How to avoid Sale Fail
Sale Fails in Real Estate - How Can You Avoid Them?
In recent months I have been faced with a few sale fails, and these events have caused me to consider the ways in which these situations can be avoided. Essentially, "Sale fail" refers to the termination of a property under contract, by either the Seller or the Buyer, after a price has been negotiated and finalized. By examining some of the factors in the real estate market that generally cause sale fails, we might be able to decrease the likelihood of its occurrence.
Sale Fails Due to Inspection Items
Very often, home inspections unearth problems or situations with the home that were previously unknown. When these problems are identified at an inspection, the Buyer is obliged to provide the Seller with an Inspection Notice, which should 1) specify the specific problems, and 2) state what corrective actions the Buyer requires in order to continue with the purchase, or indicate if they would prefer to terminate the sale.
On the one hand, the Buyer can propose solutions to the issues identified in the Inspection Notice. The Seller then has 3 options, they can agree to carry out the repairs, suggest alternative solutions, or do nothing at all. However, the Buyer can terminate the agreement as a result of the inspection issues, as long as it is done within the dates specified in the Buy-Sell Agreement.
If you are Selling property how can you avoid being surprised during an Inspection?
In order to prevent any surprises, some sellers opt to do a pre-listing home inspection. This is beneficial to both the buyer and the seller, as they are made aware of possible repair costs upfront, before a contract is agreed on. After this, the Seller can decide to do the necessary repairs, but any repairs left undone, should be stated in the property disclosure. The Buyer can also opt to take responsibility for repairs, or negotiate a fix in the sale agreement so that the problems can be remedied from the closing proceeds. Buyers appreciate when they know about repairs at the outset, and they are more willing to negotiate, if the Seller is candid about these issues.
Sale Fails Due to Financing Problems
The recent recession has seen tighter regulations being placed on the financing industry, and in particular mortgage lenders. Because of this, every Seller should insist that a Buyer provides them with a pre-approval letter from their lender. If they are unable to provide one, then a Seller ought to be very careful about entering into a contractual arrangement. Before buying a home it's a good idea to use a good Closing Costs Calculator.
What if it is a cash buyer?
If you are able to attract a cash purchaser for the sale of a property then that is very fortunate indeed. However, it is a good idea to ensure that the Buyer really does have the cash, so that you don't end up being disappointed in the long run. One way to ensure that the cash is really there is to ask the Buyer to provide a current bank statement, or a letter from the financial institution showing the balance held. Also, be sure to verify that there are no stipulations, which prevent the Buyer from accessing the funds when needed.
The purchase or sale of a home can be a good experience if you are able to plan correctly. The key thing is to make allowances for the eventualities, and deal with other issues as they arise. If you are selling, ensure that you are honest about existing situations, as failure to do so might jeopardize the contract, and if you are buying, be careful to ask the right questions before affixing your signature to any agreement. The key is to recognize that even when problems do exist; if there is trust between both parties, then a workable solution is always possible.
In recent months I have been faced with a few sale fails, and these events have caused me to consider the ways in which these situations can be avoided. Essentially, "Sale fail" refers to the termination of a property under contract, by either the Seller or the Buyer, after a price has been negotiated and finalized. By examining some of the factors in the real estate market that generally cause sale fails, we might be able to decrease the likelihood of its occurrence.
Sale Fails Due to Inspection Items
Very often, home inspections unearth problems or situations with the home that were previously unknown. When these problems are identified at an inspection, the Buyer is obliged to provide the Seller with an Inspection Notice, which should 1) specify the specific problems, and 2) state what corrective actions the Buyer requires in order to continue with the purchase, or indicate if they would prefer to terminate the sale.
On the one hand, the Buyer can propose solutions to the issues identified in the Inspection Notice. The Seller then has 3 options, they can agree to carry out the repairs, suggest alternative solutions, or do nothing at all. However, the Buyer can terminate the agreement as a result of the inspection issues, as long as it is done within the dates specified in the Buy-Sell Agreement.
If you are Selling property how can you avoid being surprised during an Inspection?
In order to prevent any surprises, some sellers opt to do a pre-listing home inspection. This is beneficial to both the buyer and the seller, as they are made aware of possible repair costs upfront, before a contract is agreed on. After this, the Seller can decide to do the necessary repairs, but any repairs left undone, should be stated in the property disclosure. The Buyer can also opt to take responsibility for repairs, or negotiate a fix in the sale agreement so that the problems can be remedied from the closing proceeds. Buyers appreciate when they know about repairs at the outset, and they are more willing to negotiate, if the Seller is candid about these issues.
Sale Fails Due to Financing Problems
The recent recession has seen tighter regulations being placed on the financing industry, and in particular mortgage lenders. Because of this, every Seller should insist that a Buyer provides them with a pre-approval letter from their lender. If they are unable to provide one, then a Seller ought to be very careful about entering into a contractual arrangement. Before buying a home it's a good idea to use a good Closing Costs Calculator.
What if it is a cash buyer?
If you are able to attract a cash purchaser for the sale of a property then that is very fortunate indeed. However, it is a good idea to ensure that the Buyer really does have the cash, so that you don't end up being disappointed in the long run. One way to ensure that the cash is really there is to ask the Buyer to provide a current bank statement, or a letter from the financial institution showing the balance held. Also, be sure to verify that there are no stipulations, which prevent the Buyer from accessing the funds when needed.
The purchase or sale of a home can be a good experience if you are able to plan correctly. The key thing is to make allowances for the eventualities, and deal with other issues as they arise. If you are selling, ensure that you are honest about existing situations, as failure to do so might jeopardize the contract, and if you are buying, be careful to ask the right questions before affixing your signature to any agreement. The key is to recognize that even when problems do exist; if there is trust between both parties, then a workable solution is always possible.
