Some deal killers are unavoidable, while others are preventable to ensure a sale.
The top deal killer in real estate is usually the lack of maintenance on the home. Most of these items usually come up in the home inspection phase of the deal which costs the buyer money for the inspection and the seller lost time from having the home off the market. Water heaters, air conditioning and heating units, and major appliances all have a lifespan. If your water heater has a 10-year lifespan and you’re in year 9, or 12, or 15, then replace it now. If you’re including the washer and dryer in the sale and the washer makes a loud banging noise when it runs, then it needs to be replaced. The buyers don’t want to make the largest purchase in their life only to have to buy major appliances immediately after they move in.
Appraisals are another deal killer. Just because someone offers you a lot of money for your home does not mean that is the value of it. While the true value of a home should be what someone is willing to pay for it, in the world of financing this does not hold true.
An appraisal is an opinion of value from a licensed real estate appraiser. This opinion is a weighted average of a number of criteria which includes recently sold comparative properties, replacement value, and current market trends.
If you’re selling your home and you get a contract at an abnormally high price, look for an appraisal contingency in your contract.
If the buyer does not get a favorable appraisal then this is their chance to cancel the contract. Unfortunately, the appraisal is done several weeks into the contract period and you can lose valuable time on the market if the contract is canceled.
Open permits, or lack of permits, are usually a problem with deals, and many times the homeowner is not aware of the problem until it comes up when selling the home.
Local municipalities have regulations in place that require permits when doing any major, and sometimes minor, work, mostly involving safety issues. Electrical, plumbing, and structural work generally require a permit even if the homeowner is doing the work themselves. Fences are another area a permit is most likely required.
If you take out a permit to do a job, the permit needs to be closed out when the job is complete. The closeout is done when the municipal inspector inspects the job and there are no outstanding issues.
Often times a job is contracted out to a professional who will get the permit for the job, do the work, but never get the final inspection to close out the permit.
It is the homeowner’s job to make sure all permits are closed especially when contracting out to a professional. Final payments should not be made until after the final inspection.
Furnishings will sometimes kill a deal. Oftentimes homes are sold ‘furnished’ but this can be a sticky subject.
Real estate transactions are for real property only and a bill of sale is for personal property, like furnishings. However, most times a furnished home is sold with the furnishing included in the price of the home.
There are many issues with this situation.
First, what are the furnishings? The seller should include an inventory list of every item included in the sale, no matter how small it is.
Second, the furnishings have a value, but what is it? If you’re getting a mortgage to purchase the home the furnishings are not included in the appraisal. The appraisal is an opinion of the value of the real estate only. If the appraisal comes in lower than the contract price, does that mean the difference is the value of the furnishings? Not necessarily. Who is to say what the value is of just the furnishings? This is a huge problem when buying and selling a furnished home.
Third, what you saw is not what you’re getting. There have been situations where the dining room furniture is included in the sale but at your final walkthrough, you find the dining room has different furniture in it. Now what? How do you prove this? The easiest way is to take pictures of everything that is included when you first view the home and compare them to what you see at the walkthrough.
Failure to come to terms with any of these situations can kill a real estate deal on the day of the closing.