The Top 10 Ways Real Estate Transactions Go Wrong

One of the first things we as humans learn in life is that absolutely nothing is guaranteed. Real Estate is no exception. Even the most sure-fire deals are subject to change, at any time, for a host of reasons. Over the years, we have experienced many transactions that have been nothing short of amazing. The clients were great, the cooperating broker and their clients were great, the lenders were great, and the closing attorneys were great.

Then there have been deals that have completely fallen apart for the most bizarre reasons that no one saw coming. Here is a list of my top ten reasons why a transaction has fallen apart.

1. Buyer’s Remorse

Ah yes, what a classic! Generally buyer’s remorse is associated with impulse purchases or items bought without proper thought being given. Sometimes buyers will get into a bidding war and it’s human nature to want to “WIN.” Unfortunately, most bidding wars end up with the winner paying far more than the listing price, meaning they are agreeing to buy a property that no longer is worth what they agreed to pay. A couple days after the contract has been submitted and a period of cool off emotionally, buyers generally sober up and terminate the contract during the due diligence period.

2. Unknown Structural Issues

When a buyer puts a contract on a home, one of the first steps is to get the property inspected. The easiest way for the seller not to be caught off guard is to get a pre-inspection before the home is listed. This will let them know of any major issues the buyer will find when they have the home inspected after a contract has been accepted. There is nothing that makes the buyers more skeptical of a home than an inspection that shows structural damage. Consider that contract terminated!

3. Holy Moldy

The sister of structural damage is mold, and she is not exactly friendly, driving buyers away in droves. Again, this can all be prevented with a pre-listing inspection.

4. The Seller Did Not Properly Complete Repairs

Contractors exist for a reason and most will offer some type of warranty for the repairs they have made. Take advantage of these contractors and their warranties to take the stress and liability of repairs off you. You have enough to worry about with packing and preparing for a move. The last thing you want to happen is the buyer complaining that the repairs were not properly taken care of, leaving you to either invest more time and effort, or likely with a terminated contract.

5. That Doesn’t Belong to You

Buyers and sellers rarely agree on what is a permanent fixture and what is personal property of the seller. Agents on both sides of the transaction are trained to explain to their party the things that are staying and the things that are going with the seller. Remember, if there is ANY dispute, put it in the contract. Not sure if the refrigerator is staying? Ask for it in the contract! The problem arises when the seller assumes something is personal property that was listed in the contract as “staying with the home” and the buyer is not happy about it.

6. A Buyer with No Credit Gets Pre-Approved

Yes, this happens sometimes. The lender will submit a pre-approval letter based on income only. The buyer has never had a car loan, a student loan, or a credit card. When the file gets to the underwriter, SURPRISE, it gets rejected. Remember, lenders are people too, and they are just as prone to making mistakes as anyone else. If you are a buyer, please listen to your agent when it comes to choosing a lender. It is likely the lender they choose is a lender they trust and have worked with many times in the past. Remember, if the loan gets rejected, the agent doesn’t get paid. They will always send you to a lender they trust that will get you to the closing table.

7. Lender Drops the Ball

There have been clients who we have seen lenders put their files on the backburner and then completely forgotten about them. This, again, is why we are very picky when it comes to the lenders we use. Our lender is someone we trust, because we know his character and have sent him numerous deals over the years and have yet to be let down. Buyers trust your agents when it comes to choosing a lender!

8. Faulty Appraisal

This can happen for a variety of reasons. The two main reasons are that appraisers have a tough time finding appreciation in areas where it is easy to show depreciation and most appraisal firms send appraisers from out-reaching areas where they are not as familiar with the comparable properties enough to deliver an accurate appraisal.

9. Buyer Decides to Buy a Car

Why anyone trying to get approved for a home loan would think it’s a good idea to convert that auto lease into a purchase or go out and buy a new car is beyond me. Adding $30K in auto debt is going to make your lender want to slap you. Well, more realistically, reject your loan application. During the home loan approval process, it’s always best to completely avoid major purchases.

10.  Seller’s Remorse?

Yes, this is a thing. It’s a very rare thing, but a thing nonetheless. An agent friend of mine had a seller get all the way up to the day before closing before they decided they did not want to sell their home. Talk about a nightmare. Fortunately for the buyer, they have the right, and legal authority, to sue for loses and damages as well as the right to sue the seller to perform and force the sale of the home. Luckily for my friend’s sellers, the buyer decided not to sue for completion of the contract, but there were definitely some damages paid.

The bottom line is that we never know what is going to happen in a real estate transaction. All we can do is the best we can to prepare, write a solid contract, and perform our duty until the closing date.

RELOCAL|MOVE has entered into an exciting agreement with CBC National Bank to offer our partners preferred pricing as well as a free appraisal with any mortgage. This applies to home purchases, refinances, and reverse mortgages. Please go to https://gosmallbiz.com/resources/relocalmove/ for more information. The application is free.