house torn in half
You fell deeply in love with an updated Victorian, knocked a few grand off the asking price, and maybe even bought a spiffy camelback sofa for your new living room. Sweet! Still, until you close and the keys are in hand, there's a sliver of dread in your mind: What if your dream of homeownership falls apart at the last minute?
This possibility does exist: A survey by the National Association of Realtors found that 1 in 16 home deals falls through. Here, Realtors explain why it happens -- so you, dear home buyer, can learn how to keep these curveballs from crashing into your dreams.
Reason No. 1: A change in credit score
Credit scores can fluctuate between loan approval and closing. Just one missed bill payment could lower your FICO score and increase your mortgage payment, or even make you ineligible for the mortgage.
To prevent it: Buyers near closing should be aware of dinging their credit, which can happen when you open new credit lines, run up balances, or take out a loan on a new car. Closing a card can also hurt by diminishing your debt-to-credit ratio. So make sure to carry on with business very much as usual.
Reason No. 2: Getting spooked by the inspection
Nicholas D'Addario, an agent at William Raveis NYC, recalls a newly renovated property with an accepted offer this summer.
"We were with the inspector in the basement, and I happened to bump into an upside-down bucket that was suctioned to the ground," he says. Water started gushing out of the uncovered hole.
"While the sellers did offer to take care of the problem -- how could they not? -- the buyers were seriously spooked and walked away." Or maybe ran.
To prevent it: While this situation suggests that the sellers were hiding an issue from the buyers, usually "if you find a deficiency in the home, the home inspection report becomes a negotiation tool for the buyer," says New Jersey home inspector Hector Garcia. So if a surprise pops up during the home inspection, don't run until you've brought the issue up with the sellers. They could have a logical explanation -- and you could get a concession.
Reason No. 3: Not getting pre-approved for a home loan
Will Johnson, a Realtor in Hendersonville, TN, has seen "quite a few buyers guess how much house they can afford and put in an offer without even talking to a lender." Finding out a buyer can't swing a house after all is "heartbreaking, both for the buyer and seller."
To prevent it: OK, this one you should know already: If you're an active buyer,get pre-approved for a mortgage before even beginning your search. Please.
Reason No. 4: Running out of money
A mortgage is only one part of the funds you'll need to buy a home. Christopher Copley, regional sales manager at TD Bank, explains that "saving for your down payment and closing costs is not enough. You'll need to have a cushion for unexpected repairs and other expenses that come up."
To prevent it: Talk to your lender or Realtor about the financial reserves you'll need to get into a house before making an offer.
Reason No. 5: Small problems blown out of proportion
Even relatively small flaws in a home can bring negotiations to a grinding halt if buyers or sellers get emotional or take things personally.
"I've seen deals fall through because a single tile was cracked in the kitchen and the seller didn't want to replace it," says Garcia.
"I've witnessed just a small misunderstanding like what's included with the house -- appliances, sheds, etc. -- completely ruin a deal," Johnson recalls.
To prevent it: While it's fine to bring up problems, try to do your best to stay calm and avoid being accusatory during communications with the sellers to avoid offense. And even if the sellers don't grant all of your requests, try to keep the big picture in mind: Does that chipped molding really matter that much?
Reason No. 6: Cold feet
Ohio Realtor Kyle Alfriend says, "Buyers see the home in its best condition and are on an excitement high. Then, over the next two weeks the home just becomes a memory. Buyers are hit with the details of closing and moving costs. As that's sinking in, they're handed the home inspection report, listing every little defect in the house. That's the moment most deals fall apart."
To prevent it: Go into house hunting knowing there's a honeymoon period, followed by a whole lot of stress, paperwork, and check writing that will drain your savings. But in the end, you will find it's all worth it. Alfriend soothes nerves by "telling the buyers of the emotional low that follows the high at time of contract." He also gives them a pair of warm socks and tells them, "Don't worry. Everyone gets cold feet."