Your Home Sale CAN Fall Through…


February, 2019

Sale complications can be more the rule than the exception. Some able to be remedied, some not.

Whether you use a Realtor to sell your home, or decide to FSBO it, many events can occur that can cause your deal to go off the rails. The question is whether you can right it, or it’s just going to the scrap heap.

Within most state or association realty contracts and supplements there lie a good number if “If-Then” statements about the agreement between Buyer and Seller. Some of these are materially conditional, some are time-sensitive, and some rely on a third party – like a Lender or Appraiser – decree. Your real estate agent will know the ins and outs of these. Did you know in Texas, there are 32 “walkout” areas for the Buyer in those papers? I know them all and will use them for MY Buyers when needed. An agent’s real goal is to get a property boughr or sold, so we shouldn’t use these flippantly, just as needed if the Buyer has sudden issues or fears with the deal.

“Check it twice!”

“Under Contract!”

Here are a few that might cause trouble with the contract stability, depending on how you as the Seller react and respond. Sometimes your action can lead to fixing it, sometimes it’s not worth fighting over. Here are a few that might cause trouble with the contract stability, depending on how you as the Seller react and respond. Sometimes your action can lead to fixing it, sometimes it’s not worth fighting over. 

The Option period: In Texas, a Buyer effectively ‘buys’ a period of time stated in the contract that allows for all inspections and other findings to be done. During this time a Buyer may exit the contract for ANY reason: “my dog died and I don’t need that big yard now”. They may see another home the next day they llike better, and cancel out. Or just cold feet. The Seller gets to keep the Option Fee required to hold that option period, but it’s usually not much of a consolation; lately the fee has hovered an average of $300 for perhaps 7 days grace. 

Buyer needs to sell their home first: A “Contingent” contract is often not the wanted choice by a Seller, but the other elements of the deal may have made that the best option. The addendum in Texas that explains the contingency does have a space for a timeframe acceptable to both sides to wait for that to happen. In a hot or neutral market, this can be fairly short. In a stagnant market or if the Seller has a unique property, this amount of days might be longer. It’s a negotiable point. Oftentimes, if the Buyer is coming from out-of-state and out of a more stagnant real estate market than your home is in, this may cause the deal to fall.  
What if the Buyer asks for more time? This is a tricky question. It depends on what you need to make your home sale work for YOU, and what your market says about your home being even longer off market if the time given doesn’t help. Talk with your agent about your specific needs here.

Home Inspection turns up nasty surprises: You THINK you know the condition of your home, but the home inspector is paid and licensed to dig up the ‘bad stuff’. And they will. A Buyer may be turned off by an old septic, old HVACs, old plumbing, or a roof/structural issue. Since this insepction happens during the Option Period, if you and the Buyer cannot come to an agreement with how to address the problem, the Buyer may walk. The upside is you now know what you need to fix. The Buyer is not required to give you a copy of the full home inspection, however. You may want to get one on your own so no more surprises jump out.

Appraisal comes in lower than needed – Buyers using third party financing have a percentage of the purchase price they must cover, and ask the lender to cover the rest. If the appraisal does not show the Lender enough equity in the home (should that Buyer get foreclosed on in future and the lender needs to sell it, Buyer must either come up with more money to cover what the lender won’t, or the Buyer may ask you to reduce your price to the appraised value. How you answer that is specific again to your situation.

Lender won’t lend until XYZ is fixed – In FHA/USDA and VA loans, lenders are quite specific on the condition of the home they are lending on. HVAC, windows, handrails, appliances, roofs, etc. are all nitpicked  in the appraisal. If there are now “lender required repairs”, you have to decide if you will do those, or if the Buyer can use the contract language to remove themselves from the purchase. 

The Closing date has changed – This one isn’t usually a deal breaker on either side, as there often are ways to cover living expenses/places or even where you end up closing. If your closing on a NEW home depends on the date this one closes, that could turn into a major issue. Discuss with your agent what the change means for you and your plans. 


Buyer Contract ‘outs”

Here are a few of the contract ‘Outs’ the Buyers might use here in Texas:

Issues with the ‘title’ of the property: Every Buyer should work with a title company to assure title insurnace. This provides protection against anyone who may come along to claim interest in this property that the current Seller didn’t know about. It also uncovers liens and other attachments to the property. If a Buyer uses the Objection Period stated in the contract to have any problems addressed by the title company, they have a certain number of days to have the Seller correct the issue, or they may back out of the contract. No one wants to buy a property that they find out someone else owns part of or has a lien on. I had a property with a mechanic’s lien (pool building company) that had never been cleared. We needed a statement from the funding bank that it had been paid off in full before we could move forward.

Issues with HOA information: THREE ‘outs’ here: one for if Buyer never receives the HOA docs for the property, one if they review it had decide they don’t like it for any reason, and one of if the HOA rulse change between contract and close.

Seller Disclosure notice: This is a Texas property Code Statute for Sellers, 5.008. In the contract, Buyer has 3 choices to indicate whether they have the seen the SD, if they have not yet seen it (and they’ll wait a # of days for it), and 7 days to back out for ANY reason after they do have it. The third choice is if the property does not by law require a seller disclosure (for a number of reasons in cluding foreclosure, bank-owned interest, death beneficiary/trustee, etc…see same code number for reference).

Other reasons are related to lender issues, credit, short sales, etc.

Real estate is more complex that it looks.

Just ask Barney Fife.

A real estate attorney can help you with these issues, and they will charge hourly for it, generally. They should be up to date with Texas code (or your state).

Your agent, however, can help you with this and ALL facets of the transaction in one place. Kind of like a ‘big box’ store where it’s all one stop.

This is what we do.

FATHOM Realty  •  6841 Virginia Pkwy 103-448  •  McKinney  •  TX  •  75071