All real estate agents love boasting that they've rarely had a property fall out of escrow. As everyone knows, it happens once in a while, sooner or later. Sometimes it is the fault of the owner or the Realtor. Other times it is just something that cannot be helped. Let's first examine the precautions that could be taken to keep a property from falling out of escrow.
The first and most important thing is to make sure a buyer is financially qualified. A way to check qualifications is to get a preapproval letter, not just a prequalification letter, from a lender. This shows the buyer has not only the financials but also the credit rating and the assets required for the purchase. It is very important the buyer has an acceptable FICO score and a solid history of good credit. A score below 750 could be questionable, and above 800 is exceptional and not questioned. You might want to refer to a credit rating website for more information. Lastly, it is important for your homebuyer to show there is not only enough money for the down payment but also an additional cash reserve.
Despite what most people think, there are many reasons transactions fall apart. The most common reasons besides financial escrow falls out have to do with disclosure and inspection. Today buyers usually order more than just the physical inspection and will get sewer inspections, chimney reports, drainage and environmental inspections, and more. Many types of inspections can be done. It is important that the contingency for these inspections have a very short fuse. You want buyers to get all their inspections done in the allotted amount of time but not to tie up your property for a long time. With disclosure, the most important thing is to be forthcoming from the beginning so that if there is a deal breaker, then the purchase can be canceled before things have gone too far.
Other issues that have come up lately are neighbor issues, or property issues that the owners themselves are usually not aware of. The website LexisNexis will reveal such things as registered sex offenders or other issues that might cause concern, especially when people have young children. Some buyers are worried about an electromagnetic field. This has to do with wires and electronic transmissions through power lines and transformers. Although I am certainly not an expert in this field, some people are very concerned with potential unhealthy effects that could endanger infants or young children. I suggest you refer to appropriate websites for further information.
Buyers' concerns can go many different directions, and the most important issues have to do with health and safety. Lately there is much controversy about Airbnb properties, rehab homes or other recovery homes being located on a home's street. For many people it is important to live in a neighborhood that is 100% stable. Some people are even concerned about tenant-occupied properties nearby. Sellers must also be sure they are not violating antidiscrimination laws when making their well-meant disclosures.
The contradictions of "you must disclose" and "you can't disclose" can become confusing, I admit! My advice is to disclose as much information as possible and keep your contingency periods short to keep your property from falling out of escrow.
For more information, please call Ron Wynn at 310-963-9944, or email him at [email protected] To find out more about Ron and read his past columns, please visit the Creators Syndicate webpage at www.creators.com.