In A Midsummer Night’s Dream, Shakespeare wrote, “The course of true love never did run smooth.” The course of buying and selling a house isn’t exactly in the same league, but there are plenty of things that can go wrong in the process once the purchase offer is accepted. While an issue may affect a buyer or seller, the end result affects both parties. Until there is an actual signed closing, there’s always the potential for something to go awry.
Say the buyer makes an offer at the asking price, and the seller agrees. That’s a deal, right? Not so fast – unless the buyer is paying cash, the lender has a say. That means the house requires a professional appraisal. If the appraisal comes in below the asking price, the lender will not approve the mortgage. The parties have a few options here. The seller can agree to sell at the appraised price, or the buyer may agree to make up more of the difference between the original price and the appraisal in cash. The seller may also challenge the appraisal. In a hot market, recent comparable sale prices, or comps, may not reflect the very latest sales. The house may have unique characteristics that make finding true comps difficult.
This is the ticking time bomb. The seller may think the house is in good shape, and it appears that way to the average observer. The home inspection, however, turns up serious issues, such as foundation issues, termites or mold. A seller may want to spring for a home inspection prior to putting the house on the market, so the odds of unwelcome surprises are lower.
Buyers must also know what is and isn’t a dealbreaker when it comes to a home inspection. Sellers should agree to make minor repairs or reduce the selling price by the few thousand dollars needed to make them, but buyers shouldn’t expect major price reductions for relatively basic fixes.
The Deal Falling Through
A buyer’s offer made in good faith on a home may not work out that way. It’s possible they can’t come up with deposit money, or the amount of money they expected to borrow for the mortgage isn’t approved. Job loss, health concerns, divorce and a host of other life circumstances can change the buyer or seller’s status overnight, and these aren’t items either party can foresee.
If the contract contains a contingency clause stating that the buyer must sell their house before buying the new property, a deal falling through on their end means the deal falls through on the seller’s end as well. It’s a domino effect if the seller had a similar clause in the contract of a home they planned to purchase.
Buying and selling real estate involves tons of paperwork. Any documentation error can set the process back. A title company may discover liens on the property or cloudy title conditions. These situations are usually repairable, but can delay closings and subsequent move-in dates.
Your real estate agent can help you avoid many of these pitfalls. They know the things that can go wrong when buying and selling a house, and whether you are the buyer or seller, aim to have the course of the sale run as smoothly as possible. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com