5 Common Reasons Home Sales Fall Through
5 Common Reasons Home Sales Fall Through
Wouldn’t it be great if every home sale breezed through without a hitch? The offer is made, accepted, and you’re moved in within 30 days—perfect! Well, that’s sometimes not the case. Home sales can fall through for a number of reasons, which is why having a REALTOR® on your side is crucial to help you navigate them. Pete Shpak, an associate broker with Oakwyn Realty’s Lee and Pete Real Estate Team in Vancouver, British Columbia, walked us through five common reasons home sales can fall through.
1. The home inspection exposes major issues
Whether you’re purchasing a brand-new build or an older property, getting a home inspection helps uncover defects or repairs that need doing. Minor issues can usually be solved between the buyer and seller, but if an inspector finds large cracks in the foundation or a leaky roof, that could be problematic.
“That can definitely kill a deal or bring it back to the table for further negotiations or more exploratory work involving a structural engineer,” says Shpak. “Sellers can potentially avoid those problems by having their home pre-inspected before going to market so you can fix minor issues, and if you come across a major one, you could think about how you’re going to tackle it when it comes to the table.”
The seller’s REALTOR® might suggest disclosing a major issue in the listing and pricing the home accordingly, for example.
2. Documents reveal red flags
If you’re purchasing a condominium, you and your REALTOR® should first review documents pertaining to the building, says Shpak.
“These include depreciation reports, meeting minutes, engineering reports, and financial summaries, and sometimes, depreciation reports can read very poorly,” he explains.
“For example, if you’re looking at a condo in a 10-unit building, you could find out the roof soon needs replacing at a cost of $100,000, but the building’s funding reserve is empty. That means everybody would owe $10,000 for the roof. Depreciation reports can show other expensive items that need replacing, like windows or elevators. This can kill a deal if the costs become too onerous for people to take on.”
3. Financing isn’t approved or a home appraisal doesn’t match the sale price
If you’re not pre-approved for a mortgage, you may not get financing in place—which could tank the sale. Even if you’ve been pre-approved, your bank will need to appraise the home you’re buying before finalizing your mortgage.
“In competitive offer situations where people’s emotions might get the best of them, the price gets higher and higher and the bank might disagree with the value,” explains Shpak. “That means it’s a shortfall from the agreed-to price, so you can still finance a large portion of it, but to make this sale work now, you’d have to bring more money to the table.”
Buyers unable to afford a larger down payment may back out of the deal.
4. Small details can cause big problems
Sometimes, buyers and sellers agree on a purchase price but then get bogged down on other points like occupancy dates or what’s included with the home. For example, a buyer may want to move into the home quickly, but the seller needs more time.
“Usually there’s a creative solution to make it work—like the seller does a rent back for a month or longer—but it can spill over to other facets of the negotiation and sour the whole deal,” says Shpak. “Sometimes buyers say, ‘I want all your furniture included’. I always tell clients to leave that off the table and make a good deal happen. Then, after the deal’s done, we can make them an offer for furniture, but keep it separate from the home.”
5. Buyers get cold feet
Until all conditions are met—a home appraisal and inspection have been done, financing is in place—and a buyer has brought in a deposit that’s at least 5% of the purchase price, a deal is not done and buyers can walk away if they have a reason for doing so.
Get peace of mind by working with a REALTOR®
With so many steps involved, working with a REALTOR® is extremely beneficial.
“If you’re working on your own, you don’t have representation to protect and guide you. A REALTOR® looks out for your best interests,” says Shpak. “We carry through the due diligence so you understand exactly what you’re getting involved in, what the costs are and what the process is so you can feel 100% comfortable with every decision you’re making.”
If you’re buying or selling your home soon, connect with a local REALTOR® to make sure you’re taken care of through the entire process—from the expected highs to the unexpected lows.
Source - https://www.realtor.ca/blog/5-common-reasons-home-sales-fall-through/32027/1363