Homebuyers Are Increasingly Backing Out of Deals: How To Keep Your Sale on Track
About 63,000 home-purchase agreements fell through across the country in July, according to a new report from Redfin. That equates to 16.1% of homes that went under contract that month — the highest percentage on record, except for March and April 2020, when the housing market was halted by the onset of the coronavirus pandemic.
So why are homebuyers backing out of deals? Rising mortgage rates have made it more difficult for prospective buyers to afford a loan. And those who are still in the market have newfound bargaining power as competition declines. This is a much different situation from last year, when buyers had to bid well over asking price and jump through hoops just to have a chance at securing a deal.
According to Redfin, buyers are now much more likely to pressure sellers into bringing down their prices and making requested repairs. They’re also including contingencies in contracts that allow them to back out without financial penalties if something goes wrong.
In other words, things have quickly shifted in buyers’ favor. “Over the last few years, buyers had to jump on whatever was available,” said Emily Wheeler, COO at Village Premier Collection. “They have more options now, and if they can get an updated and renovated home, they’ll take that over one that isn’t.”
If you’re currently trying to sell your home, it can feel like the market is working against you. However, you can ensure that your home sale goes through without any hiccups by following these tips.
Attract the Right Buyers
A successful home sale starts with finding a buyer who is strongly interested in your property. “Sellers have to understand their house isn’t going to sell as-is or in a weekend anymore,” Wheeler said.
When it comes to the listing, it’s important to take professional photos and even drone footage to attract buyers. When showing your home, make sure it’s sparkling clean and renovations are complete.
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Speaking of renovations, Wheeler noted that buyers will choose a home that’s renovated and modernized over one that isn’t. “Sellers should update light fixtures, door knobs, faucets and appliances with what’s currently trending,” she said. “Replace stainless steel or brushed nickel appliances with chrome or black stainless steel. If your cabinets are dark brown and your granite countertops are green, they need to change.”
In other words, buyers want a home that’s move-in ready.
Pricing Is Key
Next, it’s crucial to keep the asking price in accordance with the actual cost of the property, said Carolina Gerdts, executive vice president at RelatedISG Realty. She recommended paying a property appraiser before listing your home to ensure it’s priced right.
“Inflated prices could backfire during appraisal, and buyers will back out if they don’t have the extra cash to bridge the gap between the appraisal value and the offered price,” she said.
Wheeler added that the characteristics of the house will determine the price point. “Most sellers are emotionally attached to their homes, and it’s natural that they’d believe it has more value than it actually does.”
An experienced appraiser or agent can examine the property from a professional point of view, considering factors such as the school district, whether there are enough bedrooms to accommodate a growing family, and features that appeal to those working from home such as office and outdoor spaces. “If it’s listed right, it’ll sell quickly,” she said.
Pay Attention to Pre-Approval Letters
Gerdts said that sellers and their agents should go the extra mile when receiving an offer contingent upon financing. The listing agent should call the buyer’s lender to confirm the information delivered in the letter. “They should also ask if the buyer has provided all critical documents to receive the approval, such as tax returns, bank statements, and any other documents required by the lender,” she said.
Importantly, Gerdts said that sellers should steer away from buyers who have only submitted verbal numbers and do not have a documented track record to base their acceptance.
Finally, it’s important to disclose anything that has happened to the property early on. “This way, buyers know in advance what they are entering into and won’t back out because of any surprises, such as water damage, roof repairs, or older air-conditioner equipment,” Gerdts said. “All these will be revealed during inspections, so transparency is essential.”
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