As either a buyer or a seller, it can be a relief to go under contract. But our real estate agents say not to count on the sale quite yet, as there are a lot of things that can cause it to go sideways. Here are a few common reasons that pending sales fall through.
- The home inspection turns up problems.
Most of the time, home inspections are just a source of information about South Bend homes for sale. When the inspection turns up issues, the worst-case scenario might be a renegotiation of the contract. But occasionally the findings are serious enough that the buyer may view it as a deal breaker.
- The appraisal comes in too low.
It doesn't happen very often, but on occasion, the lender's appraisal won't justify the seller's price (or the buyer's offer). If the appraisal comes in too low, that means the buyer can't secure funding unless they have the cash to make up the difference. In situations like these, the seller will need to decide whether to renegotiate the price or ask the buyer to try again with a different lender.
- The lending falls through.
The buyer's lending can fall through for a variety of reasons, such as a change of employment or credit rating, a change in debt, or a change in interest rates that put the payment above the buyer's ability to pay. Getting pre-qualified or pre-approved will make it more likely that you'll be able to secure lending, but it's still not guaranteed. If the original lending falls through and the buyer isn't able to find another lender before closing, the sale won't be able to proceed.
- The buyer's current home doesn't sell.
Many buyers are selling their old homes and buying new ones, which means that the contract is often contingent on their current home selling first. Contracts are written this way to avoid the buyer getting stuck with more mortgage than they can afford to pay, but the tighter timeline does make it more likely that the pending sale will fall through.
- The title search finds claims on the home's title.
The whole purpose of the title search is to ensure that there are no undisclosed liens on the title. If there are any issues, it's usually because the house was used to secure a loan, and that loan will need to be repaid before the title can be transferred. It's expected for the seller to have a mortgage, of course, but if there are other undisclosed debts, the sale may not be able to go through.
- The buyer can't get insurance on the house.
The house has to be insured in order for the buyer to get a loan, but if the house can't be insured, the buyer might not be able to secure lending. For instance, if there has been flood damage or structural issues that are too far advanced, insurance companies might not be willing to insure the home.
- Someone changes their mind.
Contracts are typically written to avoid either the seller or the buyer backing out without a good reason, but it can still happen. More frequently, buyers will use the results of the home inspection to back out of the contract, or the seller will refuse to negotiate on price or repairs when the home inspection comes back.
Despite the many reasons why home sales might fall through, the majority of pending sales do make it to closing. An experienced agent can also improve your chances, so contact us today to get the process started.