After weeks of hard work and waiting, you finally get an offer on your home. While it may be tempting to breathe a sigh of relief, you actually need to stay on guard, because it's not unusual for buyers to back out of home sales at the last minute. Here are two reasons why this occurs, and what you can do about it.
The Inspection Turned Up Something Unsavory
To get an idea of the home's condition, the buyer will commission a home inspector to look over the property and determine if there are any major or undisclosed issues. If the inspector turns up something the buyer doesn't want to sink money into fixing, he or she may invoke the home inspection contingency in the sale contract and withdraw the offer.
Some issues that may make the buyer think twice about making the purchasing include:
- Termite infestation
- Structural damage
- Significant roof problems
- Environmental issues (e.g. contaminated soil)
- Damaged plumbing that needs replacing
Generally, any problem that makes the home look like a potential money pit may scare the buyer away from closing the sale. There are a couple of things you can do to keep the buyer from revoking their offer. The first option is to make the repairs to the home as needed. This can be tough if you don't have the cash, and the repairs may take awhile to complete, so you may be stuck with the house for longer than you anticipated.
The other option is to renegotiate the home price to reflect the problems. You'll make less money on the home. However, the buyer may continue with the sale since you're still essentially paying for the repairs by cutting the price.
The Financing Fell Through
Another reason buyers back out of home sales is because their financing falls through. The person couldn't get approved for a loan, the finance company reversed course and declined a previously approved loan for some reason, or the buyer was unable to sell his or her old home to get the money to pay you.
You can avoid this problem by insisting buyers have a pre-approval letter from a bank before they make an offer on the home. While the bank can still decline to finance the home, the risk of this happening is significantly reduced.
If you've already gotten to the point where the buyer has made the offer, your options are to either consider providing seller financing (where you essentially take on the role of lender and the buyer makes monthly payments to you directly) or put the house back on the market. It's best to examine your financial situation to determine which option works best for you.
To learn more about this issue or for help selling your home, contact a real estate agent.