Common Causes of Failed Real Estate Transactions

The successful buying or selling of a home can be incredibly fulfilling.  However, sometimes, it can be a bit of a disappointment when a transaction falls through.  Everyone hopes for a smooth, stress-free transaction where both the buyer and seller are willing and able to work out a deal.  But, the unfortunate truth is that not all real estate transactions succeed, even after an offer has been accepted.

So, why exactly do so many deals fall through?  These are the most common pitfalls both buyers and sellers run into:   

  • Dishonesty with Lenders – Sometimes, when buyers get desperate to purchase their dream home, they do some pretty taboo things to try to be first in line, like not being honest with their lender.  But, if a buyer isn’t completely honest, it can very easily and very quickly kill a transaction.
  • Low Bank Appraisal – Sometimes, even when a buyer is happy with the price of a property, a low bank appraisal can stop a transaction in its tracks.  This can happen especially in times of financial uncertainty, as banks and lenders tend to be more conservative in their appraisals.       
  • Bad Inspection Reports – When inspection reports reveal problems to buyers after they’ve already made an offer, it can put a crashing halt on the transaction.  These reports are meant to reveal problems that a buyer may have missed during their initial walk-throughs, including things like structural or mechanical damage, mold, faulty appliances, etc.  
  • Non-Disclosed Faults – Much like bad inspection reports, non-disclosures can end in failed transactions.  If sellers have conducted their own pre-inspection reports and find problems, they must reveal those issues to the buyer even if they plan to fix them before closing.  
  • Buyer’s Remorse – This happens more often that you might think.  A potential buyer may be talked into making an offer to purchase, but the next day, they’ll wake up with concerns about their offer and whether or not they made the right decision.  In these cases, the buyers will look for problems or reasons to withdraw from the sale, like in the inspection reports or other structural shortcomings, and they may be able to back out of their offer.   
  • Lapsed Deadlines – In situations where one or both parties is faced with poor communication, you might miss out on deadlines.  If paperwork or inspections, etc. are delayed for any reason, all parties must be made aware so that new deadlines can be extended and agreed upon.  Some sellers may even try to use this lapse in communication to their advantage to try to get a better deal. So, make sure you’re working with professionals who maintain open lines of communication at all times.  
  • FSBOs – Many sellers forgo working with professionals and opt to DIY their sale by becoming FSBOs (for sale by owners).  While they may be able to save on the real estate commission, these deals tend to fall through because they simply lack the professional experience to successfully negotiate and close a deal.

While there are many common pitfalls that can lead to a failed real estate transaction, if you do your research and know what sort of process you’re getting into beforehand, and you choose to work with an experienced agent, you can navigate a successful deal with little stress.   

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