Buying a home is an exciting and often life-changing experience. From finding the perfect property to navigating the negotiation process, it can be a rollercoaster ride. It’s easy to want to celebrate as soon as you go under contract but remember that reaching the finish line is not always guaranteed. There are many roadblocks a transaction can hit along the way leading to a sale not closing. Understanding the common challenges that can arise and exploring potential solutions can help both buyers and sellers navigate these obstacles with confidence.
One of the primary reasons a transaction may not make it to the closing table is the buyer’s inability to secure the loan. Buyers could face issues such as a low appraisal, insufficient income documentation, credit score changes, or changes in the lending environment. It’s crucial for buyers to obtain pre-approval before starting their home search and for sellers to carefully evaluate buyers’ financial capabilities. It’s also important that the buyer stays in consistent communication with their lender and doesn’t make any major decisions like changing jobs or buying a car without confiding in them first. These decisions can affect your income and credit, which will affect your loan, totally derailing a transaction.
To no one’s surprise, inspection and appraisal issues are another major reason a home sale may not close. During the home inspection process, significant issues or necessary repairs may be identified that can impact the sale. Buyers may negotiate for repairs or credits, or they may even decide to walk away from the deal if the issues are too severe. Similarly, if the appraisal comes in lower than the agreed-upon purchase price, it can create challenges in securing financing. Sellers can minimize these risks by conducting pre-listing inspections or appraisals and addressing any major issues beforehand. Buyers should be prepared to negotiate or re-evaluate their offer based on the inspection and appraisal results.
Another cause can be title and legal complications. These issues may include unresolved liens, undisclosed easements or encroachments, boundary disputes, or outstanding judgments against the property or seller. Working with experienced real estate attorneys or title companies can help identify and resolve title issues early in the process. As a seller, it’s best to address any known legal issues prior to listing and provide accurate and complete disclosures to potential buyers to avoid surprises later on.
Sometimes, it simply comes down to emotions. Buyers get cold feet, sellers decide not to sell, or maybe face unexpected circumstances that cause them to back out of the deal. If you’re on the opposite end, it’s understandable to be upset. However, try to respect the other party’s decision and remember that it’s probably not easy for them either. Open communication and maintaining flexibility throughout the transaction can help minimize this risk, but at times, there is only so much you can do.
There are many reasons a home may not make it to the closing table. By working with experienced professionals, maintaining clear communication, and being proactive, you can increase the likelihood of a successful transaction. Remember, each situation is unique, and seeking guidance from real estate agents, attorneys, or other relevant professionals is crucial to overcoming obstacles and ensuring a smooth and successful real estate transaction. Happy summertime! Until next week.
Eve Leombruno, 2023 MBOR President