Things That Can Go Wrong After Selling Your Home
When a buyer makes an offer on my listing, the first thought that crosses my mind is how to prevent the many things that can go wrong after selling a home. My sellers, on the other hand, are ecstatic and happy to have received an offer, and they aren't pondering possible catastrophes. They are focused on closing, and might even be wondering why they needed an agent in the first place since all of this appeared so danged simple to do.
They are not thinking about the upfront work that went into preparing a home for sale. From pricing the home correctly, to the home staging, photography, the strategic marketing, broker tours, open houses, online promotions. Nope, what they see is an agent stuck a for sale sign in the yard and now their home is sold. End of story, in their book.
But accepting a purchase offer is only halfway there. Think of home selling as 1/4 up-front preparation, offer negotiations as 1/4, getting through the home inspections as another quarter and finally navigating the final loan requirements as the last step.
A lot can go wrong after the home goes into contract. This is when your choice of a listing agent becomes evident. Did you hire an inexperienced agent who may handle those final stages poorly or a discount agent who might not offer closing services at all?
There are so many things that can mess up a closing, that I'll just hit the biggest obstacles and leave the smaller issues for another day:
The First Thing That Can Go Wrong After Selling Your Home
No earnest money deposit. Our Sacramento MLS demands we change the status of our listings within 3 days, and many other multiple listing services require a similar time frame. Not to mention, buyer's agents are very angry if they have lined up a potential showing, only to discover the home is already sold but the listing agent did not change the status in MLS.
Sellers are also anxious to stop the showings and start the packing.
But the first thing that can go wrong when selling your home is to discover the buyer has not deposited funds into escrow, there is no earnest money deposit on file. Since earnest money is generally a contractual obligation and it shows the buyer's good faith, it makes everybody uncomfortable and it's a big red flag if the money is not deposited.
The bigger problem is having changed the status in MLS to pending and because the buyer canceled due to cold feet, now the home must go back on the market as a back on market home. Everybody wonders what scared off the buyer. It's horrible for the seller. A back on market home is like a kiss of death.
The Second Thing That Can Go Wrong After Selling Your Home
A bad home inspection. To be fair, it is not always a bad home inspection that freaks out some buyers as many buyers know very little about inspections and cannot properly interpret them. Often, their agents are of no assistance, either. If they were unlucky enough to have hired a bad home inspector, they also can't trust the inspector. Guys can take a 2-week class and call themselves a home inspector.
Plenty of buyers want to cancel after a home inspection, and they don't realize all homes have defects.
Or, they ask the seller to repair issues or demand outrageous sums of money for minor repairs. I recently had a buyer demand in a Request for Repair that my seller fix a tiny hole in a wall inside a closet and oil a squeaky door, on top of which the seller was selling AS IS and lived out of state. We denied the request and it still closed. Many transactions, though, fall apart after a home inspection.
The Third Thing That Can Go Wrong After Selling Your Home
A low appraisal. You'll meet agents who will insist on handing comparable sales to an appraiser, and that's so insulting to the appraiser. They don't stop to consider that an appraiser frowns on that type of practice. That's like telling an appraiser he or she doesn't know how to do the job. Agents think they are being proactive and helpful and instead they appear like a know-it-all.
You do need an agent who knows how to communicate with an appraiser and can help the appraiser to evaluate the home differently if the value is difficult to determine. This is an area where your agent definitely can break or make the transaction for you, and where experience often pays off. You're not out of the woods until the appraiser signs off the appraisal and the value is at your sales price.
The Fourth Thing That Can Go Wrong After Selling Your Home
Underwriting rejects the file. Perhaps the mortgage loan officer who initially preapproved the buyer did not gather all of the facts. Maybe the buyer is divorcing and the soon to be ex-spouse refuses to sign a quitclaim deed. Maybe the buyer's employment income was dependent on bonuses that can't be substantiated. Perhaps the buyer's ex-husband has a short sale on his record within the past few years, or there is a judgment filed against one of the borrowers. Lots of things can go wrong in underwriting.
The Fifth Thing That Can Go Wrong After Selling Your Home
Buyer possession. Sure, your purchase contract probably defines the date of buyer possession but it doesn't do any good if the seller can't move out or the buyer suddenly needs to move sooner, both of which can happen. Coordinating the move out date, scheduling the final walk-through and making sure there are no surprises, all repairs have been completed as agreed and the home has been cleaned by the seller is not always simple.
It's important to remember we need flexibility and calm nerves, both of which are often in short supply the closer it gets to closing. Sometimes the best course of action is to extend the closing or arrange a seller rentback.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.