Why Do Some Home Sales Fail to Close?
You found it! Your dream home. Your REALTOR® found you the perfect new home, negotiated the offer on your behalf and you are in the home stretch, but then the transaction doesn’t close and you are back at the starting gate. Fortunately for you this scenario doesn’t happen in most cases.
In fact, a new study of REALTORS® across the country finds that only seven percent of contracts do not close. According to the REALTORS® Confidence Index Survey, 63 percent of contracts settled on time in June 2015, 29 percent were delayed but did close and only seven to eight percent fell through.
The study cited the three top factors causing the seven percent drop out as financing, appraisal, and home inspection issues.
Local REALTOR® Kathy Hall agrees. When it comes to financing, she cites a lack of communication, lack of adequate savings by buyers and lack of knowledge about the lending process as key factors for financing heartache. She recommends less phone and electronic communication and more face-to-face meetings between lenders and potential clients so that all questions and issues can be raised early in the process.
When it comes to inspections, she believes there can be unrealistic expectations on all sides. Buyers and sellers need to be fair with one another by focusing on significant health and safety issues and major defects, not using the inspection to quibble over normal home maintenance issues or using the inspection period to negotiation key elements of the sale that should have been handled in the original purchase offer.
Hall cites some appraisal issues arising from our current fast moving market where sellers are expecting more than market value, perhaps unrealistically. Appraisals may then come in a little too low because there isn’t enough data to support rising prices. The seller’s REALTOR® can then make sure appraisers get accurate data and are informed of any upgrades to the homes that enhance its value.
In the end, the best transaction is a team effort. And while everyone wants the best deal – the seller getting the highest sale price while the buyer pays the lowest – negotiation and fairness have to be part of a successful deal.