets uncovered, it can lead to a buyer walking away. Think foundational issues, mold damage, and roof damage. The buyer may also try to negotiate a new offer price, taking money out of your pocket. Of course, sellers can avoid many of these issues by getting a home inspection on their own house in advance. You will have to pay out-of-pocket for a pre-sale inspection, but knowing in advance what red flags might pop up allows you time to either make repairs or adjust the price of your home accordingly. If nothing else, you’ll have the ability to warn buyers about the issues.
Financing
Perhaps the biggest contributor to pending home sales falling through revolves around financing. Loan approval may simply fail, or the money the buyer needs for the down payment may not materialize. There’s no way to know for sure if either of these issues are likely to happen. But sellers can take the proactive step of contacting the buyer’s lender to vet their financial strength. There’s nothing wrong with seeing what the likelihood is of a buyer getting approved. Sellers can also protect themselves when it comes to buyer financing by knowing the difference between pre-qualified and pre-approved. A pre-approval letter doesn’t guarantee financing, but it presents a much stronger possibility than a pre-qualification letter. Avoid buyers who only bring a pre-qualification, or no financing letter at all, to the table.
Appraisal
This is a special stage in the home buying process where financing can fall through. Most lenders require an appraisal done on the home in question for purchase. If your home appraises for less than the sale price of the house, the lender may decline the mortgage. Then, you’re back to the no financing issue. Either that, or the buyer may have to contribute extra cash to make up the difference. This could be cash they don’t have, making it a significant reason for the buyer to walk away.
Why do pending transactions fail? Inspections, financing falling through, and appraisals coming in lower than expected.
Interested in getting a cash offer on your property? Please give Homeinc a call today at 1.888.850.2636 and one of our agents will talk to you directly in order to present your best options.
