What are common “deal breakers,” and how can they be avoided?
According to the National Association of Realtors, approximately one in 10 home sale agreements never make it to a closing. There are numerous reasons, but with the right planning, sellers and buyers can resolve issues before they become “deal killers.”
One in three busted sales can be traced back to the home inspection. The existence of failed inspection items generally isn’t a deal breaker by itself — it is the friction created over who should pay to cure the inspection violations. A seller can mitigate this angst by ordering a pre-market inspection and making any necessary repairs before putting the house on the market. Sellers should disclose any material facts they don’t remediate. A good broker can advise on which inspection items need resolving before going to market.
Sellers should make sure all substantial renovations are property permitted and Certificate of Occupancies (COs) secured. A seller may save money by not getting their basement or bathroom renovation permitted, but that can become a deal breaker, as most buyers will insist on proper permitting before closing, which could require significant time.
The main deal-breaker factor for buyers relates to their financing. Buyers need to be pre-approved for the loan they intend to close with, and to remain financially prudent throughout the contract period. A key element in securing the loan is the buyer’s lender’s appraisal. If the appraised value is less than the agreed-to price, the bank will not issue the loan.
If the property does not “appraise out,” there are various ways to salvage the deal, such as having the buyer come up with more cash or renegotiating the sale price with the seller.
Delays in the sale, by seller or buyer, can kill a deal, too. The astute broker will make sure deadlines are met.
There are 1,000 ways to kill a home sale. A seasoned broker has probably dealt with the major issues many times over and can assist a seller or buyer with the steps to take in anticipation of problems — and keep the sale on schedule all the way to closing.
Cynthia De Riemer, Coldwell Banker Residential Brokerage, Old Greenwich office, (203) 637-4581 office, (203) 918-1523 cell, email@example.com