Those in the market for a new home are often interested in homes that have “fallen out of escrow.” That means something went wrong with the deal between the seller and their presumed buyer, and the deal didn’t go through.
Often, by the time that happens, the seller needs to move – maybe because they’ve already purchased a new home or need to relocate for their job. If the date by which they have to leave is fast approaching, that often means having to cut the price.
What kinds of issues cause this to happen?
You don’t want to be the seller dealing with a failed escrow. By knowing what kinds of things typically cause this, you can take steps to prevent it. These include the following:
- The purchaser ends up not getting their financing after they were preapproved.
- The appraisal price turns out to be significantly higher or lower than the agreed-on sale price.
- There’s an issue with the title to the property, such as a lien the seller didn’t know about.The buyer simply changes their mind.
- An inspection revealed significant problems.
As a seller, you can prevent some of these issues by having the home inspected before you list it so that you can get significant problems and issues that may affect your ability to get a good price fixed. It’s also crucial to have the home properly appraised (after you’ve made the repairs or upgrades).
However, you can’t foresee every potential issue that could cause your home to drop out of escrow. That’s why it’s crucial to protect yourself in your purchase and sale agreement and any other contracts. Having experienced legal guidance can help you protect your rights and minimize or prevent losses.