Congratulations, your house is PENDING! Now what?
By Kathy Schmidt, Broker/Owner, Schmidt Realty Group Inc.
If you’ve ever sold a home, you’ll know how much work it is to get it ready. From de-cluttering to cleaning to staging… it takes a lot of time and energy. Then those first showings happen and it’s so exciting! Whether you get an offer right away or it takes some time to find the right buyer (because there absolutely is one for every home!), when the offer comes there’s a sense of relief. We’ve done it! We’ve got an offer on our place! It feels a bit like you’ve crossed the finish line, but the truth is you’re only part way to the end of your marathon.
Most pending offers include buyer conditions. Essentially the buyer is saying… I’ll buy your house if I can get my financing. I’ll buy your condo if I’m happy with the condominium document review. I’ll buy your townhouse as long as I’m satisfied with an inspection from top to bottom. The truth is, not all pending offers come to completion. Thankfully, most do, but there are a lot of things that need to happen between PENDING and SOLD. Let’s look at a few common scenarios:
- The buyers have been pre-approved so you’re counting on financing being 100% done. Not so fast… pre-approvals are great, and they should be done, but once there’s an accepted offer the bank will do an even deeper dive into the buyers’ financing. They’ll want to see notices of assessment and if a buyer is self-employed, they’ll look at the business as well as the individual. Secondly, the pre-approval is for the person, not the property. In other words, the buyer might be approved to spend $650000 but if the appraisal comes in lower than the purchase price, or if there’s a major issue on inspection that needs a price renegotiation, the bank might not approve the property, even if they’re happy to lend the money to the person. Make sense?
- A condominium document review is an important step for any purchaser buying a condo. This is because the unit they’re purchasing is only part of the purchase. A condo buyer is also buying into a corporation, and that includes their assets and their liabilities. The condo review looks at future expenditures by reviewing the Reserve Fund Study… this document shows the likely expenditures needed to maintain the property in the future, considering everything from parkades and elevators to roofing! They compare this to the amount in the Reserve Fund / Contingency Fund and look to see if what the owners are paying into this fund will be enough to cover these future expenditures. A buyer might look at this report and decide that they aren’t comfortable with the plan. At the very least, buyers often have questions at this point that are usually best answered by the condo management company. In the end, they’ll either proceed now that they have a better understanding, or they may decide to withdraw their offer, or they may approach the seller for a price adjustment, to cover any extra “cash call” for repairs at the condo in the future.
- Inspections are a common cause of discussions and renegotiations after an offer has been accepted. When a buyer hires a professional inspector, that inspector may find something about the property that even the seller didn’t know! For instance, what if the furnace is on its very last legs and we’re approaching winter. The seller may have thought they had at least another 3 years with that furnace, but the inspector may discover that’s not the case. In this situation, the buyer may ask the seller to replace the furnace, or they may ask for the price of the furnace to be taken off the accepted price of the property. Or, most commonly, the buyer and the seller agree to share the cost, since the buyer wasn’t expecting a brand new furnace, but they do have a fair expectation to be able to heat their home when they move in.
As you can see, there’s a lot that goes on in the 2 weeks between “Yay, we’re pending!” and “Yay, we’re SOLD!”. Your REALTOR® is there to guide you through the process, and frankly a huge amount of our time is spent handling these sorts of questions and issues. The good news is, your friends at Schmidt have safely guided thousands of sellers through these issues and have celebrated with a lot of smiles and SOLD signs. The tricky part in all of this for a seller is this… while the buyer is doing their due diligence, there’s not much that you can do. It’s important to be ready to answer questions and help the buyers obtain the information they want and need to proceed, it’s a very uncomfortable waiting game during the buyer’s due diligence period. Your Schmidt agent will provide you with any news they hear from the buyer’s agent, and I recommend planning some distracting activities while you’re waiting… like packing, because hopefully you’ll be moving very very soon 😉