Reasons Why A Contract Can Fall Apart
Are you thinking of buying or selling your home and you have agreed to the terms of the contract? If yes, it is essential for you to understand that an agreement to the terms in a real estate contract does not guarantee that you will be the one to buy the property. Research shows that over 3.9% of the real estate transactions failed in 2016. Sales fail because of several reasons which include the financial history of the buyer, home inspection, and market conditions among others. We would discuss some of the reasons why contracts fall apart here.
Potential buyers are usually meticulous with the property they seek to buy. As a result, they carry out different forms of inspections and verifications to be sure that the building is a good buy. However, these inspections are one of the reasons why real estate contract falls out.
It is a norm for a seller to conceal some things about the building. Some sellers might probably do not know because they didn’t consider a home inspection before listing the building. Most of the time, buyers discover these defects and rescind the contract if no agreement is made as to its rectification.
The current economic situation has drastically reduced the number of successful real estate contract. Many people now rely on mortgage loans to own a house. Unfortunately, not everyone could apply successfully for a mortgage due to the 2008 house crisis. Thus, it is crucial to keep in mind that a buyer is not guaranteed to receive a loan until the banks approve the mortgage. Apart from this, a slight change in the debt or income level of the mortgagee can prevent the approval of their loan. So, without the consent of the mortgagor to the loan, the real estate contract will crash as the buyer will have no means of financing it.
Competency of the Real Estate Agent
Parties to a real estate contract often make the mistake of hiring an incompetent real estate agent who will not only delay the transaction but brings the sale to its knee. The real estate often frustrates the deal through their poor communication, negotiation skills, and customer service. Some of these real estate agents might be lucky to establish a contract for you, but they usually fail to fulfill some of the requirements for the closing of the deal. The result of this is often a failed contract.
Many buyers often want to sell their buildings before buying a new one. As a result, they delay the execution of the requirement of the contract pending the time they sell their home. Most of the time, they find it hard to sell their home, and without the sales, they cannot buy a new home. As a seller, you should be wary of putting too much trust in a buyer. They might love your house and hope that they sell their home as quickly as possible to get your house. They would not buy if they could not sell their building.
In the same vein, the fault might be from the seller. Some sellers often based the sales of their house on the completion of a contract to purchase another home. If the latter fails, then the former would fail.
Validity and Originality of the Closing Documents
Real estate contract involves many documents which need to be verified and reviewed to avoid fraud. The reason for this is to discover the defect in the title of the property. A property with a defective title is a property that has a publicly – recorded encumbrance like a lien, mortgage or judgment. In other words, the title in a property is said to be defective if a party other than the owner can lay a legal right or interest in a building. A defective title cannot be legally transferred. Thus, a contract will fail if the property in question has a defective title. Common defects in the title include bankruptcies, liens, etc.
Putting too much trust in a buyer or seller before the closing of the contract and the fulfillment of all necessary requirements could affect your chance of getting a potential buyer that could pay for the property. The fact that a person has agreed to your terms should not prevent you from negotiating another potential buyer.