10 Real Estate Deal Killers (And How You Can Avoid Them)

April 15, 2019 by Jorge Lopez

Couple thinking about housing problem in Japan
Real estate is serious business. Whether it’s a young couple purchasing a single-family home to live in and start a family, or an older investor stashing her money away to create an income-earning opportunity, there’s nothing cavalier about a real estate transaction. Thus, it shouldn’t come as a surprise that many deals fall apart before they ever reach the closing table.

10 Reasons Deals Fall Apart

For every real estate transaction that ends with a handshake over a closing table, there are a couple of deals that once had promise but eventually fell apart. Whether you’re a buyer, seller, investor, landlord, mortgage lender, or real estate attorney, it’s helpful to understand why deals fall apart so that we can collectively work together to ensure we aren’t continually repeating the same mistakes over and over again.

Every real estate transaction has its own unique circumstances, but if you’re in the industry long enough, you’ll discover that these are the most common deal killers:

  1. False Advertising

 False advertising is more common than most people realize. And in many cases, it’s pretty hard to differentiate the false advertising from the real thing.

An extreme example of this can be seen in this news story from the Daily Mail. In it, you’ll notice that a homeowner and his real estate agent took a picture at a deceptive angle (and most likely photoshopped the original photograph) to remove the massive water tower that’s directly behind the house. And while this degree of false advertising rarely happens, it’s quite common for smaller issues to occur and create complications.

  1. Poor Communication 

Good communication is absolutely paramount to a smooth real estate transaction. Bad communication can doom a deal from the very start.

For there to be good communication, it needs to be honest, transparent, and proactive. A buyer shouldn’t have to pull information out of a seller – the necessary information should be shared freely and willingly. This establishes trust and prevents problems from cropping up at a later date and time.

  1. Lack of Disclosure

This deal killer goes hand in hand with our discussion about communication. It can be tough to get a seller to reveal an issue about their property, but disclosure is an absolute necessity. In fact, it’s better to overshare than to not say enough.

“Don’t be afraid to ask your sellers the hard questions. And with buyers, make sure you disclose, disclose, disclose,” agent Nancy Robbers says. “Problems always seem much bigger when a buyer uncovers them after they’re under contract.”

  1. Inspection Issues

The home inspection is more than a formality. In many cases, the inspector comes back with a long list of items that the buyer wasn’t aware of (and in many cases, the seller didn’t know about them either). If the seller is unwilling to fix the issues that the buyer requests, then there’s a possibility that the deal could fall through. 

  1. Financing Problems

While real estate agents and sellers almost always require a pre-approval, it’s still possible for there to be issues with financing between pre-approval and closing. Whether it’s a mistake on the lender’s part or sudden change in the borrower’s financial situation, financing is often a major hurdle.

  1. Appraisal Issues

 One of the biggest problems you’ll encounter is a property that doesn’t appraise at the valuation that it’s supposed to. When a property is undervalued, it can threaten the buyer’s mortgage and make them feel like they’re overpaying.

The seller’s agent can help smooth over the approval process by arming the appraiser with lots of information and comparable sale details to justify the price.

  1. Ex-Spouse Disagreements

For the most part, couples are in agreement with selling real estate. However, this can get a bit complicated when there’s an ex-spouse involved.

“Many dread working with their ex, and their potential impact on a home sale is one reason why,” Robbers Notes. “Unfortunately, it’s pretty common to find out late in the process that a former spouse hasn’t agreed to the sale with their ex. Make sure you get a preliminary title report as soon as possible and ask your seller if there are any potential claims on the title.”

  1. Wrong Closing Attorney

You may think that any old attorney will do, but real estate is a very specific niche that demands experience and expertise. There are a lot of attorneys out there who will be happy to take your case, but they may not be adequately prepared to handle the intricacies of the deal. This can cause a deal to go south in a hurry.

Make sure you select an attorney who has experience, possesses an even demeanor, and isn’t looking to cause any drama.

  1. Egos

 It’s not uncommon for egos to get in the way of a real estate transaction. If one person feels like he’s being slighted or treated with disrespect, he may choose to walk away. This is particularly common in investment scenarios where investors crave respect.

  1. Cold Feet

Buyers have been known to occasionally walk away from purchase agreements. They do so for a number of reasons, and it’s impossible to predict when it’ll happen or who is a likely offender. Some suddenly feel too much pressure or responsibility, while others find something else they like before reaching the closing table.

A seller can reduce the likelihood of a buyer getting cold feet by increasing the amount of earnest money that’s required with the offer. Money has a way of thawing out those cold feet in a hurry.

Contact Green Residential Today

Nothing is final until it’s signed, sealed, and delivered. But at Green Residential, we’ve seen just about everything. This allows us to streamline the buying and selling process for our clients to reduce the likelihood of a deal collapsing at the last minute. If you’d like to learn more about what makes our agents different than other Houston realtors, please feel free to contact us today!

Jorge Lopez

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