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.
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