How can my sale fall over?
It's common for questions to arise whenever a property goes back onto the market after having previously been under contract. Buyers will usually ask why the sale didn't go through, is there something wrong with the property?
When a buyer and seller agree on price and terms and conditions, and sign and execute a contract of sale you will usually notice an under contract sticker go up on the sign or on the internet listing.
However, you may have also noticed this under contract sticker removed from the for sale sign after some time. In these cases, it's natural to wonder what went wrong.
There are many reasons why property sales may fall over, including the following:
Studies show buyers will often regret their decision soon after. Buying a property is a huge commitment and it’s natural for individuals making such a large purchase to suddenly get cold feet. This is known as ‘buyer’s remorse’ and unfortunately an agent can’t always see it coming. Most contracts have clauses included rendering the contract conditional and allowing the buyer to cancel the contract within the conditional time period, sometimes without any reason.
This is inconvenient for the seller, to say the least. What seemed like a very sound real estate transaction can change quickly, even right before settlement day. The buyer, very unkindly and most likely in breach of the contract may never give you a real reason. They can simply opt to not to go through with the contract, although they will usually lose their deposit as a penalty and possibly leave avenues of litigation for the seller. Studies show that many buyers often regret this type of decision, but buyer's remorse is still a possibility.
A good agent is far more likely to keep the experience positive and allay any fears the buyer may experience. This should ensure the buyer does not back out of a positive buying experience. First home buyers are more likely to experience buyer remorse and once again, a good agent can assist them in dealing with any concerns that may arise.
Pest and Building inspections
Most properties purchased in Queensland are conditional upon the buyer conducting, and being satisfied with a pest and a building inspection. Licensed property inspectors will conduct an expert inspection and point out any potential issues in a property that could prove trouble for a potential buyer. This may include leaking roofs, cracks, leaking showers, subsidence or faulty appliances. If the report the inspector compiles points out a few faults the buyer may panic. The buyer has several recourses here including cancelling the contract. The buyer may also ask for certain repairs to be conducted prior to the completion of the contract, or a deduction in price to cover the cost of the required repairs. If the seller does not agree to a reduction in price or to conduct repairs themselves then the buyer may cancel the contract.
It is frustrating for a seller to put the property back on the market but it is important to consider what arises carefully and make a measured decision and not fall victim to an unreasonable buyer. However, it may be wise to work with the current buyer and conduct repairs if necessary as there is a possibility the same issues will arise when any future buyers conduct similar inspections. Your agent should be able to assist you here and it may be prudent to have the appropriate professional look at the issues raised before making a decision.
A large proportion of contract in Queensland are also conditional upon the buyer obtaining finance approval from there bank. The bank will likely conduct a valuation of the property as part of this process as they don’t want to place themselves in a situation where they are affected because the buyer has paid too high a premium for the property. If the valuation comes in below the sale price, this could lead to a variety of outcomes. The buyer will likely have the option of:
- Paying the difference with their own savings
- Engage a different registered valuer to also conduct a valuation
- Providing the valuer / lender information on recent comparable sales to support the contract price
- Ask the seller to reduce the agreed contract price
The most likely outcome involves the seller reducing the purchase price. If the seller does not agree to this the contract will fall over.
Buyer finance application refused
When a buyer applies for finance the lender will conduct extensive research on the buyer’s credit history. If the buyer is found to have defaulted on a loan previously or has an otherwise affected credit record the lender may refuse to supply the finance needed Similiarly if the lender assesses that the buyer’s capacity to repay the loan is not adequate they will refuse to supply the finance on this basis. Even if the buyer has applied for pre-approval these issues can arise.
Buyer is Unable to Sell their Own Home
Some contracts are conditional upon the buyer selling their own home in a certain time-frame. If the buyer does not achieve a sale in the specified time frame the contract is at an end.
There are other options available to the buyer, like a bridging loan if they have the capacity to repay two mortgages It is advised that if a seller accepts a contract conditional upon the buyer selling their current home that they include a clause that allows them to look for a second buyer during this time. If a second buyer also chooses to purchase the property the first buyer is given notice to make their contract unconditional or the contract is at an end.
These are just a few of the more common reasons that a contract of sale could fall over. These could vary according to the circumstances of each sale. A more experienced agent has a greater chance in over-coming some of these issues. MBPS Main Beach Property Sales would be delighted to assist you in selling your home.
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PHONE : 0408 218 361
Posted By Annette Sinclair on Wednesday 3rd June 2015 @ 15:21:17
Updated : Monday 3rd August 2015 @ 14:41:55 | Words : 1007 | Views : 1859 | Comments : 0
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