Kristine Gaffney's Blog
Once your house is on the market, it’s easy to get caught up in what happens next. Be careful though, if you’ve already found your next home and made it perfect in your mind, the disappointment if your plans fall through can be awful. No one wants their purchase or sale to fall through, but it does happen. That disappointment can open you up to taking the wrong offer for your home. Before you make that mistake, think about why your current deal fell through and try to mitigate those possibilities before taking your next offer. With any luck, you’re reading this before your first offer, and you can benefit from never experiencing that offer falling through.
Low Appraisals or Nearby Home Sales
Your buyer will likely get their own appraisal done on the property since their lender will only cover up to the appraised value of the property. If that appraisal comes in lower than the purchase price or the buyer’s offer, the deal is likely to fall through. Most buyers are unable or unwilling to cover the difference in cash, so unless you're willing to accept a lower price that matches the appraisal, everyone is out of luck. You're not necessarily stuck with this appraisal if it’s much lower than your own or what you expected the Fair Market Value to be. Appraisers are human too, and sometimes they just miss things. However, if both appraisals come back lower, you may want to adjust your pricing down to something the market will bear.
If your home is rare or exceptional in some way, there may truly be no other similar homes for comparison nearby. This often happens with larger estates, totally-remodeled homes, and historical landmarks. Go ahead and ask for a wider geographical area to be included, specifying homes with similar features and upgrades. This can give a more accurate and favorable FMV appraisal.
Errors or Glitches in the Documentation
Legal documents are a complicated mess, and every single part must be perfect. Incorrect spellings and addresses, missing or illegible signatures or dates; a plethora of mistakes and typos can pump the brakes on the closing. Triple check every single page the first time you receive it. If anything at all is wrong, send it back for a corrected version or rider immediately. Rinse and repeat until you have error-free documents.
A variety of situations can cause your title documentation to be incorrect. If you recently changed your name, went through a divorce, got the home through inheritance, or purchased through a lease-option—or other less conventional methods—your title could be incorrect and not have your current ownership status. Check all your homeownership paperwork including the title, any past loans or liens and all other paperwork you have that might block your path to a clear title. Then get it resolved as soon as possible. That way there are no surprises late in the game.
Before you agree to an offer, ensure that the buyer is pre-approved and pre-qualified for the right amount to cover the cost of your home. Finding out at the last possible moment that your buyer has less money than promised can put a wrench in the works. This might tempt you to drop your price to match their funds, especially if you've already placed an offer on a new home yourself. Check early and often to avoid being caught in a tight situation. You can also get held up by last-minute lender paperwork. Government lenders especially require a variety of proofs and reassurance so even one missing document can derail the whole process. All of this can be avoided by making sure that your buyer has their down payment available, and is totally pre-approved for a loan before you accept their offer and lock it in.
Okay, so there is no way at all to plan for these. If you need to sell your home on a schedule, don't accept a contingency offer. Here's how they work: You agree to an offer from a buyer contingent on the sale of their property. That means you are stuck together for the duration of the process. If their home doesn’t sell, neither does yours. However, if you’re on a variable schedule and really like the offer, it could be best for you to lock in the buyer and then just wait until the process completes. Just be aware of the pitfalls and plan for them as much as possible.Make sure to ask your agent about these and any other reasons a deal might fall through. They can help you plan for these situations and prevent them where possible.