No one has ever said that selling a house is a simple and straightforward process. In an ideal world, you’d stake a “for sale” sign in your front lawn, droves of people would flock to your home, and someone would hand you a check for an amount that’s over your asking price. Then, you’d drive to the bank, deposit your cash, and get on with your life.
Sadly, that’s not even close to the case. Things can get really, really complicated.
Take my client Bethany, for example. She put her house on the market, held an open house, and received a great offer the very next day. We called her up and said, “Hey, congratulations! Your home sold! Someone offered you full asking price.”
Bethany happily accepted the offer and thought the deed was done. But then, she was confronted by a harsh reality: In real estate, “sold” doesn’t always mean “sold.”
In fact, she learned this three times.
1. The Offer Was Contingent on Inspection
All smart homebuyers will make an offer that’s contingent on an inspection. This means an inspector will go into the house, explore every nook and cranny, discover every flaw, and write up a report that’s as thick as a phone book. Peeling paint, rotten soffits, termite damage, plumbing leaks, you name it. No house is immune to their watchful gazes, and there’s no such thing as a house getting a clean bill of health.
Bethany had no idea her house had any issues, but her lengthy inspection report ended up being a deal breaker. The buyers were convinced that a strong gust of wind could blow the house over, and the prospect of tens of thousands of dollars in repair costs sent them running for the hills.
2. The Mortgage Fell Through
After receiving her shocking inspection report, Bethany spent a good amount of money fixing up the house and getting it into sellable shape. She put the “for sale” sign back up, and her house soon attracted another great offer. We called her up again with the good news, telling her the house sold for full asking price.
Bethany figured she was home free after making so many repairs, but her optimism quickly turned to dread when we called her up again with some bad news: Even though the buyer had been preapproved for a mortgage, it fell through. She was beside herself and began demanding answers.
We explained to her that mortgages can fall through for any number of reasons. The buyer could have lost his job, the bank could have stopped offering the program the buyer was in, or the interest rates could have spiked. Whatever the reason, the buyer had to back out and get his finances back in order — which, again, sent Bethany back to square one.
3. It Sold in Escrow
At this point, we knew Bethany’s frustrations levels were through the roof. She had grown completely distrustful of the selling process, and she sounded much less optimistic when we told her about the next great offer on her house. This time, the deal made it all the way to the table, and the close date was set for a Friday.
As the day crept closer, we got a call from the bank saying that the buyer’s funding wouldn’t be available until the following Monday, and the house would have to close in escrow. We knew this would not be a big deal at all, but we also knew this news wouldn’t exactly be music to Bethany’s ears. We had to explain to her what the concept of “escrow” was, and we reassured her approximately 1,000 times that the deal would be unaffected by this development.
The third “sold” was the charm: The deal was officially sealed on that Monday.
What We Can Learn From Bethany
Whether you are selling or buying, always ask questions — especially if you don’t understand a real estate term or contract legalese. Take an active role in familiarizing yourself with the world of contingencies, inspection reports, and mortgages. Always read the fine print, and sign only documents you fully understand.
Real estate can be a confusing emotional rollercoaster, but it’s definitely possible to prevent yourself from being blindsided by the various deal breakers and unexpected surprises that can arise. Your house will sell; it just might take three tries.
