We’ve all heard about home sellers or buyers, thinking that their deal was as good as done but something happens and it hits a train that kills it. Why is this and what are the things that typically come up that can prevent a sale from going through. I’ve been working with buyers and sellers for a long time and can tell more often than not, it comes into 3 specific areas:
- Finance – The first potential deal breaker is finance. When talking about financial issues, I’m not necessarily talking about getting a mortgage. In the last 20 years, I can’t even remember this happening after the buyer enters a purchase agreement. But keep in mind, the transactions I’m always working with it always involves the use of an agent. So I think this prevents a tons of buyers from getting to that point in the first place, mostly the finance issues are value related. Banks loan money based on their appraisal of the property. If the appraisal doesn’t meet the agreed upon price, and the parties can’t agree on a new price, the deal is lost. Actually the only loan that that will allow the parties to negotiate to a price higher than the appraisal is a conventional loan. Today on FHA and VA loans, the sales price cannot be for greater than the appraisal, so you’re basically in a “take it or leave it” situation in the event of a low appraisal. And speaking with of FHA and VA, sellers need to understand a couple of things. First, they come in with certain condition standards. Second, the appraisal is attached to the house for 6 months so in the event of a low appraisal, and they don’t agree to a new price, they’re pretty much only in the market to another buyer who gets conventional clients.
- Inspection – The second potential deal breaker is the inspection period. Inspection related items all deal with things that become known to the buyer during their due diligence period. Whenever buyers first write an offer on a home, they haven’t had yet the opportunity to check it out thoroughly. So they typically have it inspected. Rarely do you see major defects come up that are unknown at the time of the offer. And sometimes this is possible. It’s more likely to be a number of smaller items that the buyer decide they just don’t want to handle, so they choose to bail. Or it’s something that’s not a physical defect at all but changes the way they think about the property. For example: the insurance premiums, schools districts, subdivision restrictions and things like this. The way our contracts are worded today, the buyer can deem whatever they choose as unacceptable and void the contract as long as it is done so during this period.
- Communication – The last thing that comes off has to do with how we communicate. Knowing how to communicate effectively and positively can greatly increase your chances of getting passed these situations. What I advise people to do is rather than telling the other party to the contract what they won’t do, tell them what they will do. Always give them some sort of a window and appearing flexible. It’s not really fair to be only nice and easy to deal with as long as things are going your way. Things can and do come up during a transaction so knowing what to say and how to say it can be a make or break thing.
In all of these three examples of why deals go south, my best advice that I could give you is this is what agents deal with every day and the good ones have learned what to do and say to minimize liability to their client. So do yourself a favor and get associated with the great agent… it just makes sense