Most sales fall apart because the buyers discover something new about the transaction that they didn’t know when they made their offer. This could be new information about the property, the property condition, the neighborhood, how much they can afford or the price they agreed to pay.
Most of these deal-stoppers can be avoided by taking a proactive approach to your real estate purchase or sale. It takes a lot of time and emotional energy to put together an offer to buy a home. Why go through the process unless you’re sure that there aren’t any obvious reasons why you shouldn’t?
For example, there’s no excuse for a transaction falling apart because the buyers couldn’t get the loan they needed to complete the purchase. Mortgage preapproval can be accomplished within a day or two, and ideally should be done before an offer is made. Preapproved buyers know they are creditworthy and how much they can afford to pay.
Sellers should think twice before accepting an offer from buyers who haven’t been preapproved. It’s tempting to accept any offer if your home has been on the market for sometime unsold. But, think of the time lost if you’re home is taken off the market for an underqualified buyer.
You could counter an offer from buyers who haven’t done their financial homework with a provision that they provide a preapproval letter at acceptance. Give them a couple of days to respond.
More often than not, home-sale transactions fall apart because the buyers receive negative information about the property after they are in contract to buy. Sellers can avoid this sort of deal killer by disclosing information to buyers before they make an offer.
HOUSE HUNTING TIP: Disclosure laws vary from one state to the next as to what a seller needs to disclose to a buyer. However, regardless of what may be legally required, it makes sense from a sale standpoint to provide information to buyers that could be detrimental to a sale before you accept an offer. That way, buyers can make an informed decision before entering into contract as to whether they want to buy the property.
In the interest of upfront disclosure, it makes sense to order pre-sale inspections of the property. This is not done to preclude buyers’ inspections. Buyers should be encouraged to inspect the property. However, if you know that your roof is at the end of its life and you’re sure it will be an issue for buyers, don’t ignore the situation.
Take a proactive approach and order a roof inspection from a reputable roofer. If he says that the roof is at the end of its life and needs to be replaced before the next rainy season, ask for an estimate and make this available to buyers.
By doing so, you accomplish two goals. First, you can accept an offer without having to fear that the deal will fall apart when the buyer discovers the roof is shot. Second, by providing buyers with the cost estimate, you eliminate an unknown that could stand in the way of the buyers making an offer at all.
Another way to avoid a cancelled sale is avoid a long close of escrow. The longer the close, the higher the likelihood that something will go wrong. One seller insisted on a three-month closing; the buyer wanted to close in 30 days. The buyer agreed to the longer close. After a couple of months, the buyer suffered a financial hardship that made it impossible for him to close at all.
THE CLOSING: Some sellers like the comfort of living in their homes awhile before moving on. Yet, with the finality of a closed sale comes money in the bank.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.