Don’t let a potential sale crumble — heed these tips.
A home sale can be a precarious thing. One minute, your real estate agent is sure the potential buyers — who just did a third walk-through of your home — will make an offer on your home for sale in Athens, GA, any day now. But the next minute, you could find out that those same buyers have made an offer on your neighbor’s home down the street instead. Beyond financing issues or a buyer’s sudden loss of employment (not to mention the eyesore next door or a low appraisal), there seem to be about a million and one reasons why a house sale falls through.
But there is good news: You can do several things to avoid many of the potential home-selling pitfalls before you put that for-sale sign in your front yard.
1. Get a pre-inspection
Most real estate agents suggest that buyers get their home inspected before they head to the closing table. But for a seller, it often doesn’t hurt to stay one step ahead — and have your home inspected before it ever hits the market. “Not many sellers take advantage of a prelisting inspection, partially because they aren’t aware it’s an option. But it is a way to uncover what is wrong with the home before it goes to market. It can speed up the sales process and determine if there are any major problems that are potential deal breakers,” explains Scott Brown of Brightside Home Inspections in Syracuse, NY.
Liane Jamason, a real estate agent with Jamason Realty Group and Smith & Associates Real Estate in the Tampa, FL, area, knows firsthand the value a prelisting home inspection can bring. “I had a home sale fall apart three times and then finally stuck on the fourth time!” she laughs. “The first time, we had an inspection and there were a few issues, but the buyer was willing to deal with them as it was an as-is sale, which is most common in our area. Seven days prior to closing, the buyer was laid off from her job and so she could not obtain a mortgage. Everyone was devastated, but we relisted the home. The next two times, two different inspectors found two different sets of issues, and the buyers canceled during their inspection periods, citing too much work to be done. The sellers were astounded that now three inspections had taken place, and all of them found different things. Finally, the fourth contract came in and it stuck! The sellers were exhausted but happy to finally be sold!”
2. Notify the neighbors
Sure, placing a for-sale sign in your yard should make it obvious to your neighbors that you’re hoping to move on. But don’t count on them to be on their best behavior when buyers come around just because your home is on the market. Such was the case for Mindy Jensen, whose Chicago, IL, home had been on the market for over a year before going under contract. “The buyer scheduled a home inspection, but after the inspection was over, they canceled the contract with no reason given,” she says. “Later, their agent shared with our agent that the home passed inspection just fine, but during the time they were there, the next-door neighbor came outside and started screaming at his children as they played in the yard. This neighbor screamed at his children every day, so I knew what they were talking about. He was pretty scary when he screamed if you weren’t used to it. It was easy to see why the deal fell through.” Avoid this potential deal killer by letting neighbors know that your home is for sale — and also letting them know when a potential buyer may be looking at the home. Such notice might not stop any embarrassing and potential home-sale fallout behavior from the Joneses next door … but it couldn’t hurt either.
3. Keep the appraisal in mind
Unless you’re selling to a cash buyer (and sometimes even when you are), appraisals are non-negotiable during a home sale. Lenders need to know that what the buyers are willing to pay for the home is on par with what the home is actually worth. Unfortunately, if an appraisal comes in low, a home sale that seemed like a sure thing can rapidly crumble. “We had a situation where the buyer gave us a preapproval letter from their lender, so both parties happily went ahead and signed the purchase and sale agreement,” says Wendell de Guzman, CEO of PCI LLC in Oak Brook, IL. “As part of the bank financing process, the buyer’s lender ordered an appraisal. This is where we encountered the biggest problem. The appraiser came back with an appraised value of only $132,000 — the home had gone for full [listing price] at $142,000.”
As the seller, de Guzman’s options were somewhat limited: lower the price or lose the sale. “I would have ordered another appraisal, but the [buyer’s] lender did not agree to this,” he says. Ultimately, de Guzman planned to relist the home, but after a week or two of back-and-forth negotiation, the buyer came back with a slightly lower offer of $135,000 — no closing costs included — that their lender had approved. “I said yes to this price,” he says.
4. Be willing to negotiate
In the case of de Guzman’s sale, being willing to negotiate (and compromise) was the only way to get a home purchase to closing. But selling a home can be a very emotional experience. You’ve made memories in your home, and it can be difficult to part ways, even once you’ve made the decision to move on. Letting emotions run high — and taking a buyer’s repair requests or comments about your home personally — can negatively affect an otherwise solid offer. De Guzman could have refused any sort of negotiation but chose to let his real estate agent and real estate attorney guide him, and that limited any heated debate over what the home was truly worth.
5. Know the HOA rules
Few people actually read through, line by line, the covenants, conditions, and restrictions for their neighborhood, but in the case of de Guzman’s sale, it was imperative. “The property we were selling was a townhome, and it had a homeowners’ association with unusual requirements,” he explains. “The HOA had to inspect the property prior to us selling it, and based on their inspection, they required us to fix the metal door outside the house. It only needed to be repainted, but the homeowners’ association required us to buy a new door that cost $1,938. Ouch! Moreover, ordering the door was going to take 60 days, and our closing was in two weeks.” Luckily, with the help of de Guzman’s real estate attorney, the seller put $1,000 in escrow, which was refunded to de Guzman once the metal door was installed. Home sale crisis averted!