Six Reasons Why a Real Estate Deal Can Fall Apart

Failed Real Estate DealWhy do some real estate deals fall through? A survey conducted by the National Association of Realtors found that one in every five home deals falls apart. Following are six primary reasons that the dream of home ownership collapses at the last minute.

A change in credit score

Credit scores can fluctuate between loan approval and closing. Just one missed bill payment could lower your FICO score and increase your mortgage payment, or even make you ineligible for the mortgage.

To prevent this scenario from happening, buyers who are nearing the closing date should be aware of dinging their credit, which can happen when you open credit lines, run up balances, or take out a loan on a new car. Closings can also be hurt by a diminishing debt-to-credit ratio, so make sure to carry on with business very much as usual.

Getting Spooked by the inspection

When a prospective buyer or buyers find their dream home, but the inspector finds an unexpected problem at the last minute, the buyers can be spooked and the deal dissolves, even if the sellers promise to fix the problem.

While the situation suggests that the sellers were hiding an issue from the buyers, usually if you find a deficiency in the home, the home inspection report becomes a negotiable tool for the buyer. So if a surprise pops up during the home inspection, don’t run until you’ve brought the issue up with the sellers. They could have a logical explanation and you could get a concession.

Running out of money

A mortgage is only one part of the funds you’ll need to buy a home. Saving for your down payment and closing costs is not enough. You will need to have a cushion for unexpected repairs and other expenses that come with a home purchase.

To prevent this, talk to your lender or Realtor about the financial reserves you’ll need to get in the house before making an offer.

Small problems blown out of proportion

Even relatively small flaws in a home can bring negotiations to a grinding halt if buyers or sellers get emotional or take things personally. A deal can fall through for something as small as a single cracked tile. Other deals can collapse because of a small misunderstanding such as what’s included with the house…appliances, window coverings, storage sheds, etc., can completely ruin a deal.

While it’s fine to bring up problems, try to do your best to stay calm and avoid being accusatory during communications with the sellers to avoid offense. And even if the seller does not grant all your requests, try to keep the big picture in mind. Does that chipped molding really matter that much?

Cold feet

When buyers see the home in its best condition, they are on an excitement high. Then, over the next couple of weeks, the home just becomes a memory. Buyers are hit with the details of closing and moving costs. As everything sinks in, they’re handed a horrible inspection report listing every little defect in the house. That’s the moment that most deals fall apart.

Go into house hunting knowing there’s a honeymoon period, followed by a whole lot of stress, paperwork, and check writing that will drain your savings. But in the end, you find out that it is all worth it. The buyer’s Realtor should tell them that it is normal for an emotional low to follow the high at the time of contract. The Realtor should let them know that getting cold feet is very normal when buying a home.

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Mara Calomino

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