Inexperienced Buyers

Buying or selling a home can be complex, and inexperience, especially among first-time buyers, is a common reason sales fall through. First-time buyers often have limited credit history, making it more difficult for them to secure a loan. Their mortgage applications are typically scrutinized more closely as lenders aim to make a sound investment. If a buyer’s status is marked as pending sale, it’s crucial to evaluate the reliability of their financial position. As a seller, reviewing each offer with care is essential. An experienced agent can help assess the buyer’s motivation and determine if the offer is both reliable and realistic.

Change of Heart For Pending Sale

Buying a home is one of the biggest and most expensive decisions a person or couple will make. In a competitive market, buyers often feel pressured to make quick decisions, which can sometimes lead to regret. During closing, either party can cancel the contract for a valid reason stated in the agreement. It’s natural to second-guess yourself, especially when committing to such a significant long-term investment. Buyer’s remorse or a last-minute change of heart can cause a sale to fall through and lead to serious legal consequences for both parties..

Contract Contingencies For Pending Sale

Either party can cancel the contract if a valid contingency allows it.Contract contingencies protect both parties but can also cause a pending sale to fall through.. The most common contingencies that cause transactions to fail include, but are not limited to, the following: Financing: One of the primary reasons a deal may fall apart is if the buyer’s financing is denied. Financing can fall through due to job loss, new debts, credit issues, or changes in lender guidelines, even after pre-approval. A financing contingency lets both buyer and seller cancel the deal without penalties. Inspection: Your dream home may appear perfect at first glance, but you don’t want to inherit costly repairs or hidden issues. For this reason, buyers are advised to include a professional home inspection contingency. If significant problems are uncovered, such as mold, foundation issues, or roof damage, the buyer can request repairs or negotiate the price. If the seller refuses or the problems are too severe, the sale may fall through. Home Sale: Buyers who own a home may need to sell it first to secure financing for their next property. In such cases, a home sale contingency can be added, allowing 30-60 days to sell the current home. This benefits buyers but risks sellers, as there’s no guarantee the deal will close. If the buyer’s home doesn’t sell within the specified timeframe, they can back out of the contract.

Low Appraisals

Buyers and sellers are aware that a lender requires a home appraisal to ensure the property is worth the agreed-upon financing amount. The appraisal is based on a professional inspection of the home and comparisons to similar properties in the area. However, in a seller’s market where competition drives up home prices and bidding wars occur, the appraisal may come in lower than the offered price. Since a lender won’t finance more than the appraised value, the buyer will either need to cover the difference in cash, the seller may need to reduce the price, or the buyer may choose to walk away from the deal.

Title Issues

Before closing, the lender requires a title company to confirm the property has a clear title. This process involves checking for any outstanding liens or judgments, such as unpaid property taxes or contractor bills. The title company ensures no other parties, like a former spouse or heir, are on the deed and confirms their agreement to the title transfer. The sale cannot proceed until any title issues or liens are resolved, which can take time. If the buyer is unwilling to wait, the pending sale may fall through.

Uninsurable Home

To secure a loan, the home must be insured. A property deemed uninhabitable—due to serious damage or the need for extensive repairs—cannot be insured. Additionally, if the homeowner has made significant insurance claims, such as for flooding or black mold, insurance companies may deem the property too risky to insure. If the home is uninsurable, the lender will not approve the loan. The only way to purchase an uninsurable home is with cash. However, if a home is uninsurable, it’s important to carefully reconsider your decision to buy it.