According to a recent article in RealtorMag, the top 2 problems that cause contracts to be delayed but eventually closed:
- Obtaining Financing
- Appraisal Issues
The top 2 problems that cause contracts not to close:
- Home Inspection/Environmental Issues
- Financing Issues
In the owner carry business, the problems are similar, but a little different. Since the property seller has agreed to carry the note, he will probably be a little more lenient when it comes to credit worthiness if he feels good about the buyer and the terms agreed to. This is the first obstacle sellers – and potential note buyers – have to deal with. The second obstacle in a note sale is usually the property evaluation. Note buyers are looking for a value at least equal to the sales price of the owner carry transaction. In a stable or rising real estate market, and an arms length transaction, this obstacle should be overcome as well.
Do other unexpected problems pop up from time to time that derail a deal? Of course. Unknown liens, cloud on Title, a payor who refuses to co-operate, etc. Stuff happens. But by and large, credit worthiness and property evaluation drive the transaction.
Source: RealtorMag, Daily Real Estate News, June 2, 2016.