15 Buyer’s Reasons Why “That’s a Dealbreaker”Daniel Dobbs2023-05-25T12:02:55-07:00
The 2021 attitude of sellers, “take or leave it,” created a nightmare for both listing and buyer agents as they tried to hold their deals together.
Now the shoe is on the other foot, as buyers have the edge in negotiations and use any defect in inspections to grind down sellers.
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As the market continues to shift to a buyer’s market, some buyers currently in the contract are developing a severe case of buyer’s remorse.
A recent uptick in canceled contracts reveals that buyers have begun actively looking for valid ways to terminate their purchases.
Here’s a list of the top 15 potential dealbreakers:
1. Appraisal anomalies
The current declining market, however, is making the appraisal process even more difficult.
If an appraisal comes in below the contract price, the buyer must come up with the money to make up the difference, or the seller adjusts the contract price lower, as most buyers are unwilling to pay more in a declining market.
Recommendation: Preemptively discuss with the seller the possibility of a low appraisal with a seller once they are in contract. A frank discussion early on can head off surprises and give the seller time to consider a positive course of action.
The cost of having the home back on the market when it is declining could result in a substantially higher loss than a price adjustment now.
2. Foundation flaws
Foundations are like our feet: if everything is good, everything above is secure. If there are issues, they can translate into severe problems.
Recommendation: Sellers should get preemptive inspections to know what potential issues they will need to deal with.
3. Electrical eccentricities
Electrical codes have come a long way since their inception in homes almost 100 years ago. But cities have continued to update their code.
Recommendation: If electrical issues appear in a pre-emptive inspection, recommend they either be remedied upfront or negotiated at sale.
4. Plumbing problems
Lead pipes, slow drains, leaking showers, deteriorating fixtures … there is no end to issues that hinder a home’s plumbing system from functioning.
Recommendation: the same as the electrical section above.
5. Roofing revelations
A leaky roof or roofing system (including downs and gutters) can cause rot, mildew, mold, and foundation problems. Some roofs have been repaired numerous times, while others have roofs installed over each other.
If a buyer thinks they may have to front the cost for an expensive roof repair or replacement shortly, that may give them a reason to cancel.
Recommendation: Have the roof preemptively surveyed by a licensed roofing contractor who can provide a fair assessment of the roof’s condition and the cost of any repairs.
6. Moldy manifestations
The source of mold is always moisture: find the water source first, deal with it and then remove the mildew or mold.
Often mildew can be removed with a surface treatment, while severe mold issues usually require professional treatments and the removal of affected materials and replacement with new ones.
Recommendation: Since there is so much misunderstanding about mold and mildew, it is best to have it remedied before a sale.
7. Pest predicaments
Pests vary from region to region.
Wood-destroying pests: these include termites, carpenter ants, wood-boring beetles, wasps, bees, and more. If left unabated, they can cause significant structural damage.
Recommendation: get a wood-destroying pest inspection and decide whether you wish to treat the issues or sell as-is upon receipt.
8) Structural shortcomings
Over the years, a home may suffer from neglect, abuse, or even structural modifications that are not to code. Some issues may only be cosmetic, while others require extensive repairs and upgrades.
Recommendation: Hire a professional home inspector to complete a home inspection before the sale. Use the inspection report to determine which issues should be remedied before a sale and which items can be left alone.
9. Water worries
Care should be given to ensure that all the plumbing supply and waste lines are in good condition, and the home is properly weather sealed, and so on.
Recommendation: The same as No. 8 above.
10. Neighborhood nuisances
In California, for example, state regulations mandate that ALL potential neighborhood issues be disclosed.
Recommendation: Thoroughly disclose all facts, and have the disclosures available while the home is being shown and before entering the contract.
11. Title troubles
Nothing is worse than paying to market a property, getting it into a contract, and then discovering it has a clouded title that cannot be conveyed.
Recommendation: Get a full preliminary title report BEFORE the home goes to the market to ensure there are no surprises.
12. Permit problems
Homeowners have been known to do all kinds of “upgrades” without building permits.
While minor items can be overlooked, substantial additions, garage conversions, significant structural modifications, and other more serious modifications without permits can cause problems for the new owner.
Local building departments have the authority to go through an investigative process to obtain the correct permits and confirm that everything was done to code. Or “Red Tag” the property.
Recommendations: The truth is; permits should have been obtained. The cost of remediation may be very expensive and time prohibitive. The best solution is to disclose the situation fully and hope a buyer doesn’t object.
13. Remodeling remonstrations
Some homeowners start a project but then lose enthusiasm or the funds required to finish, which is a deal killer 99% of the time.
Recommendation: Unfinished projects should be completed before the home is listed.
14. Disclosure dilemmas
It is incumbent that the seller fully discloses the level required. In California, the rule is Disclose, disclose, disclose.
Recommendation: Use a checklist approach with our sellers to ensure they do not forget anything.
15. Hazardous habitats
In Calif. agents are compelled by state laws to provide a Natural Hazards Disclosure. when the offer is accepted. Why wait?
Recommendation: Be ordered ahead of time and included in the disclosure package to head off any potential issues before an offer.
Once a property goes into contract and issues are discovered, the seller is in an unfavorable position and either adjusts the price, provides credits, or deals with a cancellation that, in a declining market, could adversely affect the property’s value.
Better to effectively prepare in advance for potential deal-breaking issues once in escrow.
