After a seller has negotiated a deal with the buyer and the sales contract has been signed they may think that the house sale will definitely be going through. However, even when the buyer has signed the sales contract there is still the danger that the sale will fall through. The two factors that may cause the for sale by owner home transaction to fall through are the housing inspection and the buyer’s mortgage.
Most standard sales contracts allow the buyer to inspect the property before the deal is finalized. The deal can still fall through at this stage if the buyer is not satisfied with the outcome of the inspection. There are three types of inspection that buyers most commonly have carried out on the property.
– Termite Inspection: Whether the termite inspection is the responsibility of the buyer or the seller will depend on the laws of the state. If the responsibility belongs to the seller than a letter from a licensed pest control company will be required that states that the property is free from termites. Whoever pays for the inspection, it is the duty of the seller to ensure that the property is termite free before closing.
– Roof Inspection: If the roof inspections shows that repairs to the roof need to be made then it is the responsibility of the seller to ensure these repairs are completed.
– General Inspection: A general inspection will cover many aspects of the home including major appliances, air conditioning, heating,
plumbing and electrical systems. Any of these areas that fail the inspection will need to be rectified by the seller.
The seller can avoid problems with the housing inspection by getting their own full inspection of the property before it is put on the market. This will find any problems that may be picked up by the buyer’s inspection and it will often be cheaper for the seller to correct any problems when they are found by their own inspector.
Another alternative is to sell the house ‘as is’. This will need to be clearly stated in the sales contract to avoid any future problems.
Mortgage Fall Throughs
Even after the sales contract has been signed, the ability of the buyer to actually purchase the home is dependent on the mortgage company approving their loan. The deal will not go through if the buyer is unable to raise the finances to purchase the home.
This problem can be overcome by checking that the buyers have been pre-approved for a mortgage before the sales contract is signed. If the buyer is serious about purchasing the property then they should have a letter from the mortgage company stating that they have been pre-approved and the amount for which they have been approved. This will allow the seller to check whether the buyer is likely to be able to raise the funds for the purchase price.
The seller can assist the buyer in finding a lender if required. If the seller is working with a real estate attorney then they should be able to recommend a lender. Contacting a real estate agency can also be an option for finding a recommended lender.
The best advice for ensuring that the for sale by owner housing transaction does not fall through is working with buyers that have already been pre-approved for enough funds to cover the purchase price.
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