A disappearing ficus tree, tenants who
won't budge, secrets under the dining room rug, a buyer-seller
brawl, and a particularly contrary house cat are just a few
of the last-minute deal breakers that have quashed or threatened
real estate transactions across the country.
Real estate professionals are trained in
the art of shepherding a property sale from contract to closing.
They counsel their buyers through every step of the lending
process, mediate between buyer and seller while inspections
and repairs are completed, and reassure nervous sellers that
the buyers' financing will be sewn up tight by closing.
And in 2004, realty agents were particularly
busy. According to the National Association of Realtors, an
estimated 6.75 million single-family homes were sold, up 10.66
percent from the 2003 record of 6.1 million. Not surprisingly,
homeownership was at an all-time high of 69.2 percent as of
the second quarter of 2004.
But the best laid plans of buyers and sellers
can and do go awry from time to time, especially amid the
stress and fatigue of a pressure-cooker deal between highly
motivated buyers and sellers.
We surveyed five real estate agents from coast
to coast to get their perspectives on the unforeseen last-minute
surprises that can turn a good deal south. While deal breakers
by their very nature are not typical, they do tend to arise
from several common concerns.
1. Shaky financing
The single most common deal breaker? The buyer's financing
This is understandable, considering that a typical
home sale actually involves two contracts: one between the
buyer and seller, the other between the buyer and lender.
Where big money is at stake and the ticking clock is exerting
additional pressure, there is no such thing as a sure thing.
Kristal Kraft, a relocation specialist with
Berkshire Group Realtors in Denver, Colo., had a deal
fall through when the buyers failed to maintain the financial
status upon which their loan was based.
"The buyers spent way too much money before
closing and when it came down to a few weeks before closing,
they couldn't qualify for their loan anymore," she says.
"That's typical of what can happen when people go under
contract and then go out and buy a big new car and it changes
their financial status. I always tell them, don't buy anything
until after closing."
Dick Pelosi, broker-agent with Century
21 Advance Realty in suburban Boston, says the old industry
phrase "Buyers are liars" sometimes applies to their
"Getting prequalified or preapproved, that's
easy to do," he says. "When it comes down to it,
can they get the loan commitment? That's where it's always
shaky. People lie on the application or they can't produce
their pay stubs."
2. Lame lenders
Increasingly problematic in these days of low mortgage rates
are lenders who just don't get it together for closing.
"You have a lot of people who got into
the mortgage business during the refi boom who are not seasoned
people and they're not paying attention, especially the nonconforming
lenders," says Hugh James of Hugh James Realty in Chicago.
"I've had them asking for changes to title and additional
documentation at the closing table that they never asked for
to begin with.
"We had one the other day at the closing
table that was asking for changes in the way the title commitment
was written, even though they had had a title commitment for
Several real estate agents also shared tales
of buyers who obtained financing only to be shocked at the
numbers at the closing table.
3. Fussy inspectors
Every real estate agent's nightmare is a renegade inspector.
Because most inspectors' livelihoods are based on referrals,
their reports tend to be fair but not overly picky.
Once in a while, however, they can be flat-out
wrong, as Brook
Ashley, a broker in Santa Barbara, Calif., found out the
"I had an escrow fall out when an inspector
said a beam was way too long and not structurally correct.
After a lost escrow and $10,000 later, a structural engineer
came in and said actually it's not one beam, but two beams,
and they are joined twice as well as they need to be. But
we lost the sale.
"And I never used that inspector again.
There doesn't seem to be any liability on his part. If we
had done that, we would have lost our license."
James had a sale fall through when the inspector
turned up a sinking front porch that would have cost $5,000
to repair. It wasn't the inspector's fault; the homeowners
didn't know about it either.
"They're typically not deal killers unless
there is something really ugly. In most cases, it's usually
very small stuff, $200 here, $200 there, and can be easily