It’s frustrating. Your buyer or seller gets cold feet, or struggles with financing, leading to a “dead deal.” In today’s market, with quickly rising interest rates, some agents are finding themselves with this unfortunate situation more often than usual.
Don’t fret. There are ways to turn lemons into lemonade. Read on to find out what to do when a dead deal happens to you.
Why do deals fall through?
Deals fall through for several reasons including the following:
- Issues are found during inspection: A home inspection may reveal issues with the property causing the buyer to back out.
- The financing isn’t approved: Financing can fall through if the buyer doesn’t get approved for the loan, especially when interest rates rise and price them out of the market.
- The home is doesn’t appraise where it needs to: A home appraisal may reveal that the home isn’t worth what the buyer offered to pay causing them to change their mind.
- The buyer can’t sell their home: Some deals have a home sale contingency meaning the buyer will only take the house if they can sell their existing home. If they can’t sell, it can kill the deal.
- The parties back out: Parties could decide they no longer want to buy or sell for any reason. If one party backs out, the other can sue for damages.
- Issues with a seller’s title: There could be issues with the seller’s title due to liens against the property causing the buyer to back out of the deal.
Why deals might fall through as the market tightens
In today’s real estate climate, we may be seeing more buyers backing off. Mortgage rates have been fluctuating and If buyers aren’t locked in for a mortgage rate, they may end up being quoted a rate that’s higher than they expected and decide not to go through with the deal.
What should I do to revive a transaction?
There are certain things you can do to save a deal before it falls through. Here are some solutions.
Appraisal or inspection issues
If the deal is in danger due to issues found during inspection or a discrepancy in price during the appraisal process, you can renegotiate the deal, rather than lose it completely. ]
Liens on the title
If there are liens on the title, you can make them go away by having the seller pay the liens. The lien might also be covered under a title insurance policy.
Financing falls through
There’s little you can do if the buyer’s financing falls through, but if something like this occurs, it’s essential to get the home back on the market as soon as possible.
Agents can also work out backup plans by keeping prospective buyers in the wings. That way, if a deal falls through, they can contact someone else who previously showed interest.
Most agents won’t take the home off the market until the appraisal and inspection has been completed so they can continue to show it to interested buyers and further build their list of prospects.
How to prevent deals from dying
If you take the right steps, you can prevent deals from dying in the first place. These include the following:
- Work with buyers that are preapproved. This reduces the chances that the financing will fall through
- Get a pre-listing home inspection. This will prevent surprises during the inspection process.
- Get title insurance. This will cover you if there are any liens on the title.
- Make sure the house is close to the comps in the area to prevent appraisal issues.
If all of these methods do not save the deal, then it’s important to go through your client list to find other prospective buyers or sellers who might be a good match for the property. With home inspections details and comps ready to go, you will cut down on the major obstacle, especially for buyers. If your existing clientele is not a match, look to lead generation sources and filter by most active.