Real estate transactions can be quite cumbersome – they are riddled with legal content and require a lot of documentation – so you can imagine that there are plenty of areas where something could go wrong. It is estimated that nearly one-third of all real estate contracts never make it to the closing table. That means after a buyer and seller have already agreed upon the terms of the sale, (which is difficult in its own right), something happens to sour the deal. What causes these deals to crumble? Here are three reasons your deal may fall apart as a home buyer.
Securing a home mortgage has become a lot tougher in the wake of 2008′s recession and housing crisis. Lenders have tightened their restrictions considerably and as a result, more buyers are losing real estate deals because of their inability to secure financing. As a home buyer it helps to get preapproved for a loan, but a preapproval is not a guarantee that you will be able to get the loan you need. Once the actual loan application process is underway it takes very little, like a slight change in income or a minimal increase in interest rates, to tip the scales and put an end to a deal. Once a lender starts digging into your financial portfolio, (and they will dig deep), they may discover tiny details that prevent you from qualifying for the proper loan.
Home appraisers use historical data to help determine the value of a home, and when real estate values are on the rise it can be tough to find comps that support the sales price, even if both buyer and seller have agreed upon the dollar amount. In essence, the “paper trail” hasn’t caught up to the market trend, which leads to low appraised values. As a buyer, that may sound like good news at first because a lower appraised value means you might get a better deal on the house. After all, who would pay more than appraised value? Unfortunately, sellers are not required to lower their price to meet the low appraisal. If a seller is unwilling to lower their price and a buyer is unwilling to pay above appraised value, the deal will fall apart.
A growing number of real estate transactions are deteriorating because of buyers’ remorse. For most people, their home is their single largest asset which signifies the level of commitment needed to make the purchase. If a person is not completely comfortable with their decision to buy a home, they may back out of a deal citing inspection results. Things that used to get overlooked have turned into deal-breakers. Another trend that can spark buyers’ remorse is the arrival of poor economic new; when buyers hear about a shaky economy they can get jitters and are less likely to make it to the closing table. – From Forbes.com