(This is Part 2 of a two-part series. See Part 1: How can I ensure my home sale goes through?)
Next to problems with the buyer’s financing, the most common reason for a home sale to fall apart is issues arising from the buyer’s inspections. Most home purchase contracts include an inspection contingency, which can provide the buyers with the right to withdraw without penalty.
Some inspection contingencies grant the buyers the right to disapprove of the inspections for any reason. Others require the buyers to give the sellers a chance to remedy a problem. Read your contract carefully so that you understand what to expect. If you have any questions about the buyer’s obligations with respect to the inspection contingency, or any contingency, ask your real estate agent or attorney for an explanation.
When a contract fails due to inspections, it’s usually because the buyers discovered new information about the property that they weren’t aware of when they made their offer. You can reduce the chance of this happening by giving the buyers as much information about the property as possible before they make an offer.
Be proactive and order a pre-sale home inspection. If the inspection report indicates there are defects, you have the option of making repairs before you put your home on the market. Even if you decide against doing work, it’s wise to get repair estimates and make this information available to buyers. The buyers can then take this into account when they make their offer.
HOME SELLER TIP: Sometimes a home sale transaction is derailed by something that you could have anticipated by studying the purchase contract carefully. For example, a small deposit amount can indicate that the buyer is not completely committed to following through with the sale. Buyers who commit a substantial cash deposit are less likely to back out for frivolous reasons.
Make sure that all the parties who are making an offer have seen your home, and have signed the purchase agreement. It’s risky to take your house off the market for a buyer whose partner hasn’t seen the property. If the other party doesn’t like your house, you’re back to square one.
One benefit of having offers presented to you in person by the buyers’ agent is that it gives you a chance to find out more about the buyers. If the agent indicates that the buyers have made a lot of offers, ask if they’ve ever been in contract and backed out. A buyer who has offered on several listings and has repeatedly lost out in competition may be the perfect buyer. He could be grateful and excited about finally having the opportunity to buy. But, buyers backed out of several transactions could be trouble.
Sometimes home sales fall apart through no fault of either buyer or seller. Recently, a buyer backed out because she found out that her mother was ill just as her offer was accepted. She had to fly across the country to oversee her mother’s hospitalization. She was in no emotional shape to concentrate on buying a home.
Buyer’s remorse can terminate a home sale transaction, often within days or even hours of acceptance. In this case, the buyer has an irreparable change of heart. Perhaps he bid too high in a multiple offer competition, and feels that he made a horrible mistake. It’s a good idea for sellers to have a backup offer to cover for this situation. Then you don’t have to go back on the market. You simply move to the next deal.
THE CLOSING: It’s no fun to lose a sale. But, if a deal fails early on, consider yourself lucky. As least you can put your house back on the market quickly.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
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