Part 3 - What Happens When A House Doesn't Close?

This is the 3rd installment in my series on What Happens When A House Doesn't Close - Part 1 detailed what happens when a Buyer breaches their contract & doesn't close & Part 2 is about how my Buyer clients benefitted from another Buyer's breached contract. Click through to catch up if you missed them! 

As I was researching & writing those first 2 posts in the series, I discovered that as the market was accelerating rapidly in 2020, 2021 & early 2022, some sellers were balking at closing because prices had risen so dramatically between the time that they sold their homes & when they were due to close...and they wanted in on that action - in other words, more money! None of my clients encountered that so it wasn't really on my radar screen...apparently it was happening back in 2017 as well, but again, not on my radar!

So what happens when a seller won't close?

What is an SPP?

In real estate speak this refers to a “condition” in an offer that makes the offer conditional on the Sale of the Purchaser’s Property (SPP) or Sale of Buyer's Property (SBP) which is the same thing. 

In a balanced or Buyers’ market this is a completely normal condition to include if you already own a home that you will need to sell before closing on a new property. Normal but not necessarily easy…

 

In a Sellers’ market, this kind of condition – or really including any kind of condition, can mean the kiss of death for your offer if you’re competing against an offer that doesn’t include that or other conditions…

 

When you’re including conditions in your offer, you’re writing them to YOUR benefit. The Seller is looking for an offer that benefits THEM. And that’s what  negotiations are for, to find terms that everyone can agree to…

 

So let’s break it down!

Insurance Issues You Should Care About!

 Is your HOME under-insured?

The price per square foot of a new build has increased dramatically over the past couple of years & often our insurance policies are not keeping up!

Regardless of where you are in the real estate space, this is an important topic to understand & take action on if needed.

First-Time Home Buyers – as you are arranging insurance coverage for your new purchase, ensure that you understand & ask how “replacement cost” is determined, “adequate limits” & “co-insurance penalties”

Homeowners Who Have Renovated – if you have “forced” appreciation on your home due to renovations then your replacement costs may have changed, depending on how your policy is written

Homeowners Who Have Re-financed to Pull Equity Out – make sure you don’t owe more than you are insured for

Homeowners/Investors Who Have Owned Their Home for a Long Time – has your “replacement cost” kept in step with market appreciation of your home

Property Values are Hyper-Local

 

-Local Matters-

I love getting questions & comments! And in the past month I've gotten a number of questions that follow the same theme...and that is, how does the selling price for a home in one area impact the value of a home in another area? Some of the homes in question are more than a hundred kilometers away from each other!

And the answer is that most likely it doesn't! It's not a relevant comparison because each area has it's own little eco-system when it comes to things like supply & demand, property values & more!

I'm sharing 1 comment & 1 question in today's post, one is more from the seller perspective & the other from the buyer's - & it's cut & paste directly from my email for the win!

The first one, a comment, came after updating someone on the selling price for a home in Wilmot Creek in Newcastle. I had noted how long it had taken to sell & the fact that the selling price was 86% of what they were hoping to get (given their original asking price). The response to this was:

Wow! I guess that will be impacting our sale too!

And my answer was as follows: