5 Reasons Homes Fail To Close Escrow

So you've sold your home and are planning your next move. But then the unthinkable happens. You get a phone call that your escrow will be canceled. You begin to panic. You get angry. But wait, this doesn't have to happen to you. How can you avoid having a transaction fall out of escrow?



The answer is to know what to watch out for so you can steer clear of disaster. To help, let's explore the top reasons real estate transactions fail and how to avoid them.



1. Failure To Obtain Loan Approval The most common way a transaction falls out of escrow is the buyer fails to qualify for the home loan. For the buyer, this can be avoided by taking proper action before it is necessary. For sellers make sure your real estate agent speaks with the loan officer and asks questions that will provide a better picture of how strong the buyer looks for obtaining a home loan.



2. Buyers Remorse Ah..Buyer's remorse - the term given to the feeling a person often gets after making a large purchase. Buying a home can be an emotional experience. A happy buyer one moment can turn into a panicky wreck the next. For some people, the thought of commitment, payments, responsibility, etc becomes overwhelming.



Buyers that suffer buyers remorse will dissect the home, looking for reasons and excuses not to move forward with the transaction. They will make mountains out of mole hills searching for justification to back out of the deal. After all, a home is the most expensive item that most of us ever buy.



To avoid this from happening remind the buyers agent that they are receiving one heck of a deal, and why the home is such a good value. Emphasize the benefits and the features of the home. The buyers agent will then relay the information to their buyer. In San Diego sellers also ask for at least a 1% earnest money deposit to demonstrate a commitment to the purchase. Since $1,000 or more is on the line the buyers are much more reluctant to withdraw.



3. Low Appraisal Appraisers have become much more conservative with their values since the real estate meltdown. So make sure you do all of your homework ahead of time before listing the property. Check other properties in the neighborhood. Pull up recent sold properties from the MLS, and prepare a little folder for the appraiser explaining why you feel the property is worth the listed amount. You need to provide the appraiser with comparable sales and they must be within close proximity of the property. It also helps to bring up features that make the home special. This includes adjustments, additions, remodeling, etc.



4. Poorly Written Contingencies Almost every home sale is subject to conditions or contingencies. These contingencies must be resolved by the buyer and/or seller in order to finalize the transaction. For instance, a common condition of sale is the acceptance of an inspection report or the review of a preliminary title report. The challenge with addressing conditions within escrow is that, if they have been poorly written or do not include a specific deadline for completion, it can quickly lead to disaster.



To avoid a problem, be sure that all parties in the transaction have a clear understanding about the meaning of the condition and a clear deadline as to when the condition will be removed or resolved.



5.Inspection Report Reveals Defect Inspection reports can definitely put some fear into a buyer. If there are no issues on the report, everyone is happy. However, if the report returns an issue or reveals an unforeseen circumstance, problems can appear. This is especially true when the buyer and seller can not agree on a resolution. To avoid this, get a pre-inspection on the home. So you'll know exactly what condition the home is in and can appropriately list the issues that may be of concern. These must be presented during the initial negotiations to avoid any conflict down the road. Even if you don't catch a problem ahead of time, be reasonable in negotiations after you find the problem. Avoid pointing your finger, it's a small world and you never know when the person you are pointing your finger at is someone whose opinion or assistance you'd want tomorrow. You can not force anyone to do anything. This includes making someone-else be reasonable. However, if you keep your head, you will have better chances at reaching a mutual understanding.



If you gain anything from this article. It should be that if you want to avoid troubles with your escrow, you need to be prepared, level headed and objective. Many more escrows close than dont. The reason is preperation and an ability to adapt to the circumstances.





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Philip D Georgiades II has been advising on real estate since 1993 and is the chief loan steward for VA Home Loan Centers. If you would like more information about govenrment loan programs or to apply for a VA, Government Insured Home Loan visit: => Apply For A Mortgage VA Loan