6 Reasons Home Buyers Can Legitimately Back out of a Purchase Contract
Even after finding a prospective buyer, negotiating and reaching an agreement, your buyer could legitimately back out of the purchase contract and leave you high and dry. So that you are aware of some of the possible pitfalls you may have to deal with, below we’ll point out the 6 most common reasons real estate deals fall through. Keep in mind that in the cases discussed below, the buyers can legally back out of a purchase contract with the earnest deposit in hand. This is one of the most important things you need to know when selling your home. At the end of this blog, we’ll present you with a practical method to sell your house that eliminates all of these possible drawbacks and guarantees you a fast and easy sale.
1. Buyers finds latent defects during the home inspection period
The buyer may back out of a purchase contract during the home inspection period or ask to renegotiate the sales price, if a home inspection reveals latent defects that were not disclosed by you or problems that are more costly to repair than initially estimated. Make sure you review your home for any issues prior to the inspection and get them resolved. If you are flipping a property to sell quick for cash, make sure you deal with any issues properly.
2. Home does not appraise for the sales price
Unless your buyer is paying cash for your house, they will have to apply for a mortgage. Since the house serves as collateral for the bank, the buyer will be required to pay for an appraisal to verify that the money being lent by the bank is adequately protected. If the house appraises less than the sales price, your buyer will not be able to get a mortgage. Your buyer can either back out of the contract or ask you to lower the sale price so it is equal to the appraised value.
3. Buyer cannot get financing
Not every buyer gets approved for a mortgage. Sometimes overly optimistic mortgage reps will try to get a mortgage approval even if they know the chances for the buyer to qualify for a mortgage are slim. In other cases circumstances can shift that disqualifies an otherwise perfectly qualified buyer. Some examples of this is when a buyer is laid off, loses a job or takes on additional debt before getting a mortgage approval.
4. Existing house does not sell in time
In a traditional sale with a real estate agent your buyer will most likely need to sell their home in order to have the funds to buy your house. As you can see from reading this blog even if a buyer has every intention to purchase your home the sale of their house could fall through for many reasons that are no fault of their own.
5. Title Issues
Title problems are not very common but from time to time they can show up and kill a deal right on its tracks. As part of the mortgage approval banks require that there be a title search to rule any liens or inconsistencies in ownership. Your buyer may not want to wait if a complex title issue arises.
6. Surprises in the final walk-through
Prior to closing the buyer is given an opportunity to examine the house without the seller’s belongings to make sure that the house is in the same condition as was seen originally. It also gives the buyer the chance to verify that any items that were specifically included in the sale are present and agreed upon repairs are completed. During the final walk-through the buyer may discover repairs that have not been completed, new major repair problems may arise or existing problems, such as fire damage, was hidden. At that point the buyer can ask for a credit or may choose to back out of the purchase contract.
What to do if you want to avoid a buyer pulling out of the purchase contract?
If you’re looking to sell your home fast and want to eliminate the pitfalls mentioned above as well as:
Save time and money on prepping your home for the market
Sell your house as is, without having to declutter, clean and repair your home before putting it on the market for sale.
Avoid the hassles of listing your home with a real estate agent
Long listing contract
Real estate company for sale sign
Multiple listing system (MLS)
Public/realtor open house
Endless house showings
Save on commissions
Commissions add up to 6% of the sales price of your home. By selling directly to a cash home buyer you’ll save a bundle of money on real estate commissions. Call CT Cash Homes, LLC today at 860-249-0950! Count on us to understand your needs, provide solutions to your problems and deliver exceptional service.