Common Real Estate Deal Killers and How to Avoid Them

1. Financing Issues on a Real Estate Deal

One of the top reasons real estate deals fall through is due to financing complications. Buyers may be unable to secure a mortgage, get approved for less than anticipated, or face unexpected changes in their credit standing before closing. These setbacks can prevent buyers from moving forward, jeopardising the deal. 

How to Avoid It: 

• Pre-Approval: Encourage buyers to obtain a mortgage pre-approval before they start their home search. This reduces the risk of last-minute surprises and gives them a clear understanding of their budget. 

• Credit Check & Management: Advise buyers to avoid making major financial decisions (like buying a car or opening new credit lines) during the transaction process, as these can impact their credit rating. 

• Backup Financing: For buyers in higher-priced markets, suggest working with a mortgage broker who can explore multiple lenders and backup financing options if needed. 

2. Low Appraisal Values 

If the appraisal is lower than the purchase price, buyers may not be able to secure financing for the total amount. If an agreement cannot be reached, this can lead to renegotiations or a terminated deal. 

How to Avoid It: 

• Accurate Pricing: Conduct a thorough comparative market analysis (CMA) to set a realistic asking price before listing the property. 

• Pre-Listing Appraisal: In uncertain markets, consider obtaining an appraisal before listing. This helps set accurate expectations and can reduce surprises during the appraisal phase. 

• Negotiation Flexibility: Prepare buyers and sellers for possible solutions, such as a seller’s willingness to lower the price or the buyer’s ability to pay the difference out of pocket. 

3. Inspection Surprises 

Home inspections often uncover issues that can cause buyers to hesitate or request costly repairs. Major problems like foundation issues, outdated wiring, or roof damage can lead to lengthy negotiations and, in some cases, a cancelled deal. 

How to Avoid It: 

• Pre-Inspection for Sellers: Encourage sellers to invest in a pre-listing inspection to identify potential issues and allow them to make repairs in advance. 

• Clear Communication: Explain the inspection process and potential costs of everyday repairs to buyers. This will set realistic expectations and prevent them from being blindsided by inspection results. 

• Negotiate Repair Credits: Suggest options like repair credits or price reductions as alternatives to immediate fixes, making the deal more appealing and manageable for both parties. 

4. Title Problems 

Title issues, such as liens, disputes, or unrecorded easements, can delay or even halt a real estate transaction. Unresolved title issues must be addressed to ensure a clean transfer of ownership, which is essential for both parties. 

How to Avoid It: 

• Title Search: Always thoroughly search early to identify potential problems. 

• Clear Communication: Explain to buyers and sellers the importance of a clear title and outline the steps for resolving common issues. 

• Title Insurance: Encourage buyers to obtain title insurance to protect against unforeseen claims and ensure sellers understand any existing liens or encumbrances on their property. 

5. Buyer Cold Feet 

Sometimes, buyers get cold feet due to anxiety about finances, changing life circumstances, or even “buyer’s remorse.” This can happen if they feel rushed or second-guess their decision after making an offer. 

How to Avoid It: 

• Clear Communication and Support: Provide buyers with ample information, allowing them to make informed, confident decisions. Avoid pressuring them into a rushed decision, which can lead to regret. 

• Thorough Walkthroughs: Schedule multiple walkthroughs if needed and address any questions or concerns they may have. 

• Offer Contingency Clauses: Allow certain contingencies, like financing or inspection, to provide a reasonable escape clause. This can offer peace of mind without requiring them to back out. 

6. Unrealistic Buyer and Seller Expectations 

Expectations that are out of sync with the market’s reality can lead to frustration, tension, and, ultimately, broken deals. Buyers may demand more concessions than a seller is willing to make, or sellers may expect a higher price than the market supports. 

How to Avoid It: 

• Education on Market Conditions: Keep both parties informed about current market conditions and what’s realistic for pricing, negotiation, and timelines. 

• Manage Expectations: From the beginning, discuss what each party can expect, including typical buyer concessions, common repair requests, and average closing timelines. 

• Professional Guidance: Help clients see the long-term benefits of a reasonable negotiation approach. This may involve guiding sellers to see that accommodating some requests may help close the sale faster. 

7. Delays with Contingencies 

Financing, appraisal, and inspection contingencies can sometimes lead to delays. If timelines aren’t met, the deal may fall through, especially if either party is unwilling or unable to grant extensions. 

How to Avoid It: 

• Plan Ahead: Set realistic timelines and communicate expectations for each contingency early. 

• Use Trusted Vendors: To minimize delays, recommend reliable professionals known for timely service for inspections, appraisals, and other essential steps. 

• Flexibility and Communication: Keep both parties informed of delays or concerns early. This way, extensions or adjustments can be negotiated without threatening the deal. 

8. Poor Communication Between Parties 

Miscommunication between agents, buyers, sellers, or any other party involved in the transaction can lead to misunderstandings, delays, and frustration, putting the deal at risk. 

How to Avoid It: 

• Regular Updates: Set up a consistent communication plan with all parties and send regular updates on the transaction’s status. 

• Streamlined Coordination: Use centralized platforms, like transaction management systems, that allow all parties to access the same information and track progress in real-time. 

• Be Proactive: Encourage questions and address any concerns as soon as they arise. Maintaining open, proactive communication can ease stress and ensure everyone feels informed.

9. Personal Property Disputes 

Personal property items, like appliances, fixtures, or even furniture, can sometimes become points of contention, leading to last-minute conflicts that disrupt the closing. 

How to Avoid It: 

• Clarify Inclusions Early: The initial listing and purchase agreement should specify which items are included or excluded in the sale. 

• Detailed Agreement: Use a thorough list to ensure both parties are on the same page about which items will stay with the property and which will not. This prevents misunderstandings or last-minute disputes. 

10. Legal and Documentation Errors 

Contract errors, misfiled paperwork, or missing signatures can lead to legal complications and delays. They can prevent the deal from moving forward if they aren’t caught early. 

How to Avoid It: 

• Double-Check Documentation: Review all documents with a fine-toothed comb to ensure they are complete, accurate, and current. 

• Use a Real Estate Attorney: In cases with complex legal requirements or high-value properties, a real estate attorney can help review documents and address potential legal hurdles. 

• Digital Document Tools: Use digital document tools that allow easy tracking, signature management, and error checking, reducing the chances of human error. 

Conclusion 

Real estate deal killers are often avoidable with proactive planning, open communication, and thorough preparation. By understanding and addressing potential pitfalls like financing issues, inspection surprises, and title complications, agents can provide a smoother experience for buyers and sellers alike. Clarity, professionalism, and attention to detail can make all the difference in keeping transactions on track and reaching the closing table without a hitch.