Why Is The Real Estate Transaction Taking Longer Than Expected?
We always want a real estate transaction to go quickly and smoothly, without any complication. However, the reality is that selling real estate is a complicated transaction. A real estate sale or purchase relies on a multitude of financial and legal variables.
In addition, there are many individual human psychological variables that will also influence the real estate transaction. Some complications behavioral traits introduce are seen more frequently than others.
What value does a Real Estate agent bring to the sale of your house?
The answer is – they can almost always get the house sold quicker with fewer delays and reduce the stress of a property sale while also maximizing the walk away profits of the seller.
How do Real Estate agents make your property transaction go quicker and smoother, without complications?
While experienced real estate agents can’t prevent all delays, they can prevent many and mitigate many others. With the proper pricing, planning, marketing, negotiations, quick thinking, and just a little luck, selling your house shouldn’t take longer than expected
30 Plus Reasons Selling Your House Takes Longer Than Expected.
First, we will take a look at some of the more common human elements that affect the real estate transaction, then we’ll look at thirty additional potential bottlenecks. Some of these are technical and others involve human behavior.
Planning Fallacy
The planning fallacy is the first real estate transaction hiccup I want to talk about. This even affects large projects that are data driven with well thought out projection models. The planning fallacy refers to the cognitive bias where individuals underestimate the time, costs, and risks of future actions while overestimating the benefits, leading to overly optimistic predictions about project completion. This phenomenon often occurs despite previous experiences indicating that tasks typically take longer than anticipated. As a result, people may commit to unrealistic deadlines and fail to allocate adequate resources, which can lead to stress and frustration when projects run behind schedule.
Understanding the planning fallacy can help individuals and teams better manage expectations and improve their planning processes by encouraging more realistic assessments of time and resource requirements. Not to mention accepting the often inevitable delays caused by system bottlenecks and unexpected or previously undisclosed requirements.
Three common biases affecting many real estate transactions.
- Optimism Bias
- Motivated Reasoning
- Anchoring Bias
Optimism bias, motivated reasoning, and anchoring bias are cognitive phenomena that impact our decision-making processes when buying or selling real estate.
Optimism Bias
Optimism bias refers to our tendency to believe that we are less likely to experience negative events and more likely to experience positive events in the future, fostering a sense of hope and confidence in positive outcomes.
Motivated Reasoning
Optimism bias is often reinforced by Motivated Reasoning, where people interpret information in a way that supports their pre-existing beliefs and desires, further skewing their perception of reality.
Anchoring Bias
Additionally, anchoring bias plays a significant role in decision-making, as individuals rely heavily on the first piece of information encountered when evaluating a situation, which can shape their judgments and expectations, often in a misleading manner.
Together, these cognitive biases create a complex interplay that can distort our understanding and approach to various life situations. But they are seen quite often in real estate transactions.
Here is a brief overview of 30 additional causes responsible for delaying a real estate transaction.
Buyer-related issues can arise when the buyer fails to secure financing due to a loan denial or when the property appraises for less than the purchase price. Additionally, loan underwriting delays can slow down the approval process, and changes in the buyer’s financial situation, such as job loss, increased debt, or a drop in credit score, can further complicate matters.
Contingency failures occur when buyers face problems selling their current homes, and incomplete or incorrect loan documents can hinder progress if essential paperwork is missing or incorrect. Last-minute credit checks may reveal new debt or credit activity, affecting the closing process. Furthermore, failure to deposit earnest money, disputes over repair requests, or the buyer backing out of the contract by exercising a contingency can disrupt the transaction.
On the other hand, seller-related issues include title issues such as liens, judgments, or other clouds affecting the title, as well as unresolved property liens like unpaid tax liens, contractor liens, or HOA dues. Problems also arise from inaccurate or missing disclosures where the seller fails to disclose property defects, along with the failure to complete agreed repairs by the deadline.
Seller complications can also stem from an inability to vacate the property on time, damage to the property after contract signing, and unresolved probate or estate issues, indicating the seller lacks the legal authority to sell. Disputes among co-owners over terms or timelines, as well as outstanding HOA violations or unresolved fines, further complicate sales. Finally, the seller backing out and attempting to cancel the sale is another significant issue that can derail the process.
Property-related issues can encompass a range of problems, including unpermitted work such as additions or renovations completed without proper permits, and significant defects or safety hazards discovered during a home inspection. Environmental hazards like mold, radon, and asbestos can also arise. Survey discrepancies can uncover boundary or easement issues, while zoning violations reveal that the property does not conform to current regulations.
Property encroachments involve neighboring structures intruding on the property, leading to easement disputes regarding access or usage rights questioned by neighboring properties. Additionally, property damage such as floods, fires, or vandalism can occur during escrow. Tenant occupancy issues may arise if a tenant refuses to vacate or there are legal eviction delays.
Lastly, unresolved utility or tax payments, including delinquent property taxes or unpaid utility bills, can complicate the process further.
All of these delays can be part of the process and are not a reason to panic or get discouraged. Real estate professionals encounter these types of concerns on a regular basis and know how and when to overcome them, as well as the ones it may not be worth pursuing. But most issues can be resolved. Real estate professionals simply make it easier for you. That is, they will reduce the amount of effort needed to deal with unforeseen issues. If you have ever seen my presentation on the “Effort Werewolf” you will know that effort always equals cost. A real estate agent can reduce the effort needed to sell or buy a property.
Here’s a quick reference list of 30 potential issues that can arise during escrow that can significantly delay a real estate sale:
Buyer-Related Issues:
- Loan Denial – Buyer fails to secure financing.
- Low Appraisal – The property appraises for less than the purchase price.
- Loan Underwriting Delays – The lender takes longer than expected to approve the loan.
- Changes in Buyer’s Financial Situation – Job loss, increased debt, or credit score drop.
- Buyer’s Contingency Failures – Issues with selling their current home.
- Incomplete or Incorrect Loan Documents – Missing or incorrect paperwork submitted to the lender.
- Last-Minute Credit Checks – New debt or credit activity discovered before closing.
- Failure to Deposit Earnest Money – Buyer delays or fails to submit the required deposit.
- Disputes Over Repair Requests – Buyer and seller cannot agree on repairs or credits.
- Buyer Backs Out – Buyer exercises a contingency to cancel the contract.
Seller-Related Issues:
- Title Issues – Liens, judgments, or other clouds on title.
- Unresolved Property Liens – Tax liens, contractor liens, or HOA dues not paid.
- Inaccurate or Missing Disclosures – Seller fails to disclose property defects.
- Failure to Complete Agreed Repairs – Seller doesn’t finish repairs by the agreed-upon deadline.
- Seller’s Failure to Relocate – Seller is unable to vacate the property on time.
- Property Condition Changes – Damage to the property after contract signing.
- Unresolved Probate or Estate Issues – Seller does not have legal authority to sell.
- Disputes Among Co-Owners – Multiple sellers disagree on terms or timelines.
- Outstanding HOA Violations – Unresolved fines or violations from a homeowners’ association.
- Seller Backs Out – Seller attempts to cancel the sale.
Property-Related Issues:
- Unpermitted Work – Additions or renovations without proper permits.
- Failed Home Inspection – Significant defects or safety hazards discovered.
- Environmental Issues – Mold, radon, asbestos, or other environmental hazards.
- Survey Discrepancies – Boundary or easement issues discovered in the property survey.
- Zoning Violations – Property does not conform to current zoning regulations.
- Property Encroachments – Neighboring structures encroaching on the property.
- Easement Disputes – Access or usage rights questioned by neighboring properties.
- Property Damage Before Closing – Flood, fire, or vandalism occurs during escrow.
- Tenant Occupancy Issues – Tenant refuses to vacate or legal eviction delays.
- Unresolved Utility or Tax Payments – Delinquent property taxes or unpaid utility bills.
When you are ready to sell, give me a call to learn how our team of real estate professionals can assist you in the efficient sale of your home.
As always “I am wishing you the very best in life.”