Purchasing a home is a difficult process — and there can be a number of things that occur between signing the contract and the closing date that might make a deal fall through. While the large majority of real estate transactions are successful, a small percentage fall apart. Whether it is the fault of the buyer, seller, or the bank, some deals don’t make it to the closing table. Below are some of the most common reasons real estate transactions might fail.
- The Buyer Fails to Get Mortgage Approval
Financing issues are among the most significant reasons real estate deals don’t make it to the closing table. Typically, a contract will include a mortgage contingency clause which allows a buyer a specified amount of time to obtain a mortgage. If they are unable to get approval for their home loan, the contract may be nullified.
- There Are Problems With the Title to the Property
Before the closing date, numerous documents must be reviewed by the buyer, seller, and the bank. Although some issues may be easily resolved, title problems can create a hurdle that can be challenging to overcome. Any liens, judgments, or claims by third parties must be resolved before a real estate deal can move forward — a seller must have clear title to the property to transfer it to the buyer.
- Issues Were Found During the Inspection
A real estate contract often includes an inspection contingency clause that permits the buyer to back out of a deal if serious problems are revealed. Defects that can break a deal may include mold, termites, foundation issues, structural problems, roof damage, and radon. If an issue would require a costly remedy, it may be in the buyer’s best interests to walk away.
- Appraisal Issues Arise
If a bank appraisal comes back lower than the contract price, the entire transaction might fall through. Critically, the buyer may not be able to secure full financing if the home is appraised lower than the amount the parties agreed upon. In these situations, a seller must be willing to negotiate a lower price to close promptly.
- The Buyer or Seller Backs Out of the Deal
Purchasing a home can be stressful and overwhelming. Buyer’s remorse — or sometimes seller’s remorse — is not uncommon. In some cases, buyers simply get cold feet and back out a deal even if it means that they lose their earnest money deposit. Similarly, selling a home can be emotional and a seller may change their mind for sentimental reasons. Significantly, unless the contract provides a specific provision allowing them to do so, a buyer can sue a seller for specific performance of the contract if they decide to back out.
Learn More About Continental Law Group’s Residential Real Estate Services
If you’re buying or selling a home, it’s essential to have the guidance of a skilled real estate attorney who can walk you through the process. CLG provides high-quality legal services for a variety of residential real estate matters in Massachusetts and New Hampshire. Based on a modern business model, CLG has offices located in Boston, Salem, MA, and Portsmouth, NH. Call (617) 616-8210 to learn more about CLG’s residential real estate practice and other legal services.