18% of NAR Members Reported Their Most Recent Sales Contract Did Not Go To Closing

The September 2011 REALTOR® Confidence Index released by the National Association of Realtors® revealed that 18% of NAR Members indicated their most recent sales contract did not end a real estate closing. The cancellations were due to appraisal issues (3%), potential buyers not being approved for mortgage financing (4%), or other problems (11%.)

Real estate and mortgage professionals are familiar with the unfortunate reality that some deals will fall out, but potential buyers and sellers, for whom the stakes can be great are often unaware of the possibility and unprepared to deal with the cancellation of a contract when it occurs. They can be disappointed, confused, and angry when a transaction does not go through and they lose out on a dream home, have to put their home back on the market, or miss out on especially low mortgage rates.

When there are issues that threaten to derail a real estate purchase it can be tough for everyone involved, and stress levels can run high. Communication is often the best strategy for getting things back on track, when the mortgage representative, buyers’ and sellers’ agents, the buyers, sellers, and anyone else involved can all share information and determine what role they can play in resolving the issue.

Being mindful of some of the most common reasons for contract cancellations can also help improve the chance of avoiding them during the process. A seller might choose to hire an appraisal to determine the property’s value before setting an asking price to help insure that the home will appraise once it’s under contract. If property values are changing quickly it could also be worth taking another look at the value every couple of months that the home is on the market.

To guard against a mortgage denial killing a deal, potential buyers can work with an experienced mortgage representative on a preapproval before submitting an offer, one who will know to ask the right questions that can identify any road blocks early on when there is still time to address them.