3 Big Reasons Why Real Estate Deals Collapse
Real estate deals are never done until the deed is recorded. Until that time, a real estate transaction can be a topsy-turvy ride filled with red flags, bumps in the road and unexpected issues that need to be addressed, both on the side of the buyer and the seller.
The best way to prevent deals from going sideways is to prepare as best you can. All parties involved -buyer, seller and agents — need to do as much due diligence as possible before getting into the transaction. This may sometimes include having tough conversations, doing some work upfront and being open to collaborating when things get a little challenging.
Here are some of the biggest places where deals can get hung up – and how to avoid them.
Appraisal Issues: Homes not appraising at the contract value have been a problem since the housing crisis and will likely continue to plague the industry for years to come. Particularly in strong markets, where multiple buyers compete for the same property, the price sometimes creates a new comp for
If the buyer wants to buy, and the seller wants to sell, it means compromising, particularly for the seller.
the area. Even if multiple buyers have offered to pay a price, a third-party appraiser, who isn’t part of the deal, sometimes won’t agree on the seller’s price.
The best way to avoid appraisal issues is for banks and buyers to work closely once a deal is in contract. If you have a hot property that hit a number that the comps may not support, start speaking to the mortgage professional. Understand the appraisal process and make sure the listing agent is present at the time of the appraisal to tell the story to the appraiser. Seeing a contract price and address on paper is one thing. But to know there were 100 people through the home in three days and six offers received provides color and context.
Inspection Problems: It’s the call no buyer’s agent, seller or seller’s agent wants to get: The inspector found some major problems with the home. When that happens, the deal can easily fall apart.