How to Protect Your Home Sale from Falling Through


It’s every home seller’s worst nightmare: You’ve agreed with the buyer on a sale price, found your next home, packed up, and gotten price estimates from movers. Then, out of nowhere, the sale falls through, and you’re back to square one.

When a home sale falls through, it’s often due to circumstances beyond the seller’s control. But sometimes a sale falters because of issues that could’ve been avoided. Issues that emerge during the inspection, a survey that reveals a smaller-than-advertised lot, a disastrous appraisal — these are the kinds of problems that sellers can sidestep with a little preparation on the front end. Let’s go over some of the easiest ways to protect your home sale from falling through. 

Get a Pre-Sale Home Inspection

Once your home goes under contract, the buyer will very likely order an inspection. Most sale agreements have a contingency stating that the buyer can back out of the sale if the inspection uncovers significant issues, so if something like a cracked foundation or leaky roof is discovered, the sale could fall through.

But why wait until the last leg of the sale to find out if your home will pass inspection? Smart sellers will get a pre-listing inspection to make sure there aren’t any hidden problems. A pre-sale inspection will make sure the foundation and roof are in good shape, that all major systems are functioning, that all renovations were done properly, and look for hazardous materials like lead or asbestos. 

If your pre-sale inspection does uncover problems, you’ll be able to proactively tackle them before your home hits the market. This can be a big financial benefit for a seller. If a buyer’s inspection uncovers a problem with the roof and asks for a $10,000 credit, you may have no choice but to take the hit. But if your pre-listing inspection finds the problem, you could fix it for a fraction of that cost.

The main drawback of a pre-listing inspection is that you’ll have to pay for it out of pocket. (The buyer will pay for their inspection.) In an era when many sellers are looking to cut costs by finding the agent with the lowest commission rates or even selling without the help of an agent, an inspection can be a daunting upfront cost. But it’s probably worth it. Not only does it give a seller peace of mind, but it can also attract buyers who are looking for a home that’s free of problems. 

Look for Qualified Buyers with Fresh Approvals

When you’re evaluating prospective buyers, you’ll want to look for ones with mortgage prequalification or preapproval letters. These letters are proof that they’re qualified buyers who don’t have the kind of financial or credit problems that come with, say, having co-signed a student loan that’s now in default. 

But what many sellers don’t know is that a mortgage preapproval isn’t necessarily a guarantee that a buyer will get a loan. If the buyer experienced a change in their financial circumstances since acquiring their preapproval letter — something like job loss, taking on more debt, or taking a hit on their credit score from something like a missed debt payment — their financing could very well fall through. 

Look for buyers with a fresh preapproval letter. Preapprovals are generally valid for 90 days, but a lot can happen in three months. Buyers with newer preapprovals are probably your best bet for a smooth sale. 

Try to Avoid Contingencies

If you’re selling a highly desirable property, or you’re in a strong seller’s market, you’ll probably be able to find a buyer who’ll agree to a sale with no contingencies. On the other hand, if you’re in a market where you might have a little trouble attracting a lot of buyers, you’ll probably have to accept a few contingencies in the sale agreement. If a contingency isn’t met, the buyer can walk away from the sale, so these can potentially derail a sale if you aren’t careful. 

The inspection contingency, which we touched on above, is one of the most common — and is generally considered pretty fair. So is the loan contingency, which simply states that the buyer is released from their obligation if their financing doesn’t come through. 

Some contingencies, however, can be a little troublesome. A home sale contingency, for example, states that a buyer won’t close on the purchase until they sell their present home. This contingency puts the seller at the mercy of the market, and can lead to some anxious waiting. (In fairness, most home sale contingencies allow the seller to walk away from the sale if the buyer’s home doesn’t sell within a certain amount of time.) Sellers who want a fast sale should target buyers who have already sold their home, or don’t need to use the equity on their current home to fund their purchase.

If you’re looking for a smooth home sale, reject offers that come with a ton of contingencies attached.

Get a Pre-listing Appraisal

A low appraisal has derailed many potential sales. If an appraisal comes in significantly below the agreed-upon purchase price, the lender will only approve a mortgage at that lower appraised amount. If the buyer can’t make up the difference in cash (or if the seller won’t lower the price), the sale can’t advance.

The benefits of a pre-listing appraisal are similar to a pre-listing inspection: It takes a lot of guesswork out of the equation. If you have an unusual or large home, you may not even have a very clear idea of how much your home is worth. A pre-listing appraisal will help you set an accurate list price, and an accurate list price is like elite SEO — it helps your ideal buyers find you with the least effort.

Consider Getting a Survey

If you have a large lot, a survey will determine its exact boundaries — information that a buyer will certainly want to know. It can also help you avoid the embarrassment of finding out the property you thought you sold is actually smaller than advertised. More importantly, if you have a fence around your property, a survey will ensure that you’ve built within your legal boundaries, and that the buyer won’t have to worry about future legal entanglements with neighbors. 

Some property boundaries are viewable on Google Maps, but not all are. If it’s been a while since your last professional survey, it’s a good idea to get one before you put your home on the market.

This entry was posted in Home Selling by kristenherhold. Bookmark the permalink.

About kristenherhold

Kristen is the PR Editor of Clever Real Estate, the nation's leading real estate education platform for home buyers, sellers, and investors. In her free time, she enjoys traveling, reading, and cheering on the Denver Broncos and Missouri Tigers.