100 Things That Can Go Wrong in a Real Estate Transaction
If I told you every single thing I thought was ever going to happen in a real estate transaction, actually happens would you believe me or think I’m full of it?
Exactly.
As a professional, I expect what I think is going to happen, to happen but at the same time as a professional I’m not doing my job if I don’t let you know what the other possibilities are.
As your trusted captains it’s our job to steer you through the turbulence that occurs in nearly all transactions. While we hope for smooth air, turbulence is part of the journey. Our years of experience over more than a thousand transactions will help us avoid the more than 100 types of turbulence we may encounter.
Well what can go wrong in a real estate transaction?
The Buyer
2. Submits incorrect information to the lender.
3. Has recent late payments on credit report.
4. Found out about additional debt after loan application.
5. Borrower loses job.
6. Co-borrower loses job.
7. Income verification lower than what was stated on loan application.
8. Overtime income not allowed by underwriter for qualifying.
9. Applicant makes large purchase on credit before closing.
10. Illness, injury, divorce or other financial setback during escrow.
11. Lacks motivation.
12. Gift donor changes mind.
13. Cannot locate divorce decree.
14. Cannot locate petition or discharge of bankruptcy.
15. Cannot locate tax returns.
16. Cannot locate bank statements.
17. Difficulty in obtaining verification of rent.
18. Interest rate increases and borrower no longer qualifies.
19. Loan program changes with higher rates, points and fees.
20. Child support not disclosed on application.
21. Borrower is a foreign national.
22. Bankruptcy within the last 2 years.
23. Mortgage payment is double the previous payment.
24. Borrower/co-borrower does not have steady 2-year employment history.
25. Borrower brings in handwritten pay stubs.
26. Borrower switches to job requiring probation period just before closing.
27. Borrower switches to job from salary to 100% commission income.
28. Borrower/rico-borrower/seller dies.
29. Family members or friends do not like the home buyer chooses.
30. Buyer is too picky about property in price range they can afford.
31. Buyer feels the house is misrepresented.
32. Buyer veteran not eligible for benefits.
33. Buyer Did not have enough money to close.
34. Borrower does not properly “paper trail” additional money that comes from gifts, loans, etc.
35. Does not bring cashier’s check to title company for closing costs and down payment.
The Seller
37. Cannot find a suitable replacement property.
38. Will not allow appraiser inside home.
39. Will not allow inspectors inside home in a timely manner.
40. Removes property from the premises the buyer believed was included.
41. Is unable to clear up liens against their property—short on cash to close.
42. Did not own 100% of property as previously disclosed.
43. Thought getting partners signatures were “no problem,: but they were.
44. Leaves town without giving anyone Power of Attorney.
45. Delays the projected move-out date.
46. Did not complete the repairs agreed to in contract.
47. Seller’s home goes into foreclosure during escrow.
48. Misrepresents information about home & neighborhood to the buyer.
49. Does not disclose all hidden or unknown defects and they are subsequently discovered.
50. Builder miscalculates completion date of new home.
51. Builder has too many cost overruns.
52. Final inspection on new home does not pass.
53. Seller does not appear for closing and won’t sign papers.
The other realtor(s)
56. Unfamiliar with their client’s financial position—do they have enough equity to sell, etc.
57. Does not get completed paperwork to the lender in time.
58. Inexperienced in this type of property transaction.
59. Takes unexpected time off during transaction and can’t be reached.
60. Jerks around other parties to the transaction—has huge ego.
61. Does not do sufficient homework on their clients or the property and wastes everyone’s time.
The Property
65. Home is destroyed prior to closing.
66. Home not structurally sound.
67. Home is uninsurable for homeowners insurance.
68. Property incorrectly zoned.
69. Unique home and comparable properties for appraisal difficult to find.
70. Engineer will not approve septic system or well.
The title company
72. Fails to obtain information from beneficiaries, lien holders, insurance companies, or lenders in a timely manner.
73. Lets principals leave town without getting all necessary signatures.
74. Loses or incorrectly prepares paperwork.
75. Does not pass on valuable information quickly enough.
76. Does not coordinate well, so that many items can be done simultaneously.
77. Does not bend the rules on small problems.
78. Does not find liens or any title problems until the last minute.
The appraiser
80. Is too busy to complete the appraisal on schedule.
81. No comparable sales are available.
82. Is not on the lender’s “approved list.”
83. Makes important mistakes on appraisal and brings in value too low.
84. Lender requires a second or “review” appraisal.
The inspectors
86. Infuriates the seller.
87. Home inspector not available when needed.
88. Inspection reports alarm buyer and sale is cancelled.
The Builder
89. Doesn’t complete project on time.
90. Rates rise before buyer can lock in their rate.
91. Material increases and/or change orders were higher than expected.
92. Does not build to agreed upon plans and specs.
93. Property appreciates during the building process and builder looks to refund buyer deposit to relist at higher price.
94. Does not share accurate sales information resulting in low appraisal value.
95. Refuses to correct defects and expects buyer to accept the condition as/is.
God
96. Storm, fire, flood or other damage occurs and destroys the property.
97. Any party becomes extremely sick, incapacitated or dies.
Neighbors
98. Creeps out the buyer making buyer uncomfortable moving forward.
99. Runs their mouth and divulges inaccurate material information that was not disclosed by seller.
100. Threatens a legal action during the process (e.g. fence is encroaching 1 foot into the neighbors yard).
Well what can go wrong in a real estate transaction? Is this the complete list… no.
We have seen nearly all of these occur. It’s not about avoiding turbulence, that’s honestly impossible. It’s about knowing which tool to grab. We’re problem solvers and we’re here to help make your transition as smooth as possible. Reach out to our team today. You point the destination, we’ll guide you there.
