The three most common reasons home sales fall through

The three most common reasons home sales fall through

To help sellers prepare themselves for any possibility, shares some of the most common reasons for why property sales fall through before the deal can be concluded:

1. The buyer's bond application is rejected

Especially now that interest rates are so high, the possibility increases that the buyer might not be able to qualify for the full bond amount they once thought they could. If this happens, and the buyer is unable to source the funds elsewhere, the sale will fall through. This is why sellers often prefer cash offers or offers where buyers have been pre-approved for a home loan, either by their bank or through a bond originator.  

2. Suspensive conditions aren't met

A suspensive condition is something that needs to be met before the transaction can proceed. Bond approval is one of the most common, but there could be others included in the OTP. These would normally be listed as follows: "[...] is subject to and conditional upon the fulfilment of the following suspensive conditions:". The buyer would then list the conditions, which could include things like the seller needs to remove any structures that do not have planning approval, or the home needs to pass an additional home inspection arranged by the buyer. If agreed to by both parties, these conditions need to be fulfilled before the sale can proceed.

3. An issue is uncovered during the required inspections

Before the sale can go through, the seller needs to acquire the necessary certificates of compliance (CoCs) to show that the home meets the minimum standard for safety. This includes an electrical, plumbing, gas, and beetle compliance certificates. If an issue is discovered, the seller needs to fix it at their own expense. If, for whatever reason, they take too long to do so, the offer might expire and (depending on the wording of the OTP) the buyer can choose either to extend the offer or cancel it.

Electrical compliance 

• Certifies that the electrical installation on the property complies with the required safety standards (governed by the occupational health and safety Act)
• Often remedial work is required which may take some time (best to attend as soon as possible)
• The certificate is valid for two years unless alterations are made prior to the expiration date
• Parties cannot contract out of/agree to waive

Beetle certificates

Certifies that the accessible wood of permanent structures, on the property, does not contain any wood destroying beetles

• Usually valid for 3 to 6 months
• Not governed by any specific law, but has become practise upon change of ownership of property
• If parties agree that no certificate is necessary and the bank requires it for the purchaser's bond, then this is for the purchaser's expenses 

Gas certificates 

 Certifies that the gas installation on the property complies with the Occupational Health and Safety Act and requires safety standards

• A certificate must be obtained on installation
• If any change or amendment is made, a new certificate must be obtained
• Cannot contract out of or agree to waive

Plumbing certificates 

 Only applicable to transfers within the municipal jurisdiction of the City of Cape Town

• Certifies that the water installation at the property is in line with the City of Cape Town Water By-laws
• A new certificate must be obtained upon every change of ownership
• Parties cannot contract out of this or agree to waive
• NB! Does not confirm all plumbing works in perfect condition!

What does the plumbing certificate confirm?

• • the water installation conforms to the national building regulations;
  • the property's water meter is in working order;
  • there are no defects that can cause water to run to waste; and
  • no rainwater leaks into the sewerage system

Electric fence 

 Certifies that the electric fence installation complies with the required safety standards in terms of the Occupational Health and Safety Act

• An existing certificate may be transferred by the seller to the purchaser
• A seller need only provide a new certificate to the purchaser if a change was made to the installation after the current certificate was issued
• If sectional title, obtain from the body corporate
• Parties cannot contract out of/agree to waive

To help avoid the chance of the offer falling through midway, both buyers and sellers to be as transparent with their chosen real estate professional as possible. The more information both parties provide to their real estate agent, the better their chances will be to avoid complications down the line. As experts in the property industry, real estate professional can often provide solutions before they become problems - but this can only happen if they are aware of the possible issues upfront. If ever you are unsure of something, rather speak to your agent and ask for clarity.