If you are thinking how often do closings fall through, when a home sale is under contract, there are numerous contingencies that must be fulfilled in order for the deal to close. If any of them don’t take place as planned, the deal will likely fall through.
Fortunately, there are ways to reduce the chance of closings failing. One major issue that may lead to a sale not closing is financing issues.
1. Financing Issues
Mortgage financing is an integral component of home sales, as evidenced by the National Association of Realtors’ (NAR) 2018 Home Buyers and Sellers Generational Trends Report: 88% of homes purchased within the last 12 months were financed with a loan.
Finding a mortgage that meets both parties’ needs can be a daunting challenge, particularly as interest rates continue to rise. But with the assistance of an experienced realtor, potential homebuyers can successfully negotiate through the financing maze and secure terms that make financial sense for both parties.
Financing issues have been known to cause many cancellations and delays, so it’s no shock that a wise real estate agent would request a buyer’s pre-approval letter before entering into any contract. Furthermore, buyers often request a home inspection as part of the process, so make sure your property is in top condition before signing on the dotted line.
2. Inspection Issues
Home inspections are often the last step in the home-buying process, whether you’re a buyer or seller. Unfortunately, they can also uncover numerous issues which could force you to back out of the deal.
Some problems may be minor or easily fixed with some extra effort, while others could be major and put your safety in jeopardy. In some instances, repairs may prove so expensive that it would be better to walk away and avoid further harm.
Fortunately, there are ways to prevent these common issues before they escalate and negatively affect your sale. By anticipating what issues might come up during a buyer’s inspection, you can take proactive measures by either making repairs or adjusting the price accordingly. Doing these repairs ahead of time may increase your chances of closing on the deal more quickly.
3. Buyer Changes Mind
Purchasing a home is one of the biggest financial and personal decisions you will ever make. It can be an anxious process, but also incredibly exciting.
The good news is that home sales usually go smoothly. However, there are a few things which could cause a sale to fall through and it’s best to be prepared for these potential pitfalls.
One common reason that closings fail is the buyer has changed their mind. They could have suffered from buyer’s remorse or had other life circumstances arise that forced them to back out of the contract.
4. Seller Changes Mind
When a home sale is under contract, there are several potential issues that could go wrong, such as an inspection or financing issues. But even if everything looks promising on paper, buyers may experience second thoughts if they feel the deal is unjustified.
When this occurs, it’s essential for the seller to be able to back out of the purchase agreement without facing legal or monetary repercussions. While this is usually feasible, it may not always be the best option.
One common reason a seller will terminate the purchasing agreement is when they cannot find suitable housing for themselves or their family members. Another possible explanation could be an unexpected life event like birth, death or loss of employment.