The Reason For Pending Home Sales Falling Through
Although most home sales close quickly and smoothly, it is a good idea not to be surprised if your sale does not go through.
What Does It Mean If A House Is Pending?
If your real estate listing changes from "active" into "pending," it means that you have accepted an offer, but the sale isn't yet closed. Real estate agents will also use the term "under contract" to indicate this pre-close period after accepting an offer.
Many things can happen while your home is pending. This includes the seller and buyer working together with their agents to resolve any contingencies. The word "contingent," which appears on your listing, means that the buyer is working to resolve any contingencies, such as a financing contingency or home inspection contingency. These contingencies will be discussed further below.
How Often Does A Sale Pending Fail?
Research shows that 3.9 percent failed to close sales in 2016, an increase from previous years. This means that most sales close. However, deals can fail for many reasons.
Here Are Some Reasons Why Pending Home Sales Fail To Materialize
Home Inspection Contingency
A home inspection is a procedure that potential buyers will use to inspect a property once they have found a home they like. Potential buyers can negotiate a price reduction or walk away if there are any issues in the inspection report.
Low Appraisal
Bidding wars are common in the seller's market, where there is limited housing inventory. When the pre-closing appraisal report is returned, this can cause financing problems.
The lender of a buyer won't finance a home worth more than its appraised value. This means that the buyer will need to pay cash to cover the difference. As a result, sellers will either have to lower their prices or they can walk away.
Buyer Remorse
A big decision is purchasing a home. Sometimes potential buyers change their minds after they submit an offer. To cancel their offer, they'll use one of the contingencies or another loophole.
Remember that nearly half of all buyers are first-timers (42 percent, according to a report). Some first-time buyers simply won't make the financial decision that will affect their entire lives.
Title Issues In The Property
A buyer's lender will verify that there are no liens on the property for unpaid debts. Deals that have major title issues could be delayed or canceled altogether.
Financing Is Difficult
A transaction can be canceled if the buyer's financing fails to meet the requirements. A lender can cancel financing if the buyer is pre-approved. This happens when there are changes in the buyer's status, such as a change of employment, new negative credit, accrual or additional debts, and a change to the lender's guidelines.
Before you accept an offer from a buyer, make sure to verify their financial situation.
Buyer Home Sale Contingency
A home sale contingent is a condition that a buyer must sell their home to be able to buy a new one. They can withdraw their offer if the home they are selling doesn't sell in a specified time. While it won't kill a deal, a buyer home sale contingent can make your sale pending for a long time.
Select The Best Offer
It is important to weigh the pros and cons of all offers when comparing them. Your real estate agent can help you in this regard. Prioritize offers that have the least contingencies and avoid high-dollar offers.
Avoid Buyer Home Sales Contingencies
You may need to accept buyer sale contingencies. If you do, you have no other options than to wait for the potential buyer to close their home.
Perform A Pre-Inspection
Before listing, do a pre-inspection to avoid any surprises. This will allow you to make necessary repairs and reveal any structural problems in advance. It also saves time and reduces stress.
