Numerous ways that home sales fall apart

To save time and money, probe buyer before accepting offer
By: Dian Hymer: Inman News
Recently, a Los Angeles home seller thought his sale was a sure thing. Mere days later, his house was back on the market. What went wrong? The buyer didn't qualify for financing.

In most cases, this sort of fallout can be avoided. One positive byproduct of the recent fast seller's market is that lenders are prepared to preapprove buyers for financing in a day or two. It doesn't make sense for either the buyer or seller to enter into a transaction that the buyer can't complete financially.

To avoid disappointment, buyers should find out for sure what they can afford before making an offer. Buyers are in a better bargaining position with the seller if they can accompany their offer with a bona fide preapproval letter.

HOUSE HUNTING TIP: There's a big difference between prequalification and preapproval. A prequalification letter merely states that the buyer might be qualified for a mortgage if the credit report and pertinent financial documentation pans out. A preapproval letter from a lender is a letter that says the buyer is approved for a mortgage subject to a ratified purchase contract, a property appraisal and an acceptable preliminary title report.

Sellers who receive a preapproval letter from a mortgage broker rather than from the lender who will make the loan should ask for permission to call the mortgage broker to find out if there's any reason at all why the buyer's loan shouldn't be approved. Your listing agent can make the call for you.

Every once in a while, someone who's not actively looking to buy a home walks into an open house and decides to buy the property. Sellers who receive an offer from an enthusiastic buyer who hasn't had the time to be preapproved should issue a counteroffer that includes a provision for the buyer to be preapproved by acceptance.

If you give the buyer a day or two to accept the counteroffer, he should be able to provide a preapproval letter in that time frame. Or, if not, within the time frame it takes to negotiate the contract.

Some deals fall apart because the buyers discover something about the house or the neighborhood that makes them rethink their decision. It's best for sellers to get all the news about property and neighborhood conditions - especially if it's bad news - out in the open upfront. This lessens the chance that the deal will fall apart.

Buyers appreciate a complete disclosure package on a property, including presale inspections reports, so that they can make an informed decision about whether to buy the property. Sellers, however, often fear that the bad news will dissuade buyers or that inspections cost too much.

A failed transaction costs time, and sometimes money. Also, a property that goes back on the market can carry a stigma. It's far better to deal with issues upfront.

Another reason deals fall apart is "buyer's remorse." That is, a buyer has second thoughts about going through with the purchase soon after the sellers accept his/her offer. Sellers should find out as much as they can about a buyer before accepting an offer.

For instance, why are they buying? Have they outgrown their present home? Have they been transferred into the area? How long have they been looking? Have they made offers on other houses? Why weren't their offers successful? Did they back out of other deals?

THE CLOSING: As tempting as it might be to accept an offer and be done with the marketing process, it does little good if you're back on the market shortly after acceptance. It takes committed buyers and sellers to close a real estate transaction.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.