In the continuously bulging state of Boston's real estate comeback, the road from accepted bid to signing on the dotted line can be full of hairpin turns. While most experts say that the vast majority of accepted bids lead to sales, deals can - unfortunately - still fall apart for a number of reasons even after a price is agreed on.
Here are a few of the most common "deal killers":
When a buyer needs a mortgage, there's always a chance that the financing won't come through, and that the deal will fall apart as a result.
If you're the seller, the best way to avoid this kind of deal killer is to accept an all-cash offer. That is the safest proven way to circumvent financing woes.
If you don't have any all-cash offers, the second best option is to screen buyers ahead of time and make sure they're pre-approved for a mortgage and have gotten a pre-qualification letter from the lender. Do take note, to increase the odds that a pre-qualification letter means what it says, make sure it states that the lender has checked the buyer's credit and income, otherwise it is based only on verbal affirmations of the buyer.
That said, it would also be wise to go and list your property with a broker who pre-screens potential buyers. Most, like yours truly, qualify people by working with partner mortgage brokers or financial consultants before they sign any deal for the benefit both of the buyer and the seller.
But if the seller has a problem finding a new place to live, that can have a domino effect. From our experience, we estimate that this happens in about 10 to 15 percent of the cases where a deal falls through after an offer has been accepted. You can't really protect yourself much if you're a buyer, though if a contract has been signed, you're entitled to your deposit back, and may have grounds to sue if the seller doesn't return your money.
We also suggests you ask some questions about the seller during the negotiation process, like why they're selling and whether they've already got a new place. Of course, this can't protect you from last-minute problems, but it can definitely help prepare a bit more.
We always say that the best way to get another bid is to accept an offer because once doubtful buyers see an apartment is being lusted after by someone else, they think it's worth buying. So how can a buyer with an accepted deal protect themselves from a higher offer coming in?
Well - the best remedy is to apply the notion of "time is most definitely of the essence."
Make sure you have an attorney that can get you into contract as quickly as possible. It's hard to do it in less than two days, but 24 hours is ideal. If you give it two days to a week, that gives plenty of time for another bidder to come in and derail the deal. That's why we ourselves have partnered with quite a range of lawyers who specialize in speedy but sharp closings.
Another way to avoid getting an apartment "swiped" from under you is to tell the seller how much it means to you. Obviously, this tactic will only work for a seller who's emotionally invested in the home, not someone who's selling an investment property. If it's a seller who loves their home and has lived there for a while, there's a big chance it'll strike a chord. Communication is really important. By showing that you're invested in the process and the apartment, the seller is more likely to feel guilty taking that other offer.
Be sure not to go overboard and squander your negotiating ability, though. Having a broker who can help you carefully word the letter to sound eager but not desperate and willing to pay any price will certainly help. But, remember that this being Boston, and the human race, it often just comes down to dollars and cents.
The best you can do? Be prepared to match the offer.
5. Renovation glitches
If a seller has done a significant renovation in their apartment or combined two units or whatnot, they need to file the appropriate paperwork with the City Hall's Building Division. Before a seller lists, they should make sure that all of that paperwork and inspection is in order. As a seller, you may need to get your architect or expediter to follow through with this. And you'll want to allow two to six months to complete the process.
As a buyer, always always remember that banks will not lend or will have less of an issue denying a loan application if there is still pending work on a property, much more construction works that have been pending and sitting idly by. In some cases even, banks will hold off on closing until the certificates are done.
Alongside what's discussed in No. 5, issues with the building can hurt a buyer's chance of getting a mortgage, and can also turn a buyer off big time.
It's really important to manage a buyer's expectations when it comes to the building. Oftentimes, buildings will levy a monthly charge for repairs above and beyond maintenance fees, which is known as an assessment.
If there's an assessment in the building, the seller's broker needs to make sure it's all clear upfront--on the website, printed brochures--and they should mention via word of mouth. Monthly assessments may not seem like a lot, and sometimes the seller will negotiate to pay them, but it's important to be transparent so it doesn't come as a surprise to the buyer.
Likewise, litigation or other issues that show up in board meeting minutes should be disclosed upfront so they doesn't surface when you're reviewing the contract. And buyers should always have their attorneys look carefully at board minutes from the condo docs.
When it comes to brownstones, major structural issues and problems with the foundation can pop up and cause complications. While this issue doesn't usually derail deals, it can instill fear in a buyer. Likewise, external things like a large construction project coming in next door can scare off purchasers. Believe us, we've seen our fair share of buyers who planned to convert three-or-more-family home into a single-family home eventually backing out over huge tax implications.