Top Three Reasons Your Real Estate Sales Contract Falls Apart

So you've had your home on the market and you finally get an offer!

Wonderful news....until issues arise with the contract.  Below are the top three reasons that real estate sales contracts fall apart:

The top 3 reasons why most home sales fall apart, or the top 3 deal-stoppers are:

1. You have a contract with an unqualified buyer

Most of the time, home sellers accept offers without asking if the homebuyer is qualified or not. Then, the home seller finds out several weeks later that the homebuyer couldn't get the mortgage loan. In this case, you not only have to let the buyer back off, but also have to refund the earnest money to the homebuyer.

Always ask for a lender pre-approved letter accompanying any offer. Although you cannot be 100% sure, at least, you know that most of your potential homebuyers are capable buyers. This move could decrease the chance of the offer falling apart.

2. Homebuyer receives negative information about your home

The home inspector found out something negative about your home and it was not disclosed in your seller disclosure form. Disclosure laws vary from state-to-state. If you didn't disclose something required by law, a buyer can back out of the contract and you have to release the earnest money to the buyer.

Make sure you disclose everything required by law about your home. If you think there is something negative about your house and can be fixed, you may want to fix it first before you put it on the market and disclose it as the problem fixed.

Sometimes, ordering a pre-inspection may make sense for some older houses as a proactive measure.

3. You have a contract with a qualified buyer, but the closing terms are too long.

If you have a contract with a qualified buyer, but there are three months to close, the chances of the deal falling apart may be much higher than a contract with a term of one month to close. Nobody can predict what could happen to the homebuyer during this 3-month period.

The way to stop possible falling apart of the deal is to avoid a long close of escrow. The shorter the escrow is, the better it is for you from this standpoint. But, it has to be reasonable and acceptable by both parties.

via Contract Falls Apart - Top 3 Reasons

What can you do to avoid your real estate sales contract from falling apart?

If you are selling your property on your own as a FSBO, then you need to consult an expert that can help you out.  If you are working with a realtor that is representing you in your home sale, they should be focused on these issues and weeding out any problems.

In fact, when you receive an offer from a potential buyer, they should be providing a pre-approval letter from the lender that states how much they can purchase.  From there, your realtor should be calling the lender and confirming this information.  Additionally, your realtor should ensure that there is adequate earnest money deposit on this contract.

As part of the terms of the contract, your realtor should also be making sure that the home inspection is taking place in the 1st week after the contract is ratified.  This ensures that if there are any issues that the buyer has on the property and wants to back out, that your home was off the market for  a minimal amount of time.

Finally, your realtor should be making sure that the closing terms are adequate for the contract price and earnest money deposit.  All of these items are negotiable and your realtor should be experience enough that they are representing you adequately with your very best interests.  When our team receives a contract on a property, we reviewed very thoroughly to minimize these issues and make sure we are maximizing the return on investment from the home seller.

We treat your home & investment as if its our own.