3 Reasons Why Real Estate Deals Fail

Real estate deals fail all the time. Almost every single time, it’s because of one of these three reasons:

Cold Feet / Grass is Greener

It’s very common for a new buyer to get scared after going under contract for the first time to purchase a home or investment property. When this happens, it’s really a product of not being prepared. They probably bid too soon and weren’t ready for the commitment of owning a house. It happens. Everyone seems to be rushing, which is the biggest instigator of cold feet.

Also, it can be a money issue. They may have gotten caught up in a bidding war and wanted to win, but then decided that the price was more than what they wanted to pay. Sometimes it’s even a real estate agent who gives them the advice to bid high to win, but they are left wondering where the second bid ended up.

The grass is greener also comes into play in a similar situation when a buyer goes under contract on a home, but can’t stop looking and finds new houses that hit the market to be more favorable for them. So, they ruin their first deal just to try and win the second, and oftentimes, that deal fails as well or they don’t win. Grass is greener is never a good thing. We want our buyers bidding on a house they love and being happy when they win the race.

Home Inspection

Home inspection is where many deals go to die. It can be for a variety of reasons, but generally, it surrounds what comes up on the inspection report and how the buyer has been prepared for what they should, could, and should not ask for in terms of repairs or credits.

In a seller’s market, sellers really control this part of the process because they have backup offers they can go to if a buyer is unreasonable. On the other side of that coin though are sellers who don’t want to do anything, not realizing that the same things will come up at all home inspections and some of these things are going to be required for repair.

Our job as your agent is really to be making sure we are looking for a win-win because it is in your best interests to work together, within reason, with the other side to agree on something in between. If a deal fails here, a buyer has to go back to the drawing board and start all over again and a seller has to take those days on market and see if the backups are still interested.

Mortgage Contingency

This is the worst of the deal failures because it happens so late in the process. This is usually the last thing we are waiting on to close a transaction so when a buyer can’t satisfy the mortgage contingency it is a disaster for all parties involved.

A buyer now knows they can’t buy a house, most likely, and a seller has to start all over again, from scratch, and have all new buyers ask what happened, assuming it was a house issue and not a buyer issue.

The best way to prevent this is to talk to the lender on the transaction, in-depth, so everyone is on the same page as to how solid the mortgage is.

These are just three of many reasons why a real estate deal can fail, but these are the ones to watch out for the most. As an agent, we want to make sure our client is prepared to win an offer or accept an offer. We also want to make sure they understand what the home inspection phase is about – knowledge of the house and major items, not a fishing expedition. And lastly, we want to make sure the financial end is fully vetted well before the end of the transaction.