Your home sale has just failed. Frequently, the buyer’s failure to close on a mortgage is to blame. Additionally, inspection problems, poor appraisal, or cold feet might ruin a sale.
- Check with your title firm to see whether you have the right to keep the earnest money.
- You must immediately replace your buyer.
- Now is the time to contact any backup offers or parties who have shown interest while the house was in escrow.
After losing your buyer, you could feel a little gun-shy. However, remarketing a property is simpler than starting from scratch.
Two Steps Forward, One Step Back
Home sales are not guaranteed. According to the real estate sales website Trulia, roughly 4% of transactions fell through in 2016. This may indicate that the danger is low. However, it is essential to remember that it is possible.
Mark Ferguson, a Forbes Real Estate Council member, states, “As an investor, I currently have six residences for sale.” Three of them have had at least one contract fail.
Numerous factors can derail a transaction. These consist of the following:
- The mortgage of your buyer may need to be properly authorized.
- It is possible that the home will not appraise for the purchase amount.
- A house inspection might uncover defects.
- Your purchaser needs to satisfy the loan contingency date.
- There are issues with the title.
- Before the closing date, the buyer needs to make better financial decisions or lose their job.
Your Options
The good news is that you have several options following a failed deal. Included among them:
- Keep the deposit money.
- Contact further prospects
- Get a fresh assessment
- Improve and repair your house
- Modify the selling price
- Hire a new agent
Try to Keep the Earnest Money
You may be permitted to retain the earnest money if the buyer backs out and breaches the conditions of the contract. However, verify with your title company, agent, and attorney.
“Your contract should outline the conditions under which earnest money is refundable,” advises real estate attorney Elizabeth A. Whittaker. “You should make a formal demand for the release of the earnest money if the buyer is not entitled to a refund.”
However, each state has its regulations regarding earnest money forfeiture.
“In Colorado, it is quite uncommon for a seller to retain the earnest money,” adds Ferguson. Here, the customer may cancel for nearly any moment and receive a refund.
Contact Other Prospects
According to the proverb, as one door shuts, another opens. Even though your customer has gone away, it is still possible to locate another buyer quickly. Request that your agent contacts any prospective purchasers who previously saw or visited your house.
“When a home is no longer under contract, we always email all the agents who scheduled previous showings,” adds Ferguson. “We are also cautious to explain why the house went out of contract since some purchasers may presume it was due to an inspection issue. Consider that the cause was the buyer’s lender. If so, we declare that it was not the house’s responsibility.”
Be sure your next buyer delivers a loan pre-approval letter. This suggests that the buyer’s mortgage application will likely be granted, and the transaction will proceed.
Get a Fresh Evaluation and Inspection
Realtor and real estate attorney Bruce Ailion recommends having your house properly assessed. This should be done before listing your home for sale. However, it should likely be completed when a buyer withdraws.
If your buyer had a professional inspection performed on your house, try to acquire a copy of the inspection report.
“Discover the problems that the inspector highlighted. Then, calculate the cost of addressing these issues, recommends Whitman.
If your buyer did not do an inspection, you should conduct one immediately.
“These actions will at least allow you to anticipate future problems with your house,” adds Ailion. Before your next buyer views the house, you can remedy any of these flaws.
Improve and Repair Your House
Suppose the buyer’s house inspection uncovered any issues and attempted to remedy them. Restore any defects highlighted by the inspector. Additionally, please address any issues raised by the buyer or their agent.
Consider painting your property to revitalize its appearance. And enhance the curb appeal with better landscaping, a new door, or other simple improvements.
Re-List and Decrease Your Asking
Once you are prepared, you will want to re-list your house. Your realtor should advertise your home as a new listing. The benefit is that the number of days your property has been on the market resets to zero. However, there may be other options.
“Review your listing agreement,” advises Whitman. “Most multiple listing agencies have regulations regarding when a house may be advertised as a new listing. Typically, the agent cannot advertise the property as a new listing under the terms of the previous brokerage agreement.”
Also, to assure the sale of your property, reduce the asking price. This is a fantastic choice if you do not wish to pay for any of the home inspector’s advised fixes. Discuss with your agent the optimal pricing plan.
Hire a New Agent
Need more clarification with how events have transpired? It may be time to fire your real estate agent and find a replacement. However, you must first review the contract you signed with your agency.
“If your contract is still valid, you must continue to work with your present agent. “However, if your license has expired, you can select another agent,” Whitman writes.
If the contract is still valid, you may request that your agent terminate it. They may agree rather than deal with a dissatisfied vendor.
However, consider this move carefully. Perhaps your agent pushed you into a terrible contract, resulting in the buyer’s withdrawal. Or the collapse of the sale had nothing to do with your agent’s efforts.
How to Avoid Future Difficulties
It is essential to maintain adequate context. If your business transaction fails, it is not the end of the world. Be patient and positive.
“Panic will not resolve any problems,” argues Ferguson. “It is difficult to compel a buyer to continue if they do not want the residence. It is wise to avoid dwelling on the past. Move forth and exert effort to sell your home.”
Because the buyer’s failure to close on a mortgage is one of the leading causes of failed property sales, it is crucial that you only accept (or at least give precedence to) cash offers or those accompanied by a pre-approved mortgage.
That is not a pre-qualification for a mortgage. Mortgage companies often provide pre-qualification letters without credit checks or other verifications. In contrast, a pre-approval is practically as good as cash. The lender has examined the borrower’s finances and credit, and the loan can close if the property conforms to the lender’s requirements.
