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Selling a Home? Beware These Buyer Red Flags When You Sell Your Home

Posted by Justin Havre on Tuesday, July 11th, 2023 at 8:00am.

Common Red Flags for Home Sellers to Watch Out ForWhen the time comes to sell your Calgary home, there is more to selling than simply staging your home and putting it on the market. Choosing the right buyer is just as important, as a good buyer will help ensure the process of selling your house goes smoothly. Failure to select the right buyer could lead to home selling delays or even a canceled purchase contract. Here's what you need to know about common red flags that sellers need to watch out for.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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Common Home Selling Red Flags

Home buyers tend to follow a pattern. Good home buyers send their paperwork promptly, ask for what is fair and not more, and work with a real estate professional. Uncooperative home buyers will display warning signs that stand in stark contrast to good home buyers. For example:

Asking for Extra Contingencies

Contingencies are clauses in the home buying contract that enable the buyer to back out of the purchase without losing their earnest money. If your home buyer is asking for extra contingencies that other buyers do not normally use, this could be a sign that your buyer is having a hard time committing to a property.

Errors on the Home Purchase Agreement

The home purchase agreement should be clearly laid out and error-free. If the home purchase agreement is missing information, or if the information on the agreement is incorrect, this could be a sign that the buyer doesn't know what they're doing, or that the buyer's real estate agent also doesn't know what they're doing. This could lead to delays throughout the home purchasing process.

Abnormally Low Purchase Offers

It's frustrating for most home sellers when the purchase offer they get is very low. A very low offer could be a sign that the home has been poorly priced, or that the home buyer has very limited resources.

If the buyer has limited resources, they could run into problems getting approved for a mortgage. Even if the buyer is able to get approved for a loan, they may still ask for many home improvements, because they won't be able to afford them after moving in. Either way, a very low offer is a problem for the seller.

Buyer is Not Preapproved

Pre-approval and pre-qualification are two different steps of the loan approval process. Pre-qualification is the first step. It's often easy to get pre-qualified by answering some questions over the phone. Pre-approval is the second step, and it requires the home buyer to submit documentation to the mortgage lender. This documentation supports the buyer's answers during the pre-qualification process. Often, during the pre-approval process, the lender will discover new information that changes the buyer's approval status.

Buyers who are able to get pre-approved are much more likely to qualify for a loan at the end of the escrow period. Buyers who are only pre-qualified may be facing a nasty surprise when the time comes to buy a house.

Requesting a Lot of Repairs

Unless a house is not in good condition, many buyers will not request a lot of repairs up front. This could be indicative that the buyer has unrealistically high expectations that could become a recurring theme throughout the home purchase process.

Low Earnest Money

The earnest money check is the deposit the home buyer puts down at the start of the escrow period. The earnest money check goes into an escrow account, and is held until the home purchase process ends. If the home buyer backs out of the home purchase contract at a time when the purchase agreement does not allow, the buyer will lose the earnest money deposit.

Sometimes the size of the earnest money check is a sign of a buyer's commitment. Sellers should weigh the size of the earnest money check when considering which home to purchase.

Know When to Reject a Home Purchase Offer

It's exciting to get an offer on a home. Many sellers are tempted to accept the first offer they get because they're afraid that there won't be another offer, or the next offer will not be as good. This is when it's important to work with a real estate agent.

A good real estate agent will be able to help the homeowner determine whether an offer is worthwhile. If the offer is not good enough, the real estate professional may recommend that the homeowner reject it. Sometimes, all it takes is patience to succeed in a real estate transaction. Rejection of one offer could lead to a better offer, just given a little time.

Real estate agents are also trained in the art of negotiation. If an offer is too low, or the number of contingencies unreasonable, the real estate professional can help the homeowner decide whether it's worthwhile to negotiate a better offer.

How Can a Seller Identify Potential Red Flags?

When interviewing prospective buyers, look out for signs of dishonesty such as when they tell exaggerated stories or give vague responses about their financial situation. If a buyer refuses to provide proof of funds or submit necessary paperwork quickly and accurately then this could indicate that there may be problems down the line. Furthermore, if a buyer insists on making unusual demands like asking for additional concessions beyond what was previously agreed upon then this could be cause for alarm as well.

It's also important to closely examine all offers received from potential buyers before accepting one. Be sure to read through each offer thoroughly and check for any discrepancies or loopholes that could lead to disagreements later on in the process.

Finally, don't forget to trust your gut instinct when evaluating different buyers; if something doesn't feel quite right about a particular person then don't hesitate to move onto another option instead! Keeping these tips in mind will help ensure you find the best-suited buyer for your property – one who won't bring any unexpected surprises along with them during closing time.

Should Sellers Always Avoid Buyers With Red Flags?

While it's true that potential buyers with red flags should be carefully considered, it's not necessarily true that sellers should always avoid them. One or two red flags may be common among buyers, as asking for concessions or adding extra contingencies isn't unusual in the real estate process. Sellers should watch out for when a number of red flags crop up at once, rather than just one or two.

It's also important to remember that buyers with red flags come with their own set of benefits as well. They tend to be more flexible when negotiating price and willing to accept non-traditional payment plans such as rent-to-own agreements or seller financing options. This can help make selling easier for sellers who are looking for alternative ways of completing the sale without going through traditional lenders or real estate agents.

Sell Your Home With Confidence By Avoiding Common Home Buyer Red Flags

No matter what kind of buyer you end up working with, always remember that your ultimate goal is getting your house sold quickly and easily while still maximizing your profits from the sale—even if this means taking a bit more risk by working with buyers who have red flags attached to them. Do ample research on potential buyers before making any decisions so you can feel confident in your choice no matter what path you decide upon in selling your home!

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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