You have just negotiated a deal with a buyer and have a signed sales contract. The good news is that it is almost here. The bad news is that the finish line is still not as close as you think. Even though you and the buyer have agreed on a price, there is still room for the deal to fail. Two important parts of the transaction still lie ahead: the inspection and the buyer’s mortgage.

Home inspection

With most standard sales contracts, the buyer will request that they be allowed to conduct a home inspection. If this inspection is not satisfactory to the buyer, the deal could die on the spot. There are three main types of inspections that the buyer may have completed.

  • Termite inspection. Depending on the laws in your state, you or the buyer could be responsible for the termite inspection. If it is your responsibility as a seller, you should have a letter from a licensed pest control company stating that your home is free of termites. Whether you or the buyer pay for the inspection, it is your duty to resolve the issue before closing.
  • Roof inspection. If the roof inspection results in the repairs being completed, it should cover the repairs.
  • General inspection. This is an inspection of major appliances, air conditioning, heating, plumbing, and electrical systems. As a seller, you must repair or replace any of these items that do not pass inspection.

Avoid inspection problems by having your own inspection completed before putting your home on the market. That way, you will have time to make the repairs before the buyer’s inspector finds them.

Alternatively, you can sell your home “as is.” Such a stipulation should be included in the sales contract and lets the buyer know that it will not fix any problems that may arise from any inspection.

The biggest drawback to selling your home “as is” is that any potential buyer will assume that you know of problems in your home that are too costly for you to fix, making them extremely reluctant to even want to make an offer. If they do, don’t be surprised if it’s significantly lower than the asking price.

Pit Falls Mortgage

Your buyer’s ability to buy your home depends on your approval for a mortgage. If the buyer does not get approved for a mortgage large enough to buy your home, the deal will fail unless you are willing to lower the purchase price. Without financing, it is impossible for the buyer to acquire your home.

What can you do to avoid this problem? Make sure all buyers are pre-qualified before starting negotiations. Ask prospective buyers for a pre-approval letter from a lender. Serious buyers will have already been pre-approved for a mortgage. Make sure the amount the buyer has pre-approved covers the sale price of your home.

You can also work with the buyer to obtain financing. If you are working with a real estate attorney, he or she could be a resource that can help the buyer communicate with a mortgage lender or broker. Alternatively, you can contact a local real estate agency for recommendations on lenders or brokers.

Just because one lender has rejected them does not mean that another will not approve them for a loan. Be patient and keep working.

As a real estate agent, I have seen my fair share of home sales drop due to failed inspections and lack of financing.

As the owner, you are in control of the inspection. You can choose to fix each and every problem an inspector finds.

Funding, on the other hand, requires a great deal of faith and often hope. So while you wait for buyer financing to be approved, keep your home on the market and continue to work towards getting offers in the hope that you may end up with a secondary offer that you can fall back on if the original offer is not fulfilled. .

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