When it comes to selling property, sometimes you can be within touching distance of a sale, only for it to slip through your fingers at the last minute.
So what are the ways property sales can fall over moments before you’ve popped your expensive bottle of champagne about to toast your success?
1. Buyer’s remorse
Because a property purchase is such a big commitment, it can be human nature for people to get cold feet after they’ve thought about it post-offer. To give people a concession on this, many contracts have standard clauses that allow the purchaser to cancel their contract within a certain time period – and they don’t have to give a reason.
The purchaser in this instance usually loses their deposit as a penalty but it can be obviously most inconvenient to the seller, meaning the champagne goes well and truly back in the refrigerator.
2. Failed house inspection
A property must be inspected before a transaction can take place, and professional property inspectors are very good at identifying problems for potential buyers. They will compile problems like cracking walls, leaking roofs and faulty heating systems into a report that may panic the buyer.
While pretty much all homes have flaws, the buyer may wish to have some of these flaws repaired before they sign the contract. The buyer may also ask for a discounted price and if these demands aren’t met the sale can fall through.
Ultimately it’s up to the seller if they accept such demands, and they must balance repairing flaws identified by a qualified inspector with refusing to give in to unreasonable demands from an overbearing buyer.
3. Low valuation
Buyers will often get a professional valuation of a seller’s home to make sure they are not paying over the top for it. Often the lending bank enforces this to make sure they are lending money for a property that is at least worth the amount they’re lending.
If a professional valuation comes in under, the buyer has a number of options. They could get straight past it by simply paying the difference with their own savings. Alternatively they could get a second opinion. They could provide the mortgage lender with sales information that supports the sale price. They could ask the seller for a second mortgage to help compensate the difference, or they could ask the seller to drop the price, which is the most common outcome.
4. Mortgage loan rejected
Obviously, the buyer’s financial success in getting their loan approved is important here. Also, if the buyer makes a large purchase on credit while their loan is pending it can upset their debt ratio ruining their chances of getting the loan. The loan may also get rejected if the buyer’s finances have changed since the original application.
5. Buyer fails to sell their own home
Property sales are sometimes dependent on whether the buyer can sell their home within a certain time period. It may be what they need to do to afford the first two mortgage payments. Buyers can get round this by getting a bridging line of credit tied to the equity in their home. As for the seller, they can protect themselves by adding clauses into the contract that allow them to break it with a contingent buyer should an approved one come along.