A lot can happen between the time you get a new buyer lead and when they close on their home. Luckily, there are counter-moves you can make to combat most last-minute closing disasters. Find five of the reasons a deal could fall through and tips to avoid that situation below!
Inspection reveals unexpected problems.
Start familiarizing your buyers with the idea that there’s no such thing as a perfect home during the walkthrough phase of their search. For each home you visit, point out things you think may be flagged during the inspection and explain the difference between minor problems like peeling paint and major red flags such as foundation issues, structural deficiencies, and roof leaks/damage. You can also show your buyers a sample inspection report for a different home to give them an idea of what to expect before they receive an exhaustive list of everything wrong with their dream home.
Buyer doesn’t receive final approval for a mortgage.
Credit scores and mortgage approval are contingent on the specifics of a buyer’s financial situation. If they quit their job, make a major purchase, or open up new credit cards or loans, it can disqualify them from their mortgage pre approval. Be very clear with buyers from the get-go to ensure they know not to make any major changes before the very last of the mortgage papers are signed. Be sure to provide plenty of examples of the kind of activities and purchases they should avoid, such as buying a car, getting married or divorced, taking out a loan, or applying for a new credit card.
Appraisal comes back low.
Most lenders will require the buyer to pay for an appraisal to ensure the home is worth the loan amount. If the appraisal comes in low and the bank isn’t willing to finance, you have several options. If you believe the listing should have been appraised higher, show the appraisal specialist proof in the form of similar homes that recently sold for a higher rate. If the price and appraisal are only a few thousand off, consider explaining the problem to the listing agent to see if the sellers would be willing to come down on the price. If your previous offer included the seller paying closing costs, your buyer may be willing to pick up that expense in return for a lower sales price. Another option is for your buyer to cover the difference in appraisal and sales price in cash.
Most contracts allow a buyer to back out of a sale for almost any reason during the inspection phase. There are precautions you can take before you get to inspections to help keep your buyers from canceling due to buyer’s remorse. The first thing you can do is make sure your client has a good understanding of how the real estate process works and which stages they’ll have to spend their money such as inspections, surveys, and earnest money.
It’s also important to help them figure out how much they can realistically afford and advise them to stay within that price range to minimize the risk of cold feet due to an over-extended budget. You should also make sure the buyers have seen a good sample of active listings that fit their search criteria before they place an offer so they don’t feel like they’re missing out on options after they’re committed to a property. Once they do place an offer, don’t send them any new listings to look at unless their offer is rejected.
Buyer hasn’t found someone to purchase their current home.
Sometimes a buyer has to sell their current home before they can purchase a new home. If this is the case in your situation, make sure your client is aware of other options they may be able to leverage to help them get their new home while still working on selling their previous home. Bridge loans, for example, can lend homeowners the funds they need for a down payment while they find a buyer for their current home.
Looking for more buyers? Homes.com’s Local Connect program puts you in front of active buyers in your zip codes. Learn more about Local Connect and check availability here.