What Can Go Wrong Between Contract and Closing?

The most common problems are the buyer's loan, a low appraisal, the inspection, and title surprises in the public records. Most of them can be worked out when someone catches them early and acts before the next deadline in your contract.

I am Delia Bayna, a REALTOR with eXp Realty in Salt Lake City, Utah, and a Seniors Real Estate Specialist (SRES). Being under contract is good news. It is not the finish line, so here is what to watch for between now and settlement.

The loan is where many deals run into trouble. A pre-approval is not a final approval. The lender still has to check the buyer's income, debts, and credit again, and look at the appraisal.

Things that can slow or stop a loan: the buyer changes jobs, takes on new debt like a car loan, or the lender is slow and misses steps. You cannot control any of that. Your agent can keep in touch with the buyer's agent and the lender, so a problem shows up in week two instead of the day before settlement.

I have lived this one. On one of my own deals, the lender was the problem, and my client came close to losing the condo he was buying. I kept calling the lender, the other agent, and everyone else in the deal until it moved. It reached the closing table. That is the job when a deal starts to slip.

After the inspection, the buyer may ask for repairs, a credit, or a lower price. Your choices are covered in what happens after the buyer's home inspection. The deal is at risk when neither side will move on a big item, like a roof or a furnace.

If the buyer has a loan, the appraisal comes next. A low appraisal leaves a gap between the value and the price, and you and the buyer have to decide how to close it. I walk through the options in what happens if the appraisal comes in low.

Both of these are easier when you know your home well before you list. A seller who already knows the roof is old, and disclosed it, is having a much calmer conversation.

After you go under contract, the title company searches the public records on your home. Sometimes they find something nobody remembered:

• An old loan that was paid off but never officially released
• A lien from a contractor or an unpaid bill
• A name on the title of someone who has passed away
• A home held in a trust, with paperwork that needs to be found

Most of these can be fixed. They take time, and the fix usually needs papers from you, a lender, or a court. If you are selling a parent's home, or using a power of attorney, tell the title company early, and talk with an attorney about who can sign. My post on talking with your parents about selling their home covers the family side of that.

In Utah, the REPC gives each deadline a name: Seller Disclosure, Due Diligence, Financing & Appraisal, and Settlement. Each one is a real date, and what each side can do changes as those dates pass. A buyer who wants out usually has the most room early, during Due Diligence. A missed deadline can change who has the right to cancel and what happens to the earnest money, so every date belongs on your calendar. In a Salt Lake City fall, I also watch the calendar for repairs. Once the cold weather comes, roofers and furnace companies get busy, and a repair promised before settlement needs a real date on someone's schedule.

Sometimes a buyer simply changes their mind. That is hard to hear. It is also why a backup offer, or a buyer who has already removed most of their conditions, gives you more peace of mind.

One more risk is not about the house at all. Criminals send fake emails that look like they come from a title company or an agent, with new wiring instructions. Never send money or change where your money goes based on an email. Call the title company at a number you already know is real.

Put every deadline from your contract on a calendar the day you go under contract. Answer calls and emails from your agent and the title company quickly. Keep your own paperwork close, like your loan statement, HOA contact, and any trust or estate papers.

I call and email every client every Friday, from the day we start until after closing. Under contract, that Friday call covers which deadline is next, what came in that week, and what I am watching. I spent eighteen years teaching, and I know people stay calmer when nothing is a surprise. If I think something is going wrong, I will tell you, along with what I would do about it. It is your call, and I will support it either way.

You can see the whole path from listing to settlement on how I sell a home, or read more about selling a home in Salt Lake City.

What is the most common reason a home sale falls through?

Problems with the buyer's loan, the appraisal, and the inspection come up most. Title issues and missed deadlines can also slow or stop a sale.

Can a buyer back out after signing the contract?

Sometimes. In a Utah REPC, the buyer's options depend on the deadlines and conditions in the contract. What happens to the earnest money depends on the same things.

What is a title issue?

It is a problem in the public records about who owns the home or what is owed on it, like an old loan that was never released. The title company finds these and helps clear them before settlement.

How do I protect myself from wire fraud when I sell?

Never act on emailed wiring instructions or changes. Call the title company at a phone number you already know is real before any money moves.

This article is general information and is not legal advice. For questions about contract terms, talk to a Utah real estate attorney.