Posted on June 18, 2018 - 10:01 AM
by Jacob Skiles
Your buyers found the home of their dreams. They’ve started packing. Then, something pops up that could stall the sale. In today’s market, finding a home is only the beginning. There are often stumbling blocks along the way.
Here’s how to keep common real estate mistakes from killing the deal.
No one divides the fixtures
Sales can falter because of disagreements over silly stuff — like who keeps the fireplace screen, the wall sconces or the appliances. For some buyers and sellers, it can be difficult to distinguish between a seller’s personal property and what actually comes with the house.
To bypass the issue, educate your client about the difference between attached appliances, fixtures and personal property. If something is really special to a homeowner, suggest that they remove or replace the item before you put the house on the market. If this isn’t possible, exclude it in MLS (along with items like flat-screen TVs, which are frequently confused for a standard fixture) in the written offer. Buyers should figure out what stays and goes as well, and include any items that are important to them.
The ex disagrees
Many dread working with their ex, and their potential impact on a home sale is one reason why. Unfortunately, it’s pretty common to find out late in the process that a former spouse hasn’t agreed to the sale with their ex.
Make sure you get a preliminary title report as soon as possible and ask your seller if there are any potential claims on the title.
Buyers buy stuff
Your first-time home buyers are moving into their new home. They don’t have a washer and dryer, and the local appliance store is offering a smoking deal — a store credit card and 15 percent off new appliances! Sounds like a steal, but it might just kill your deal. Buyers should not make major purchases, like a new car or appliances, before escrow closes. Major purchases that affect their credit can also impact the mortgage.
Remind your buyers to wait to purchase appliances, furniture or a new car until their loan has been funded. Have them stash those credit cards until the paperwork is finalized.
Failure to disclose
It can be tough to get sellers to reveal issues with their home, but it’s almost always better to overshare when it comes to the disclosure. Inevitably, a neighbor will tell the prospective buyer about the unstable hill, the moldy basement or the meth lab around the corner.
Don’t be afraid to ask your sellers the hard questions. And with buyers, make sure you disclose, disclose, disclose. Problems always seem much bigger when a buyer uncovers them after they’re under contract.
There’s no appraisal — or it’s late
Appraisals used to come in magically close to the offer price. They are great for reinforcing the price of a home. But these days, appraisals are often deal-killers, and often, they don’t show up on time. It’s also common to have an appraisal review as well, which slows the transaction down.
Make sure the lender has a qualified appraiser and, when possible, accompany the appraiser on the inspection. Explain to clients that if the appraisal comes in low, they might need to renegotiate the purchase price or pay a higher down payment.
Unclear property boundaries
Your buyer thinks they are getting a 6,000-square-foot lot only to find out that the fence is built on the neighboring property. Or they think they own the driveway, but it’s really an easement owned by the cranky old neighbor. Lot lines, shared driveways and fences are common stumbling blocks in a home sale.
Review the preliminary title report with your client, and have a title officer explain anything unusual. You and your client should also go to city and county authorities to review the items on file. If your client is concerned about lot boundaries, recommend that they have the property surveyed by a professional surveyor. While surveys can be costly, not knowing the actual lot boundaries can be expensive. Also, keep in mind that if a client is concerned about only one side of the property, they can get a partial survey.
There are no permits
In many areas, unpermitted additions or remodels have become serious challenges for buyers and sellers. On top of that, many cities and towns have implemented pre-sale inspections to fill their dwindling coffers.
If your sale requires inspections, get them in advance, correct any pressing issues and get your documentation together. Have your inspections done as early as possible as some municipalities take a while to get through their workload.
Surprising inspection results
Inspections can kill a deal, but they can also save your client from a costly lawsuit. When your client invests in a home, they should understand what they are buying. Inspection periods are like a second negotiation phase, and this additional time can become a problem when buyers and sellers can’t reach an agreement over who is responsible for what repairs.
Recommend that sellers have their home inspected before the property is actively on the market. Buyers will probably get their own inspections, but a pre-inspection enables sellers to resolve problems that might turn off a buyer. Repairs almost always cost a seller less if the buyer knows about them before writing an offer.
The lender changes the rules
It can be hard to imagine, but sometimes, just when everything looks great — you’ve got your buyer, not just pre-qualified, but pre-approved, and you are under contract — the lender suddenly changes the rules and your buyer can no longer meet the lender requirements.
Unfortunately, this scenario can’t be always prevented. Work with a reputable mortgage broker or lender with a solid record of closing transactions. If you represent the buyer, you may want to recommend that they leave their loan contingency in place until the loan is funded. Make sure your buyer is aware of the ramifications if the loan doesn’t fund.
The bank doesn’t care
If the property being purchased is a short sale, the bank is basically in charge and doesn’t care about a buyer’s timeline. Sadly, it’s not unheard of for short sales to drag on for years, only to have the bank pass.
When a bank is involved, the best way to save a deal is to make sure your buyers have appropriate expectations about the process. Inform them about possible pitfalls and let them know that bank-owned properties require a lot of patience.
One of the best ways to avoid killing a deal is to educate your clients about the whole home buying and selling process. While buyers and sellers might not be aware of common real estate mistakes, a good agent must identify potential issues and address them early so the transaction can proceed smoothly.