It’s a long road between the purchase offer to closing day when you are buying or selling a home. Homebuyers will have to slog through tons of paperwork related to inspections, appraisals and financing approvals. Sellers need to do their part to keep the property ready for inspection to facilitate the processes required to transfer the title to a new owner. With all the requirements for a real estate closing, it is no small wonder if the transaction sails through without a hitch.
Buyers and sellers should remember that keeping the lines of communication open will help to resolve issues that arise. More importantly, having an experienced real estate specialist on hand to mediate the problems will pave the way to a successful closing. Real estate agents who have been around the block will have a handle on typical and not-so-typical issues faced by buyers and sellers.
Appraisal is Below Expected Value
Financing companies and real estate regulations have led to more stringent rules on property appraisals. As the housing market emerges from a period where home values tanked due to foreclosures and a poor economy, appraisers have no choice but to use the most recent sales of comparable properties. Having a savvy real estate agent on your side can help turn this issue into a bargaining chip.
Inspection Reveals Significant Defects
No home is perfect, so a thorough inspection will always reveal something about the home that needs work. Cosmetic issues and problems already stipulated in the purchase offer may be excluded from consideration. However, issues such as evidence of defective plumbing, outdated electrical systems and roof problems can be deal breakers. Motivated sellers may agree to a discount provided buyers accept the property on an as-is basis. Buyers need to assess if the costs of repairs and the stress involved is worth the discounted price. Some problems may be insurmountable, in which case, the best solution would be to walk away from the deal and start over.
Buyer Fails to Qualify for Financing
Buyers who take the necessary steps to gain loan pre-approval rather than just pre-qualification can hasten the closing process. Make sure that the rate is locked in and all requirements are turned in to ensure approval of the home loan. However, life happens, and buyers’ financial circumstances can change quickly. Financing companies can withdraw their loan commitment when the buyers’ debt-to-income ratio changes because of loss of income or needlessly incurring a large debt prior to finalization of the loan.
The Final Walk-Through Reveals Major Problems
Shortly before closing, buyers have to schedule a final walk-through. Sellers would already have vacated the property at this time, which may reveal problems such as damages due to moving or previously camouflaged by large furniture. Buyers should take pictures to present at the closing table. If sellers agree to compensate buyers through additional discounts on the sale price, the transaction should close smoothly, and everyone would go home happy.