Selling a home can often be one of the most emotionally draining events in a person’s life. Where a seller might be swinging from the rafters with glee one day at having finally found a buyer willing to write an offer, they can be drowning in tears the next when the buyer withdraws from the sale. Losing a real estate sale is depressing. So how can you avoid having your home sale fail?
The answer is to know what escrow icebergs to watch for so you can steer clear of disaster. To help, let’s explore the top five reasons sales fail (and how to avoid them):
Lack of commitment (buyer’s remorse)
Buyers remorse is the psychological backlash from making any major purchase, the little voice in the back of a buyer’s mind that says – Is this really a good idea? Buyers suffering from buyer’s remorse will often begin to pick the home apart, scrutinize inspection reports more carefully, and look for reasons to withdraw from the sale. To combat this natural tendency, savvy sellers and their agents continue the selling process throughout escrow. They do this by reminding the buyer why the home is a good value. This might include the benefits and features the home offers, the advantages the home provides over the competition, or the superior location and neighborhood amenities. In addition, wise sellers request that buyers make a substantial earnest money deposit to demonstrate their commitment to the sale.
Whether they deserve it or not, appraisers have taken a lot of heat concerning the real estate market meltdown. Because of this they, and the banks they represent, are much more conservative when it comes to establishing fair market value which often results in low appraisals. To avoid a deal breaking low appraisal, sellers and their agents should be prepared to defend their price by meeting with the appraiser at the home and providing the list of comparable sales that were used to establish value. In addition many homeowners have found it useful to point out remodeling, construction, and amenity details that might not be readily apparent.
Poorly written contingencies
Almost every home sale is subject to conditions or contingencies. These are the points that a buyer or seller must resolve during escrow in order to successfully close the transaction. For instance, a common condition of sale is the acceptance of an inspection report or the review of a preliminary title report. The challenge with addressing conditions within escrow is that, if they have been poorly written or do not include a specific deadline for completion, it can quickly lead to disaster. To avoid a problem, be sure that all parties in the transaction have a clear understanding about the meaning of the condition and a clear deadline as to when the condition will be removed or resolved.
An inspection report can be a “deal killer” if it reveals a problem the buyer was unaware of before they made an offer, or if the report itself was written in such a way that it gives a buyer the wrong impression about the overall condition of the home. To avoid a nasty surprise, many sellers choose to have a pre-inspection prior to marketing their home for sale. By doing so they can address any issues revealed by the inspection in advance and be able to provide a “clean” report to the buyer. The only downside to this approach is that any items revealed during the inspection will need to be disclosed to the buyer whether they are fixed or not.
Missed deadlines and poor communication
Often the biggest challenge to closing escrow isn’t the home, appraisal, or inspection reports, but rather the people. People problems, including poor communication skills and missed deadlines, can create escrow challenges that can easily kill a sale. To avoid this fate, decide in advance a schedule of communication with all parties involved in the transaction. For instance, a conference call with all the players every Monday might be one way to keep everyone focused on moving escrow forward to a successful conclusion. In addition, map your deadlines on a calendar and be sure to extend any dates that can’t be hit.
Don’t allow your sale to fail! Many sales on the brink of failure can be saved if the seller and their agent take the time to attack these issues early.