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Why do some contracts fail to close?

Here are some common reasons:

  • The Buyer was not pre-qualified for a mortgage and could not obtain financing.
  • The Buyer feels pressured and changes their mind.
  • The Buyer has mortgage financing issues that were not detected when obtaining mortgage pre-approval.
  • The Buyer has insufficient funds for a down payment or closing costs.
  • The Buyer cannot remove their sale contingency and the Seller must eventually accept another purchase offer.
  • The property does not appraise out for the purchase price.
  • The appraiser finds numerous bank conformance issues or property deficiencies and the Lender cannot underwrite the loan.
  • The Seller does not have enough money from the sale of their existing property to pay off mortgages, property liens and home equity loans.
  • The Seller did not properly disclose known material defects to the Buyer.
  • The home inspection report reveals too many property defects and deficiencies, and the Buyer chooses to cancel the contract.
  • Environmental issues such as a buried oil tank, friable asbestos and high radon readings spoil the sale.
  • Property repairs are not satisfactorily completed to Buyer or Appraiser’s expectations.
  • The property survey indicates boundary disputes or encroachments.
  • Property information was misrepresented, such as acreage, taxes, square footage, rental income and expenses.
  • Legal issues or title defects obstruct the sale.
  • Tenant lease or holdovers interfere with the Buyer’s plans.
  • Poor Buyer, Seller and Attorney communication.
  • Your attorney disapproves the contract terms.

Here are some reasons why closings are delayed:

  • The Buyer fails to make an application to a lender in a timely matter.
  • The Buyer fails to submit all necessary documents to the lender.
  • The lending institution is overloaded with applications and cannot process all loans efficiently.
  • The appraiser cannot gain access to property in a timely manner.
  • The lender or Buyer may require a survey map of the property.
  • The home inspector cannot gain access to the property or is delayed in processing the report.
  • The water quality and/or septic test do not meet the lender’s underwriting guidelines.
  • The wood destroying inspection does meet the lender’s underwriting guidelines.
  • The home inspection report indicates many deficiencies and several repair estimates are required.
  • Repairs are not completed in a timely manner or to the satisfaction of the Buyer or Appraiser.
  • The property does not have clear title - free of liens and encumbrances.
  • The abstract of title cannot be found and needs to be recreated.
  • The attorneys delay updating, reviewing or approving legal work.
  • The sale of property is tied up in probate or bankruptcy.
  • The Buyer is waiting for a zoning or use variance before the property will close.
  • The Buyer, Seller and Attorney communicate poorly or lose documents.