The days of guaranteed buyers and raging bidding wars are no more. The market has noticeably changed since the height of the pandemic when sellers were at an overwhelming advantage. One of the main factors causing potential buyers to back out of deals is a fear of a recession. As a seller, it’s important to know how to vet potential buyers to ensure they’re prepared for any unforeseen hiccups during the closing process. Here are a few different scenarios that you can plan for that could cause a buyer to back out at the last minute.
1. Interest rates are high and they’re only continuing to increase.
Due to this, affordability is harder to come by for buyers. For a seller, it’s best to require a pre-approval letter from the last 30 days. It would also be beneficial to ask buyers to lock their interest rate, which can eliminate the risk of fluctuation during this time of rapidly rising interest rates.
2. There may be an appraisal gap that can open the door for negotiations that favor the buyer.
If your home is appraised significantly lower than the buyer’s offer then concessions will need to be made for the deal not to fall through. As a seller, it’s best to check in your area for similar listings that have been appraised within the past three months. As a general rule, your home should be priced within 10% of these numbers. Another thing to consider is that the market is cooling so if you’re unwilling to be flexible in your pricing then you may be chasing a declining market.
3. Contingencies are back.
Expect buyers to no longer be pushovers when trying to purchase your home. When rates were low, buyers were waiving the need for home inspections, appraisals, and financing. The main contingency that is back in full swing is home inspections. If any problems do arise then you’ll most likely have to make repairs or other compromises to ensure that the deal doesn’t fall through. The best piece of advice is to work with the buyer. You want to sell your home and they want to buy it–be open to renegotiating if any issues surface. That doesn’t mean you need to concede to all of their demands but as long as their requests are fair for both parties, you will still come out of the sale elated.
For more information on how to list your home and navigate the market please contact your Neighborhood Expert today!