Have you or one of your team members ever had a buyer back out of a purchase? Did a  seller back out of a sale for a better offer? Or maybe the deal went through, but it took longer than everyone expected. 

Canceled or delayed real estate transactions aren’t uncommon, but that doesn’t mean there won’t be fall out from unhappy buyers or sellers. Even if the deal does go through but is delayed, the extra time can have a significant financial effect on your client. 

While some actions of buyers and sellers are out of your hands, real estate professionals  should do what they can to reduce delays and failures to close on real estate sales. Doing so leads to better outcomes, happier clients,  and a reduction in risks to your business. 

Top Reasons for Canceled or Delayed Real Estate Transactions 

Let’s start by looking at some of the reasons real estate transactions fail or get delayed and steps you can take to minimize your risks. 

Some common reasons buyers back out of a real estate purchase include:

• Failure to secure financing
• Job loss
• Medical issues
• Failure to sell the home they are currently in
• Unexpected problems found in the home inspection
• Lower than expected appraisal 
• Seller’s failure to complete repairs or follow other agreements or covenants
• Title issues, such an unlisted co-owner

In some cases, like not being able to obtain adequate funding, the buyers are unable to go forward with the purchase. In other cases, they may choose not to, for example if there are major issues with the house or the seller fails to do repairs as agreed on. 

Even if the buyer wants to go through with the purchase, any of these issues can lead to delays, which can be costly.

Delays in communication or late filing of paperwork can lead to delays too. 

Minimizing Risks of Failed or Delayed Real Estate Transactions

Because there are so many things that can stop or delay a closing, you want to do everything you can to keep things on track. 

To make sure you and your team members are taking appropriate steps to minimize delays, make sure you are doing everything you can for a smooth process — and have systems in place to encourage clients to follow through on their contractual expectations. 

Here are 5 things you can do to increase the likelihood of delayed transactions: 

• Build an experienced and qualified team. Make sure your team understands the importance of meeting deadlines, communication, and documentation. Team trainings and check-ins can help keep your team strong. 
• Communicate well. Respond to buyers’ questions quickly to keep the process moving. Avoid downplaying delays or being overly optimistic when talking about timing. Make sure to communicate any deadlines or responsibilities of your client to them.
  For example, if you are working with sellers, make sure they understand any contractual responsibilities for repairs and the deadline to have them done. If you are working with the buyers, make sure they are clear on the deadline for the initial deposit and have the information they need to make it. Keep communicating throughout the process. 
• Have systems in place to reduce delays on your end. Systems for completing and submitting paperwork helps keep the process moving smoothly. These systems can help you stay on schedule and also make sure nothing gets lost in the shuffle.
  You’ll also need systems for when somebody is out to make sure there are no delays in submitting paperwork, arranging access to the property for inspection, or anything else that needs to happen within a tight timeframe.
  
• Make necessary changes early. Changes to the Closing Disclosure generally go to the lender for approval, and this takes time. If you need to adjust fees or commission splits or anything else, make changes as soon as possible. The closer you get to the closing date, the more likely you are to face a delay. 
• Document and keep good records. Good documentation can help you out of sticky spots. Keep good records of all of your communications with clients throughout the process. 

Although the buyer and seller are responsible for their own actions and contractual obligations, you and your team can be proactive in helping them meet those obligations and keep the sale moving forward. In doing so, you reduce the likelihood of problems between the buyer and seller and the risk of facing a lawsuit yourself. 

Protect Yourself Against the Risks

Finally, make sure you have adequate insurance to protect yourself against the risks. CRES Insurance offers customizable policies, so you can choose the coverage that best suits the needs of your real estate business. 

With CRES Real Estate E&O + ClaimPrevent® policies, you also have pre-claim legal advice included. Sometimes catching something early can help prevent an actual claim. 

CRES has individual E&O policies as well as company E&O policies to help keep you covered. As part of one of the largest insurance brokers in the world, we have access to more real estate E&O policies than just about anyone.

To learn more and get a quote, contact the CRES team at 800.880.2747 or get an online quote (select your state in the right-hand column to get started.)