150 Things that can go wrong in real estate in Salt Lake City

by John Austin, Broker at America's Best Real Estate - Utah

One thing I have learned over the years, helping people buying and selling, is that there are many problems and potential “deal killers” that will come up throughout most transactions. 


Inexperienced agents, or For Sale by Owners, will often fail to react in time to save a deal, or simply not know what to do. A wise and experienced agent will be on the look-out for these problems, proactively checking all details along the way to ensure a smooth and successful transaction for their clients.


Experience has taught us to be organized and detailed, with checklists to watch daily, helping us move all parts of the transaction along in a timely manner.  Being prepared for problems before they happen is crucial and having a plan of action in place to solve these problems when they are first discovered, is a must. This enables us to save deals when others fail.

This is our list of common problems that we deal with on a daily basis.


Things that can go wrong in real estate in Salt Lake City


THE BUYER:

1. Gets "buyer’s remorse" and loses excitement.

2. Was highest bid in a multiple offer situation and now thinks they overpaid

3. Gets pre-qualified, but not pre-approved. (know the difference) 

4. Picked a discount internet lender, who is hard to reach or communicate with when needed

5. Terms of the mortgage are not satisfactory and buyer backs out 3 weeks into the contract

6. Takes advice from friends or social media, instead of an expert - "their own agent"

7. Has a co-borrower who ends up not qualifying

8. Does not tell the truth on his loan application

9. Has an unpaid judgment filed against them

10. Their income to debt ratio changes before closing and now they don’t qualify for the loan

11. The buyers home falls out of escrow so they are unable to close on this purchase

12. Interest rates go up, buyer did not lock the loan, and can’t afford the higher payments

13. Does not have two-year employment history with the same company or line of work

14. Opens a new credit card or new line of credit before closing

15. Has recent late payments on their credit report

16. Thinks the seller lied on the sellers property condition disclosures

17. Loses their job prior to the close of escrow

18. Changes jobs before close of escrow

19. Income verification is lower than what was stated on the loan application

20. Some buyers income not allowed by underwriting (overtime, commissions, bonuses)

21. Makes a large purchase on credit before closing

22. Has a financial setback before closing (illness, divorce, accident)

23. Meets the neighbors and does not like them or what they have to say

24. After reviewing HOA docs, decides to back-out

25. Misses important deadlines in order for the loan to close

26. Was getting a financial “gift” from family and the family member backs-out

27. Cannot locate their old divorce decree

28. Cannot locate tax returns

29. Cannot locate bank statements or other asset statements

30. Cannot locate bankruptcy discharge

31. Cannot verify rents paid

32. Mortgage payment is much greater than previous housing payment

33. Child support not disclosed on application

34. Has had a chapter 13 Bankruptcy within the last 4 years

35. Has had a Short sale within the last 2 years

36. Is uncompromising in negotiations

37. Switches from a salary or hourly job to one based on commissions

38. Does walk-through inspection on the morning of closing, is not happy and refuses to sign

39. Feels the house was misrepresented by seller or the sellers agent

40. Loan program changes with higher rates, points or fees

41. Veterans DD214 not available or not eligible

42. Does not satisfy underwriting conditions in a timely manner

43. Does not qualify when underwriter reviews all the information

44. Does not have all the money necessary to close

45. Wants to use the home as a rental, but discovers the HOA rules do not allow it

46. Is self-employed and does not report enough income on taxes to qualify



THE SELLER:

47. Gets a better offer and intentionally sabotages the deal or fails to deal in good faith

48. Misrepresents information about the home

49. Rents the home and the renters refuse to vacate before it closes, so buyers can’t move-in

50. Renews the lease or takes on a new lease and deposits prior to closing

51. Needs more time to move-out than expected and causes great hardship for the buyers

52. Does not co-operate with inspectors or appraisers to access the home

53. Changes their mind and does not want to sell

54. Cannot find a home to buy and does not want to close until they do

55. Was selling due to job transfer, and now that opening is not available

56. Was selling due to divorce, but is now reconciling

57. Does not have the cash to clear up liens on the property

58. Does not disclose the correct property taxes, HOA fees, or upcoming assessments

59. Elderly owner, not of sound mind, and without Power of Attorney

60. Property actually owned by more than the one person who signed the listing agreement

61. Refuses to make or pay for requested repairs after inspections

62. Makes repairs themselves to save money and does not hire licensed contractors

63. Does some but not all of the agreed upon repairs

64. Moves out and does not remove trash or hazardous materials

65. Does not disclose defects and they are discovered prior to close

66. Is not making house payments and home goes into foreclosure during escrow

67. Borrows money against the home prior to close

68. Sells items in the home that were supposed to remain with the home

69. Dies or is hospitalized prior to closing

70. Does not vacate the property after closing (a holdover seller)

71. Removes property from the home that the buyer believed was included in the sale

72. One of the spouses refuses to sell or sign the listing or closing docs

73. Movers reschedule, seller can’t get out when expected, and buyers can’t move-in

74. Does not even own the property or have sole right to sell it



THE LENDER:

75. Only pre-qualified the buyer and did not pre-approve

76. The buyer is getting an FHA or VA loan, but the home or subdivision does not qualify

77. Is slow to ask for needed documentation from the buyer

78. The loan originator is new or inexperienced 

79. The loan officer goes on vacation and the file just sits on the desk until they return

80. Finds unsigned documents too late in the process and requires extensions

81. Does not order appraisal in time to meet contract deadlines

82. Charges the buyers higher rates because their loan lock expired

83. Requires costly or unattainable insurance to protect the asset from floods

84. Requires the property repairs to be completed prior to closing

85. The market rates or fees go up before they get a loan lock 

86. Requires more down payment or closing costs to be paid by seller

87. Requires a last-minute, second appraisal or review appraisal

88. Puts off this file to focus on other deals

89. Does not ask for all important information from buyer upfront

90. Needs more time to complete the loan than estimated

91. Tells the buyer, no need to sell their home first, then later changes that requirement

92. Does not fund the loan in time for the closing deadline

93. Fails to give loan approval prior to approval deadline

94. Gave an approval letter, then denies the mortgage 3 to 4 weeks into the process

95. Gives loan denial after lending deadline, causing the loss of the buyers earnest money

96. Over-promises to get the loan, then under-produces, and just can’t do it



THE APPRAISER:

97. Is busy and cannot schedule the appraisal right away, requiring extensions

98. Cannot complete the appraisal before the appraisal deadline

99. Cannot find comparable sales to justify the sales price

100. The home was misrepresented as to size or condition and appraises for less

101. Is not local and does not know the area and the market

102. Is not on the lenders “approved list”

103. Makes mistakes on appraisal which cause the value to be too low

104. May require a second inspection of the property after repairs are completed



THE INSPECTORS:

105. Home inspector not available right away or reschedules, changing timelines

106. Inspections show presence of meth, mold or other serious health concerns

107. Radon tests come back at or above government recommendations

108. Pest inspector bills are high for pest mitigation (termites)

109. Discover a fence or an outbuilding is over the property line and on a neighbor’s property

110. Inspections disclose serious defects in foundation or other construction safety issues

111. Inspectors report shows need for other inspections (roof, HVAC, sprinklers, etc.)

112. Inspections cause buyer to ask for excessive seller paid concessions

113. Inspection reports alarm buyer into cancelling the sale

114. Inspection comes back fine and buyer discovers problems after the close of escrow

115. Property is damaged by fire, weather, or renters prior to closing



THE TITLE AND ESCROW COMPANY:

116.  Title policy has unknown or undisclosed defects or liens

117.  Buyers or sellers leave town without getting all necessary signatures

118.  Buyer or seller loses license or ID right before settlement

119.  Fails to order payoffs or HOA documents early-on, delaying the closing

120.  Title shows defects like easements or mechanics liens that have not been solved

121.  Is inflexible when it comes to small problems

122.  Does not coordinate well, so that many items can be done at the same time

123. Fails to notify the agents of unsigned or unreturned documents

124. Incorrectly prepares paperwork

125. Does not coordinate well with other title company in the transaction

126. Does not obtain important information from lien holders, insurance companies or lenders

127. Discovers liens or other title problems at the last minute



THE AGENTS:

128. Did not get all owners to sign listing, so the listing is un-enforceable

129. Did not verify if the home or subdivision would qualify for an FHA or VA loan

130. Do not tell the seller or sellers agent that they are continuing to look at other homes

131. Did not put in the offer that the buyer has a home to sell in order to qualify

132. Do not communicate well with the other agents in the transaction

133. Do not get completed paperwork to the lender in a timely manner

134. Let their egos get in the way of good negotiations

135. Have no client control

136. Fail to get buyers earnest money deposited and cleared

137. Fail to verify the buyer has the funds to close

138. Failed to forward all CC&R’s, Rules and Regs to the buyer prior to disclosure deadline

139. May be inexperienced and don’t ask the right questions of their clients

140. Unfamiliar with their client’s financial position

141. May not be familiar with this type of property or area

142. Does not return phone calls or email requests

143. Does not give access to property when needed or asked

144. Misleads the other parties in the transaction

145. Takes time off during the transaction and can’t be reached

146. Takes time-off and leaves their business with an agent who is unaware of the details

147. Oversells their clients qualifications or cash to close

148. Give bad advice during negotiations, counter-offers, valuations, repairs requests, etc.

149. Are adversarial to the other agents, or encourages their clients to walk away

150. Does not know their client well enough and wastes everyone’s time


While not every problem can be solved; having a great real estate agent on your side will give you the best chances of being prepared for the problems that can and will happen during your transaction. 


- John Austin, Principal Broker, America's Best Real Estate


Most real estate deals have problems; some can be "deal killers".

Most real estate deals have problems; some can be "deal killers".