The subject of this video centers around ways in which the sale of your San Diego home can fall through. Today we will discuss how and why the sale of your San Diego home can unfortunately fall through. Thanks for watching.
My name is Brian of Trusted House Buyers and it’s important to understand the reasons why houses fall out of escrow.
Let’s get real here: not every sales transaction goes as smoothly as one would wish, especially those that involve big value purchases such as homes. Transaction failures happen when a home falls out of escrow.
Real estate agents, sellers and buyers often stress about issues that may arise throughout the selling process because there are many things that could go wrong. If anything goes wrong, there is a possibility the sale falls through, and the Agents lose their commission. This is why it is important to be prepared as possible for the ups and downs of the closing process of a house.
Let’s discuss five reasons why the sale of your home in San Diego can fall through.
The first and obvious road block: the dreaded inspection. When you first signed the sales contract, it would normally have included some contingencies. These are a series of conditions that have to be met before the home sale can proceed. One of these would have been the home inspection contingency. As a buyer, this is one you can’t afford to leave out of any contract. It protects you against the possibility of buying a home with severe issues. Many times there are hidden issues with the home that are revealed during the inspection. You want to make sure you have all the information you need when making such a large financial decision.
If something major like a leaky roof is found, then you have the right to ask the sellers for relief. This can take the form of having them pay for contractors to fix the problems, a price reduction, or providing you with credit to fix the issue yourself after closing. But if the sellers refuse, then the inspection contingency allows you to exit the deal without penalty. This is unfortunate as it means you’re back to square one. But at least you won’t lose your EARNEST MONEY DEPOSIT.
Next up, is the appraisal. If you’re purchasing a San Diego home with the help of a mortgage, then one of your requirements will be paying for a home appraisal. This is a valuation of what the property is worth in the current market. For lenders, the agreed price of a property must be roughly in-line with the appraised value. If this isn’t done, then in the event of a foreclosure the lenders have little chance of making back their money so this protects them.
In most cases, the appraiser will find small issues that need to be corrected before closing. This will not make a deal fall through. But if they determine that the value of the property is thousands of dollars less than the sale price, then you have a problem. If the difference is only a couple thousand dollars then most buyers and sellers will reach an agreement. The sellers can agree to reduce the price, or the buyers can put down more cash to make up the difference. But if the difference is in the tens of thousands of dollars then the chances of the deal falling through rises drastically and it becomes a major sticking point.
The third reason that the sale of your house in San Diego may fall through is that the buyer cannot finance the property anymore. When a buyer contacts a lender to finance a property purchase, they go through the process of getting pre-approved. The name says it all: you are getting PRE-approved.
The reality of life is that situations can change during the weeks of the selling process once the property is on escrow and the initial screening isn’t very thorough anyways. The buyer might find themselves without a job, acquired new debt, or do something that negatively affects their credit score. Or the lender discovers some inconsistencies when digging deeper. This leads the lender to believe the buyer won’t be able to afford the property anymore, and will most likely lose their financing. If you included a mortgage contingency in the contract, then at least you’ll have an easy way out but it still puts you back at the starting line. Let’s remember though, many sellers won’t even accept an offer from someone who hasn’t been preapproved for this very reason. You must at least prove you’re worthy to at least offer the price.
Yet another reason why your house sale can fall through, is that there are issues with closing documents. A home transaction requires a lot of paperwork that has to be reviewed before things can proceed. If any issues are found, they can usually be overcome if both parties are fully committed to the deal. But sometimes it’s not that simple and you could be left with the choice of walking away or taking on a property that has some issues – this is NOT ideal.
One of the worst of these “issues” is outstanding liens on the property. Unless the seller pays those off, you’ll be left with the responsibility of paying them if you proceed with the deal. Often, the seller needs the proceeds from the sale to pay off those liens. If an agreement can’t be reached, then the deal is lost.