What can go wrong with the property sale now the deal has been done? Almost everything, from the buyer getting cold feet and reneging on the deal to the property not passing a standard building inspection. So what can you do to make sure you’ve got the best chance of closing on a house sale? We have some recommendations for you in this blog post.
Before you list your home for sale, do some due diligence, so you know everything is in order. As the homeowner, it is your responsibility to make sure what you’re selling is fit for use and legally viable for transfer to a new buyer. Let’s look at some of the basic checks you can do before engaging a real estate agent to list your property for sale.
1. Check the Title Deed
When you bought the property, your lawyer or conveyancer managed the transfer of the property title over to you or an entity of your choosing. For example, your name may be on the title or a company name if the property is held in a company. Checking the title deed will inform you if there are any caveats on the title.
A caveat is an interest in the property, usually for a debt. Before the title can be transferred to another party, it needs to be free of caveats.
An example of a caveator that adds a caveat on a title deed is the mortgage lender. The lender can be a bank, or it could be a family member or someone else. Other caveats include liens where there is a debt like an overdue tax payment.
You’d be surprised how many homeowners do not check that the property title after the sale. Start with an expert in real estate law to check the title deed, and when you know it’s in order – make sure you understand how much you need to pay back to the mortgage lender to get their caveat removed from the title during the sales transaction process.
2 Either Party Pulls Out
If you can not provide a clean title, you can not sell your home. If you agree to sell your home for a price that is less than the principal loan amount – then as the seller, you’d need to pull out of the sale. This is why it’s vital to know how much you need to sell your home before you can get the mortgage caveat removed from the title.
Also, you will want to make a profit from the sale, so you have a deposit for your next property purchase, so do the numbers beforehand.
Know your minimum sales price. Do research online and speak to real estate agents to understand if your home is worth the open market. As the seller, you want to make sure it is not preventing the sale from going ahead.
Some of the reasons a homebuyer pulls out include:
The homebuyer can also renege on the deal. They have time on their side to change their mind. As the seller holds off on the big celebrations until all signatures have been added to the sales agreement and the transaction is unconditional, i.e. there is no going back, the deal is done, and the new buyer is committed to the purchase of your home.
House fails property inspection.
A homebuyer can pull out of a home sale agreement if they have a clause that says the contract is subject to a satisfactory building inspection. If the building inspector finds fault with the property and the homeowner is unwilling or can not remedy the faults, the home buyer can pull out of the deal.
The homebuyer can not get the loan. Even if the homebuyer has preapproval, there is no guarantee that the lender will be forthcoming when it comes times to get the funds. The mortgage loan underwriting process may, in the end, fail the buyer for the loan amount they need to purchase your home. If the homeowner can not find a lender, they will need to pull out of the sale.
3. Home No Longer Insurable
The buyer may qualify for the loan they need to purchase your home, but they can not find an insurance company that will insure it. This situation will kill the deal, and the property purchase will fail. A lender will require the home to be insured. The only way an uninsurable home can sell is if the buyer doesn’t need a loan to buy it, and they are willing to take the risk without insurance. If there is a fire or damage due to a weather event, the buyer will have to pay for the repairs.
There are many reasons properties become uninsurable, mostly to do with disasters like earthquakes, floods, changes in the ground integrity, e.g. slips.
Start your property sales process by doing the basics to make sure your property is ready for sale. Plus, be prepared for a sale that may not happen. To get maximum sales price, spruce up your home, declutter and stage it.