Dear Heather,

I have received an offer on my property. I am so excited! But my agent tells me not to get too excited yet. What could possibly go wrong?

Seller

Dear Seller,

When a buyer makes an offer the first thought that crosses my mind is how I can help to prevent the many things that can go wrong between accepting the offer and the closing.

The sellers, on the other hand, are ecstatic and happy to have received an offer, and they aren’t pondering possible catastrophes; in their mind the house has sold.

They are focused on closing, and might even be wondering why they needed an agent in the first place since all of this appeared so simple to do.

They are not thinking about the upfront work that went into placing a house on the market for sale; pricing the home correctly can mean several hours of researching other properties that have either sold, are on the market or didn’t sell.

They are not thinking about the photography which may have required several visits to get the right shot in the right light, or even drone footage. They are not thinking about how long it took to prepare the brochure, maximum web coverage or online promotions.

They are not thinking about how many times you may have shown the property on their behalf, introduced it to other agents or held open houses. No, all they see is an agent who listed the home for sale and quickly produced a buyer and now their home is sold. In their book this means end of story.

But whoa …. not so fast. Accepting an offer is only the first tiny step.

There are many more steps to be taken before a home can be considered “sold”. A lot can go wrong after an offer has been accepted, even before the home goes into contract.

This is when your choice of a listing agent becomes evident. Did you hire an inexperienced agent who may handle these many stages poorly or a discount agent who might not offer closing services at all?

There are so many things that can throw off a closing. I’ll just hit the biggest obstacles and leave the smaller issues for another day:

1. A higher offer comes in

There are a few days between the seller accepting the offer, and signing the sale and purchase agreement. This can present problems for both the buyer and the seller. If a house is desirable it is becoming more frequent to see additional offers coming to the table in that timeframe. As an agent it is our fiduciary duty to present those offers to the seller. Remember, higher isn’t always better; it is the offer with the least conditions that is the best. Be sure the buyer is aware that their offer and acceptance is not binding until all parties have signed the sale and purchase agreement and a ten per cent deposit has been received. Even then, a contract is not a done deal until all the conditions have been met. So if the offer that comes in is either higher or cleaner or both, the seller can legally change their mind and accept it.

As a buyer it is a good idea to move forward with putting down your ten per cent deposit as soon as possible, as it shows the seller that your intentions are serious.

Vice versa, it is during this time period if a buyer gets cold feet that they can drop out.

2. Building survey

Sometimes buyers opt to have a structural survey done on the property they are hoping to purchase; usually these properties are in a state of disrepair or the buyers intend to remodel them. Some buyers decide not to buy after they review the structural survey — which they can if it is a condition of the contract — or they can “move the goalposts” so to speak and ask the seller to repair issues, or be compensated by way of a price reduction. Some home purchases fall apart after the structural survey is received if buyers are not familiar with home ownership and are unaware that it is indeed a rare thing that a structural survey comes back with every single item in perfect condition.

3. A low appraisal

Most buyers need to obtain bank financing and whilst preapproved, the bank will send an appraiser out to value the property and make sure they deem it worth what the buyers have offered to pay. If the appraisal comes in below the accepted price it means the bank will not offer financing over and above the appraised value. This means the sale cannot go through as agreed. Sometimes in these situations both the buyer and the seller go back to the drawing board to negotiate a new price.

4. Bank financing

Perhaps the mortgage officer who preapproved the buyer did not gather all of the facts or, the buyer did not disclose them or their circumstances have changed. Buyers’ circumstances change all the time. Maybe the buyer is divorcing and the soon-to-be ex-spouse refuses to sign necessary paperwork. Maybe the buyer’s employment income was dependent on bonuses that can’t be substantiated or there is a judgment filed against one of the borrowers. Lots of things can go wrong in underwriting.

5. Buyer possession

Sure, the sales agreement defines the closing date but it doesn’t do any good if the seller can’t move out or the buyer suddenly needs to move sooner, both of which can happen for many reasons. Difficulties can arise when coordinating the move-out date, scheduling the final walk-through and making sure there are no surprises: all repairs have been completed as agreed and the home has been left in the condition that was agreed in the contract. Remember, buying is not like renting, most of the time houses are sold in “as is” condition.

A good agent can emphasise the need for flexibility and calm nerves, both of which are often in short supply the closer it gets to closing. Sometimes the best course of action is to extend the closing or arrange a seller rent-back.

6. Boundary problems

Before a property can be conveyed it has to be surveyed and the stakes have to be located or replaced. Sometimes a new plan has to be produced if the old one is difficult to read or not in metric (a new requirement). A boundary survey can sometimes reveal encroachments, easements and other anomalies. It is usually a condition of contract which can cause a sale to be severely delayed (by months and months) whilst it is sorted out. If the boundary problems are severe and don’t appear to be readily resolvable, it can cause the buyer to back out altogether. If encroachments, easements and right-of-way issues cannot be resolved, the sale cannot go forward as the seller must be able to give good title in order to meet legal and bank requirements.

7. Title issues

In order for the property to be conveyed a lawyer has to receive the title deeds, review them to ensure title is good and draw up the new conveyancing documents. In rare cases the deeds cannot be found. Reconstructing them is a lengthy legal process and can cost over $10,000. Failure to be able to give good title will cause the sale to fall apart.

It sounds overwhelming, but if you are in the hands of a good agent they can guide you through the process step by step.

Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated confidentially