Once you’ve found the home you want and your offer is accepted, it feels like the hard part is over. Yet many dream home purchases fall apart during the closing process, leaving would-be homeowners confused, disappointed, and back at square one. What happened?
There’s a number of factors causing home sales to fall through. Problems can arise among or between the buyer, seller, lender, or any associated agents. Sometimes, you yourself may realize it’s better to walk away. Look out for these problems and you can prevent a frustrated and fruitless almost-close.
11 Factors That Could Cause a Home Sale to Fall Through
Problems with the Lender
#1: Mortgage denial
Even with pre-approval in place, completing the mortgage process can be problematic. If the financial documents you submitted aren’t accurate or your financial picture has changed, your mortgage might be denied. Avoid making significant purchases, changing jobs, opening credit accounts, or making other changes to avoid this factor making home sales fall through.
#2: Mortgage delay
If you’re working with an inexperienced lender they might submit documents incorrectly or miss important deadlines. If your mortgage is not completed by the deadline set in the purchase contract, usually 30 days from signing, the deal may fail.
#3: Contingency date expires
For a mortgage to be completed, contingencies such as an appraisal and homeowner’s insurance must be resolved by the contingency date. If contingencies aren’t resolved on time, the mortgage and, subsequently, the home close will fall through.
Problems with the Home or Seller
#4: Another offer
Problems with the seller or home is another important factor that can cause home sales to fall through. Once the seller accepts your offer, all other offers should be off the table. Still, some sellers will consider higher offers even after the purchase agreement is signed. Sellers considering higher offers will look for any reason to void the first contract, or they might break the contract. If this happens, the jilted buyer has grounds to sue.
After you sign the initial purchase agreement, time is allotted for inspections. These inspections may show that your lovable fixer-upper needs more fixing than you thought. If you encounter structural damage, septic system problems, chemical exposure, or other big issues, it might be a good reason to walk away.
#6: Title isn’t clear
If a property has liens or levies attached to it, it doesn’t completely belong to the seller, therefore they can’t sell it. If a title does not show up as ‘clear,’ the seller has to resolve these issues or work out a different sale system, such as a short sale.
When you take the final walkthrough before the closing date, you may find that the property you first saw isn’t in the same state anymore. Maybe a storm damaged the house, pests moved in, or squatters damaged a vacant property. Whatever the reason, more negotiations may be in order, or you may decide it’s best to walk away.
#8: Missed deadlines
The purchase agreement outlines deadlines for every step in the closing process, from the first deposit to the closing day. Each time a deadline is missed the contract is breached and a frustrated seller is unlikely to give numerous extensions, especially in a seller’s market. Missed deadlines can be a big factor causing home sales to fall through.
#9: Tough negotiations
If inspections uncover problems, you may ask for a home warranty, negotiate closing credits, or ask the seller to pay for additional inspections. The seller might make a counter offer or refuse altogether. If a seller won’t cooperate, you might want to walk away. If you push a seller too hard and continue to delay the close, they might look for any excuse to void the contract.
#10: Lack of Funds
Maybe you didn’t consider all of the closing costs, or maybe an emergency occurred that emptied your savings. For whatever reason, a lack of funds by close date means trouble. Sellers might be willing to negotiate with you under extreme circumstances, but in most cases, this is a sure factor causing your home sale to fall through.
#11: Cold Feet
Sometimes buyers are their own worst enemies. If you find yourself consistently missing deadlines or regretting your decision to buy, you might have cold feet. If everything is going well but you find yourself looking for factors to delay your home purchase, ask yourself if you want the deal to fail and, if so, why.
In some cases, the purchase will inevitably fail, due to no fault of yours. In other cases, you may find that the home just isn’t want you signed up for, and it’s best to walk away. The best thing you can do to keep your home purchase on track is work with an experienced realtor and lender, keep your documents in order, and stay up-to-date with all deadlines.
Have you seen a home sale fall through? What advice would you give other buyers or sellers? Leave a comment!