9 Warning Signs When Selling Your Home
Anyone who has bought a home can appreciate that it’s not a simple process. Despite now having a little experience under your belt, selling ...
Anyone who has bought a home can appreciate that it’s not a simple process. Despite now having a little experience under your belt, selling your home can be just as tricky as buying it was. Signs of potential delays, scams or suspicious offers should all raise red flags. With that in mind, check out these nine warning signs to ensure everything goes well when selling your home.
1. Lots of Viewings, but No Follow-ups
If your home is getting lots of viewings, but none of the potential buyers get back to you afterward, it’s worth asking yourself why. Of course, getting no viewings is worse, but at least that’s easier to understand: perhaps you overpriced your property or posted a listing that doesn’t do it justice. But assessing why buyers would lose interest in the property after viewing it is more challenging.
If you haven’t already, try hiring a real estate agent to market your home. Also, it’s worth inviting friends over and asking for feedback. Your house likely has some flaws that you’ve gotten used to but put visitors off, such as unpleasant smells, dated decor or a noisy neighborhood. Finally, keep in mind that savvy homebuyers are wary of old listings. And the more time your home spends on the market, the more it becomes a red flag to them.
2. Lowball Offers
No seller likes a lowball offer, especially at the start of the negotiations. And while it’s perfectly normal for buyers to try and negotiate a lower price, offers that are significantly below your asking price should trigger a warning bell. It’s possible that you’ve priced your home too steep compared to the market value or that the neighborhood itself is in decline. A lowball offer could also indicate that your property is in dire need of repairs or even upgrades. And in some cases, it could also suggest that the buyer doesn’t have the financial means to purchase the home and is trying to bring the price down to something more affordable.
3. Restrictive Contingency Clauses
Real estate transactions often feature contingency clauses that allow both parties to back out of the sale under the circumstances stipulated in the contract. One common type you’ll encounter is a sale and settlement contingency. It’s used by buyers who already have a home they’re looking to sell to finance buying another one. This clause stipulates that if the buyer sells their house before a specific date, the sale of your home to them can go forward. If not, the deal falls through.
Other types of contingency clauses you may come across are:
- Appraisal contingency: home must be appraised at a minimum amount specified by the buyer;
- Inspection contingency: the buyer has the right to inspect the home within a certain timeframe;
- Mortgage contingency: the buyer will obtain financing for their home within a specific timeframe;
Often, these clauses are added by buyers doing their due diligence or even trying to secure the property they’re interested in. However, they’re no guarantee that your house will sell. In fact, they allow the buyer to back out of the sale without any penalties if their conditions are not met. What’s more, the clauses will keep you in a stalemate that could prevent selling your property to other buyers in the meantime.
4. The Buyer Is Not Pre-approved for a Loan
Although buyers are not required to be pre-approved for a loan in order to buy a house, expecting them to be is perfectly reasonable. As a seller, you will save valuable time when dealing with pre-approved buyers. On the other hand, waiting for the lender’s letter could slow things down, and you even risk losing out by not prospecting a better offer. Also, be wary of buyers who are not pre-approved and bring contracts full of contingency clauses to the table. Again, this can cause serious delays in selling your property.
5. The Buyer Is Asking for Cashback
This request may seem harmless at first, but it’s a major red flag. Buyer cashback requests usually take two shapes. In one scenario, the buyer will offer to overpay for the house, then ask you to wire back the difference at closing. In other cases, the buyer will send you too much money for the deposit, realize their ‘mistake,’ and ask you to send back the extra. The main thing to keep in mind is that this practice is illegal. Essentially, this is a method used by scammers to defraud the lender and can land both you and the buyer in jail.
6. Buyer Refuses Legal Parties Involvement
As a rule of thumb, never sign a contract that you don’t fully understand. Especially when it comes to real estate. Legal terminology can be complicated, and it’s within your right to ask for professional assistance if something doesn’t make sense. But if your buyer refuses to let you have a lawyer look over the contract they’ve drawn up, that should be an instant red flag. Similarly, be cautious of buyers who refuse to work with a title company or using a notary to formalize the deed of sale and who are suspiciously pushy about getting your signature on the contract.
7. Cash Purchases
At first glance, finding a cash buyer for your property sounds like excellent news. Not having to wait on all the mortgage-related documentation alone can be a real time saver. However, home cash purchase offers are not always as good as they seem. They’re often a sign that the buyer doesn’t actually have the money to buy the house and can’t qualify for a loan. Sometimes, offers from a cash buyer can also signal a scam. You can protect yourself from potential cash buyer scams by requesting ‘Proof of Funds’ documentation and asking for a non-refundable deposit that’s at least 5% of the selling price. If the money for the deposit is paid by check, always wait until the check has cleared.
8. Interest from ‘We Buy Houses’ Companies
If you receive a call or email from a ‘We Buy Houses’ company, don’t get your hopes up too soon. Admittedly, some of these companies are legitimate, but even then, selling your house this way can take years. And in some cases, you may be dealing with a scam. The most common signs that you’re dealing with a ‘We Buy Houses’ scam are upfront application fees, offers of foreclosure relief, or contract clauses that prevent you from selling your home to someone else if you change your mind. In addition, ‘We Buy Houses’ companies usually target distressed properties, so if your home falls in that category, you need to be extra vigilant.
9. Something about the Buyer Feels… Off
So you’ve finally found a buyer interested in your property, but for some reason, your gut instinct warns you against them. Perhaps they’re not asking the type of questions a home buyer should ask and just skipping straight to signing the contract. Maybe they’re a bit too keen on buying the house sight unseen. Or perhaps it’s just suspiciously difficult to get in touch with them or their agent. Of course, there could very well be a reasonable explanation for this behavior. But, in the worst-case scenario, it could be a sign of a scam.
When in doubt, never hesitate to enlist the services of a professional, such as a real estate agent or a lawyer. Remember that your property is your biggest personal asset, and it’s in your interest to capitalize on the equity you’ve built up in a way that’s both legal and financially advantageous.