There are three main reasons why contracts fall through during the buying or selling process.
The first is pre-contract killers, or things that happen during negotiations before the contract is ratified. Even when buyers and sellers come to an agreement, the deal can fall through. There are three main causes of pre-contract killers:
1. Last-minute financial changes or misunderstandings between the buyer and their loan officer. This may happen if the pre-qualification or pre-approval process wasn’t conducted thorough enough, causing a later development to negatively impact the deal.
2. Cold feet. In a hot market, buyers can sometimes feel pressure from their agent (or from themselves) to make an offer, only to regret it right after they make it. This can result in them withdrawing their offer even if the seller has agreed to it. Remember, an offer can be withdrawn at anytime before the contract is ratified by both parties.
3. Poor communication between the buyer and seller or their agents. If neither party is communicating with the other in a reasonable time frame, one side can get frustrated enough to withdraw.
The second reason is post-contract killers, of which there are also three main causes:
1. Inspection processes, or whatever comes up during radon tests, pest inspections, etc.
2. Financial changes of the buyer. If the buyer’s financial situation changes before or on the day of settlement, the bank could withdraw their commitment to loaning the actual money.
3. Appraisal issues.
The third and final reason is pre-settlement walk-throughs. In this case, there are usually two main causes:
1. Neglect or deferred maintenance that hasn’t been taken care of by the seller.
2. Misaligned expectations.
One thing we always look for is a win-win situation between the buyer and the seller. If we have a win-lose situation, that can be a major burden on one party and put the whole transaction at risk. As long as both agents are working together to create a win-win situation for both parties throughout the transaction, chances are good that everybody will be happy once you reach the settlement table. That’s the best recipe to hold a transaction together from start to finish.
If you have any questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d be happy to help you.