When buying or selling real estate, there are many hurdles that must be overcome. With this said, any of these obstacles could likely result in contract cancellations. Of course, buying a home is a major life decision, and it’s important to be prepared for the possibility that things may not go according to plan. One of the most common setbacks is a canceled contract. There are a number of reasons why a home contract might get cancelled. We discuss some of the most common reasons below.
Likely culprits of contract cancellations
- Financing falls through: This is the most common reason for home contracts to be canceled. Buyers may not be able to qualify for a mortgage, or they may not be able to get the interest rate or terms they need.
- Home inspection reveals problems: A home inspection can reveal a variety of problems, from minor repairs to major structural issues. If the buyer finds problems that they are unwilling or unable to fix, they may choose to cancel the contract.
- Appraisal comes in low: When a home appraises for less than the agreed-upon purchase price, the buyer may not be able to get a mortgage for the full amount. This can put the buyer in a difficult position, and they may choose to cancel the contract.
- Title issues: If there are any problems with the title to the property, the buyer may not be able to get title insurance. This can prevent the buyer from closing on the loan and purchasing the home.
- Unexpected life events: Unforeseen circumstances can also play a big role in contract cancellations. For example, the loss of a job, a health crisis, or divorce can certainly disrupt a buyer’s or seller’s ability to proceed with a transaction.
- Cold feet: Sometimes, buyers simply get cold feet and change their mind about purchasing the home. This can be disappointing for the seller, but it is important to respect the buyer’s decision. As a reminder, a buyer may cancel a contract without losing their initial deposit at any time during the inspection period.
Whether you are buying or selling a home, it is important to be aware of the common reasons for contract cancellations. As a home buyer, here are some helpful tips to avoid a cancelled contract:
- Get pre-approved for a mortgage before you start looking at homes. This will give you a good idea of how much you can afford to borrow and make the financing process go more smoothly.
- Hire a qualified home inspector to inspect the property. This will help you to identify any potential problems with the home before you enter into a contract.
- Get the property appraised by a qualified appraiser. This will help you to determine the fair market value of the home and avoid any surprises.
- Work with a qualified real estate agent who can help you to understand the home buying process and protect your interests. The importance of hiring a local and knowledgeable real estate agent can not be overstated. When it comes to what is likely the biggest investment in your life, it is important to have professional guidance.
Are you looking to buy or sell real estate in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet.