Buying Advice

Why Escrows Fail

Of course, there’s no “one size fits all” when it comes to reasons that sales fail. We generically use the term “fell out of escrow” to describe a sale that does not close escrow. The adage “buyers are liars” refers to buyers who change their minds. This actually doesn’t happen very often. Title issues come up but are easy to avoid by reviewing the title report prior to listing. Listing with known title problems wastes valuable listing time. Lender issues sadly are another avoidable situation.

Lender Issues

Like REALTORS®, all lenders are NOT created equal. Get a very strong recommendation for your lender. In Hawaii, lenders are supposed to have a physical office which means the unknown quantity of an online lender could be a problem for a couple of different reasons. There’s often no central point of contact and they don’t depend on repeat business like a local mortgage broker. The standard of care used to be a prequalification letter which meant that if what you told the lender was true, you may be able to get a loan. Today, a preapproval is essential. The loan officer should review both your credit and your job info leaving only the appraisal.

Appraisal Problems

Next, there are many reasons an appraisal might be the problem. Foremost is value but short value does not automatically harken demise. An astute agent should review the appraisal for errors. Property attributes or even inappropriately picked comparable properties might be the problem. Even when appraisers are “geographically qualified,” mistakes happen. Failing that, a buyer can bring in funds to cover any shortfall or value might also be renegotiated. At times, repairs are noted in the appraisal report.In this case, the lender can only make the loan once the noted repairs are made. Not all sellers are willing to do them. Such repairs are normally related to “health and safety” so the same repairs will likely come up again.

Sellers Change Their Minds

Lastly, (and there are others) sellers just change their minds about selling. Our contract calls for “specific performance” which is interpreted to mean that the seller must sell once a sales agreement is solid. Remember, any additional request from buyer could be considered a new contingency making application of this provision difficult. Trust me, navigating a sale is not for sissys. It takes staying on top of events and eventualities. It takes an agent who personally knows the parties involved in order to keep things moving forward from a wish to reality.

About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at denise@hawaiilife.com or via phone at (808) 936-5100.

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