This April 11 Seattle Times Article outlines the 10 “red flags” that may indicate that a sale will fall through. A number of these “deal breakers” can be dealt with ahead of time by studying the Form 17, Seller Disclosure of the home, others by obtaining a Pre-inspection of the home by a licensed home inspector. Out of the 10 reasons for sale failure, outlined in the article, I would say that
#1. The Buyer has an existing home to sell – is one of the most prevalent. Often, when a sale falls l through after being “off the market” for the amount of time required to sell the buyer’s home, the re-listed (or Back on Market) price will tend to be much lower than the original list price. Some of these sales, however, are successful, so a seller should not necessary rule out a “Contingent” (on the buyer selling their home) offer.
The #2 reason, in my opinion, and not listed in the article, is that lenders are taking a long time to respond to short sale offers and, as a result, buyers tire of waiting and find another home. Because the seller owes more than what the home is worth, the lending institution needs time to make a decision on how much of a loss to take and one really can’t determine which lenders will respond faster than others A short sale negotiator helps the process, simply by keeping everyone informed of what is happening or why it’s not happening yet.
#3 (#9 in the article) a change in the terms of the mortgage, is the third most common reason that sales fail, in my opinion. At lender interviews, buyers should obtain three good faith estimates: estimated loan costs and monthly payment amounts, from three different lenders. They should be loan pre-approved by a second lender, in case the first loan falls through during the transaction, but prior to closing. Lenders can change their terms and frequently do, so make sure to get pre-approved versus pre-qualified.
Finally, buyers should think carefully about how the good faith estimate figures fit into their Big Financial Picture.Any life changing “what ifs” should be considered at this time, like job loss, costs associated with having children, divorce, etc. Will they be able to sell the home, if forced to, for more than what they paid for it or at least break even? Our team can help you, even at this initial stage of deciding whether it’s time to purchase or sell a home.
This blog is a reprint from April 2010 http://www.themimiteam.net/PugetSoundHomesBlog
Would you like to share your “sale fail” story?