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Reasons for failed real estate contracts in Mich. and across U.S.

Before the housing crisis, only about 10 percent of U.S. real estate transactions across the country failed to close. Now, with the tightened reins of the lending industry, it is more common for about a third of purchases and sales to fall through.

One of the most common reasons for a real estate transaction to be reneged is because of a delay. Short sales in particular take a long time, and some potential buyers might walk away to purchase another property. Additionally, home inspections can cause delays and make buyers walk away from the deal. Long closing periods can also cost buyers who may choose to walk away and purchase a property with a faster closing time.

Another issue that causes real estate transactions to fall through is problems with financing. Lenders are being more strict about lending guidelines now due to apprehension of making the same mistakes that caused the housing crisis. Sellers can avoid part of this problem by refusing offers from potential buyers who have not secured a pre-approval letter from a lender. However, even with this letter in hand, an individual may still not qualify for a loan. A letter of credit only means that the bank at the time it issues the letter believes the potential buyer will qualify for a mortgage. However, this opinion can change as the lender looks at the buyer's credit with more scrutiny. Another problem can come into play if the property is appraised at an amount that is less than the proposed value of the mortgage. However, if a buyer is paying in all cash, this problem may not deter the sale.

If an individual is interested in selling a home, he or she may contact a real estate lawyer. This individual might be able to draw up contracts regarding the terms of a proposed sale.

Source: Forbes, "Top 3 Reasons Real Estate Deals Fall Apart For A Seller", November 20, 2013

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