Common pending home sale pitfalls and how to avoid them
There are a lot of moving parts when it comes to buying or selling a home. It’s a big transaction, and a ton of items need to be checked off before the property can transfer from one person to another.
A home sale is considered “pending” from the time that a seller accepts the offer up until the moment that the sale closes.
There are so many important steps that happen while the home sale is pending, such as the financing process, appraisal, inspection, title search, and more.
So, whether you’re buying or selling, it’s important to understand some of the most common reasons that a pending home sale falls through so that you can avoid any unnecessary issues.
Home inspection contingency
Once you accept the buyer’s offer, they will typically hire an inspector to make sure that everything is working properly. A home inspection contingency will allow the buyer to either renegotiate the sale price or walk away from the sale completely if concerning items were found during the inspection, such as problems with the roof, foundation, heating and cooling systems, mold, termites, or other big-ticket items.
To avoid any unexpected issues, sellers should hire their own inspector before putting their home on the market. Either fix the items listed in the inspector’s report, adjust your pricing, or offer the buyers a seller’s credit that will go toward the cost of the repair.
Financing Falls Through
Typically, a buyer is pre-approved for their financing before putting an offer in on their home. However, a change in their status could mean that their financing falls through. This could be a change in their employment, a new negative credit issue appears, or they’ve taken on new debt. For this reason, many real estate agents recommend accepting either an all cash offer, or an offer from a local, trusted bank or mortgage lender.
In some cases, the appraisal might come back lower than the contract price. This is an issue because banks and mortgage companies will only lend up to the value of the property. So, if the buyer can’t pony up enough cash to cover the difference, then their financing could fall through. As a seller, you would need to make a decision to either let the deal fall through or lower the sales price. The seller could also hire another appraiser in hopes of a different answer, or make a case to the appraiser, using recent neighborhood sales prices or other evidence, that the home should be appraised at a higher value.
Buyer home sale contingency
Sometimes a buyer’s financing is dependent on them selling their current home. If their home doesn’t sell quickly, then your home sale could be pending for quite some time.
Property title issues
Prior to closing, the buyer’s lender will order a title search to find out the ownership of the property and find out if there are any liens or claims against the property. A clean title is required before the transaction to close. So, if there are any liens or claims against the property it could take weeks or months to get them sorted out. Depending on the seriousness of the title issue, some buyers may walk away from the sale.
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