Tips & Trends for the Flagstaff Real Estate Market:
Past Articles [February 2003]
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Avoiding a Transaction Collapse
A home seller's worst nightmare is selling to a buyer who disappears mysteriously at some point during the transaction. The transaction never closes, leaving the seller in the lurch just before moving day. As worrisome as this scenario seems, in reality this sort of calamity rarely happens.
Although disappointing, the damage is usually minimal when a transaction collapses early on. In a multiple offer situation, the seller may have negotiated a back-up contract with another buyer. In this case, the seller moves directly from the primary contract to the backup contract without having to market the property again. Within the Flagstaff multiple listing service, agents usually indicate a sale as “pending taking backups” in the MLS system until it is certain that the offer is good. This allows other agents with interested buyers the opportunity to present an offer.
Usually when a real estate transaction falls apart it's for a good reason, and not due to the buyer's whim. Typical problems involve property inspections and financing. But with a good team of real estate professionals on your side, many of the problematic issues that arise during a transaction can be resolved satisfactorily.
Buyers can avoid most financing problems by getting pre approved for the financing they need before they even make an offer to buy a home. A pre approved buyer has already been approved for a mortgage by the lender. His credit has been checked and his employment and down payment funds have been verified. He's ready to go.
Even with a pre approved buyer, there's always a chance that the property won't appraise for the purchase price. A low appraisal can put a transaction in jeopardy.
Another reason that real estate transactions fall apart is inspections. Buyers should include an inspection contingency in any home purchase contract. A home inspection will almost certainly reveal defects. Even brand new homes have defects. If defects are discovered that the buyer can't live with, and that the sellers are unwilling or unable to correct, the transaction can be cancelled.
Arizona realtors use a Sellers Property Disclosure Statement (SPDS) so that the sellers can disclose any material facts to the buyers during the inspection period. A material fact is anything that will affect a buyer's decision to buy, or the price he'd be willing to pay.
The more information the buyers have up front about the property they're trying to buy, the better. This minimizes the chances of the transaction falling apart due to inspections.
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