Top 10 Deal Killers in a Real Estate Transaction

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In today’s market, buying or selling a home is only the beginning. Getting through the entire transaction is not only stressful, but often has obstacles or hoops to jump through. Here's just a few of the common deal killers that will halt you in your tracks.

APPRAISALS
A few years ago, it was like pulling teeth to get an appraisal done, especially VA loan types. Even harder to get them back before closing. But after new legislation, this issue for the most part ceases to exist. In fact, I've seen lenders order an appraisal and the appraiser went out the following day. This step of the process has definitely improved in our area, but not getting an appraisal back in time can definitely kill a deal.

Another area of concern with appraisals is if the appraisal comes back low. This may require renegotiation on the purchase price or the buyer will need to increase their down payment.

BOUNDARIES AND EASEMENTS
To avoid issues with boundary lines and easements, be sure to review the preliminary title report. You don't want to find out late in the transaction that your neighbor has a 30 foot access to your property for a shared driveway that you had no idea about. If you see something unusual under special exceptions of the title report, be sure to contact the title officer for further explanation.

If your client is concerned about lot boundaries, recommend that they have the property surveyed by a professional surveyor. While surveys can be costly, not knowing the actual lot boundaries could be more expensive. Also, keep in mind that if a client is concerned about only one side of the property, they can get a partial survey.

DEBT TO INCOME RATIO
Your home buyers have found the perfect home, and what would be even better is a brand new car in the driveway or brand new stainless steel appliances in the kitchen. Yes, it happens and nothing will kill a deal faster than running up your debt to income ratios through the roof. Be sure you understand the do's and don'ts with your mortgage lender before making any financial changes that will affect your credit including charges, adding lines of credit, or making big purchases.

Wait till after the home closes to do all those other things if possible.

DIVORCE
Going through a divorce is hard enough for all parties involved, but one of the biggest reasons is fighting over money. When it comes to making decisions on how to handle debts and assets, it can be strained if all parties are not in agreement with one another.

Make sure you get a preliminary title report as soon as possible and ask your seller if there are any potential claims on the title of their home.

EARNEST MONEY
What is earnest money? *Earnest money is a deposit made to a seller showing the buyer's good faith in a transaction. For example, the standard *NWMLS residential purchase and sale agreement in the state of Washington gives a buyer two days (not including weekends) to get the earnest money submitted to escrow. If this deadline is not met, the deal is considered "out of contract" and unless both parties agree to proceed, the buyer could lose out on their new home.

FAILURE TO DISCLOSE
Not sure if your getting the whole story? It can be difficult to know whether a seller is giving you the whole story on their home. A great way to get additional information is talking with neighbors. They might tell you about the backed up septic system that hadn't been pumped in 18 years. You never know what you might learn. Not to mention you get an opportunity to meet your potential new neighbors. 

As a buyer, don't be afraid to ask difficult questions. Best way to avoid potential issues is through an independent inspection of the home. They will test all the systems, look for all flaws, both major and minor. A detailed report of their findings is provided.

FIXTURES
As a seller, you may have said the washer and dryer did not convey in your listing, but the buyers included it in their contract and you missed it altogether. Often times not accurately stating the obvious or carefully reading over the contracts, can really put a sour taste in your mouth or kill the deal. Pay careful attention to the section of the *NWMLS residential purchase and sale agreement labeled "Included Items". 

*NWMLS Form 22D - Optional Clauses addendum also includes an "Excluded Items" section.

LENDER ISSUES
You finally found the perfect home and have it under contract, only to find out your lender won't finance on any manufactured homes. Your lender never disclosed this and your like now what? You might even have done everything you were suppose to, sent in all the documents requested, but somewhere along the line, the rules changed and now you no longer meet the lender requirements. 

Well these scenarios aren't great news, but you do have options. First and foremost, making sure you understand the ramifications if you choose as a buyer not to keep your finance contingency in place for whatever reason. Another thing to be mindful of, is that during certain stages of the transaction, you may have to get written approval from the seller before you can change lenders.

SHORT SALE TRANSACTIONS
As a buyer of a short sale property, its best to know what your getting into before moving forward with an offer. Banks don't work on the buyers timeline, they work on theirs. Short sales can drag out months even years, only to find out they won't accept your offer. 

In addition, they are exempt from the seller disclosure, so you won't know the history of the home. Short sales typically require additional front end costs, such as septic pumpings, well tests, closing costs, etc. They typically won't pay for these fees like in many seller transactions. 

TROUBLING INSPECTION RESULTS
So the inspection is done, and your once perfect new home isn't so perfect after all. Big decisions have to be made. Not sure whether to walk away? Decide what is important to you and make your case to the seller. All they can do is accept, decline, or counter your requests. At least you'll know where you stand. 

Inspection periods are like a second negotiation phase, and this additional time can become a problem when buyers and sellers can’t reach an agreement over who is responsible for what repairs.

In closing, one of the best ways to avoid killing a deal is to ask your agent questions about the home buying and selling processes. While buyers and sellers might not be aware of common real estate mistakes, a good agent must can identify potential issues and address them early so the transaction can proceed smoothly. Don't be afraid to get second opinion either.


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All of the information provided on this page is to be used for reference purposes only. All of the information provided is believed to be accurate and reliable; however, Melanie Douglas, RE/MAX Town and Country and its affiliates assumes no responsibility for any errors or omissions and is not responsible for misuse or misinterpretation. Melanie Douglas, RE/MAX Town and Country and its affiliates specifically disclaims any and all liability for any claims or damages that may result from using the information contained on this site.
Melanie Douglas
Melanie Douglas
Realtor® | SRES®