Maybe you just found your dream home and your offer was accepted! Or maybe you just got a great offer on your home and you're already imagining how you'll organize the purses in your walk in closet at your new house! Whatever the scenario, negotiating the terms of the purchase agreement is only the first step in what can be a long and tumultuous process. Here are some common ways real estate sales can fall apart and some things you can do to keep them together!
The inspections. In Arizona, buyers typically have 10 days to perform any inspections they want to. This is the time period where you'll be shopping for homeowner's insurance, locking in your mortgage interest rate, timing your commute to work, and checking out the assortment of croissants at the closest coffee shop. This is also where you will hire multiple home inspectors to get into the nitty gritty of your new house's bones. I usually recommend multiple inspections (home inspection, plumbing, roof, pool, HVAC, etc.), so when all those reports come back to the buyers at once, it can be overwhelming! If the buyers and sellers can't agree on which repairs should be done by the sellers before closing, the buyers can back out of the sale.
A great listing agent will make sure the sellers know about some potential issues up front (is your HVAC 35 years old? Does your roof leak every monsoon season?) and encourage you to address those ahead of time, or at least be prepared to compensate for those items later.
A great buyer's agent will help put things in perspective. How old is your own roof or your HVAC unit? If you stay in your current house, you may incur these same costs sooner or later. Also, most things don't require immediate attention and can be done over time. The sellers may be more willing to address serious, immediate safety issues. Having the seller provide the buyer with a home warranty can also ease their minds when it comes to older (but still functioning) systems and appliances.
The appraisal value. If the buyer is getting any type of financing, most likely, an appraisal will be required. This is when a highly trained professional looks at the home for sale in comparison with other similar homes that have recently sold, or "comps". They will consider the comps, the market conditions, and many other factors, and determine the value of the home for sale. If this value is below the contract price, the bank won't want to loan the extra money and the sale can go south quick!
A great listing agent will look at comps before listing the house. That way, they can meet the appraiser and give them the comps they used to price the house, as well as explain what kinds of features and upgrades this house has that make it stand out. It's also possible to appeal an appraisal if you can provide better comps that the appraiser didn't use.
A great buyer's agent will provide the buyer with comps before making an offer on a house. That way everyone will be aware of whether the house is priced well or not. The truth is that in this market, many homes are being sold way above the appraised value and buyers are paying the difference. This might be a risk that a buyer wants to take if they really love the house, but they should definitely discuss all the possibilities with their agent before agreeing to do that!
The appraisal conditions. Aside from the value, appraisers can also ask for certain repairs to be made. These can be a shock to both buyer and seller as the appraisal is usually received after the inspections are done and repairs have been agreed upon. Some common ones are repainting peeling fascia boards and painting over old water damage on the ceiling (after repairing the leak of course!).
A great listing agent will walk the seller through some of these common conditions that appraisers almost always ask for and recommend the seller getting them done prior to listing their home.
A great buyer's agent will ask for them as part of the repair requests. However, some things just slip through the cracks. When it comes down to it, the seller has to get these things done if they want to sell to a buyer with a loan.
The financing. You hear a lot about how great cash offers are. That's because any type of financing adds multiple layers of additional risk for the seller. It also typically takes longer to close a financed transaction vs. cash. The buyer's financing can fall through at any point in the transaction. Maybe they bought a boat (oof!) or lost their job. Sometimes it's something as small as the HOA dues went up and now the buyer doesn't qualify for the payment. The seller is risking taking their home off the market while the buyer works to obtain financing. And, sometimes when it falls through late in the transaction, the buyer can get their earnest money returned to them and the seller is left with nothing!
A great listing agent will closely review the buyer's loan prequalification when reviewing offers, AND talk to the lender! That will give the sellers additional info about the buyer's ability to close. In the case that the buyer's loan does get denied, a good listing agent will carefully review the reason behind the loan denial, because in some cases, the seller is entitled to the earnest money.
A great buyer's agent will have their buyer get completely pre approved before looking at and making offers on homes. This is a very thorough process where the lender asks for your blood type and your second grade crush (kidding!) and goes through your tax returns, pay stubs, bank statements, etc. (no joke...) in order to determine whether or not your loan will go through. This is a much more sure thing than a simple pre qualification, which can be done with a quick phone call, and it will alert everyone of any potential issues up front so they can be dealt with.
At the end of the day, some home sales are just not meant to be. I am a strong believer in everything happens for a reason. So hang in there and don't get discouraged! If your sale falls apart, it just means you're that much closer to finding your real home!