Acquiring residential real estate is a very lengthy process. First-time home buyers often experience weeks of legal limbo that can be anxiety-inducing and frustrating. A relatively low level of housing inventory may force aspiring buyers to spend weeks or months searching for the right home and making offers on various properties. Even once a seller accepts their offer and the buyers schedule a closing, things could still go wrong with minimal advance warning.
Issues that arise between when a buyer makes the offer and when they actually sign the final paperwork could delay or possibly prevent the transaction. For example, the following issues might affect a pending real estate transaction.
Financing challenges
Issues with financing can arise for numerous different reasons. Perhaps an appraisal of the property returns an unexpectedly low amount. If the appraised value of the home is below the price offered by the buyer, the lender may refuse to finance the transaction or may limit the funding provided based on the appraised value of the home. Other times, changes in the buyers’ financial circumstances might make them ineligible for a mortgage. An increase in their total debt levels or a sudden drop in income might make them unable to secure a mortgage.
Property issues
Sometimes, people uncover concerning defects with a property after submitting their initial offer. Perhaps the inspector finds latent defects that the seller had not previously disclosed. Maybe a surveyor determines that the boundaries of the parcel do not fall where the seller previously indicated. It could be the final walk-through right before closing that exposes significant damage caused by the seller’s moving out or removing fixtures that should have remained with the property.
Any of those issues might force the buyers to renegotiate and could lead to the cancellation of the closing. Personal issues affecting either the buyer or the seller, ranging from a sudden divorce announcement to a death in the family, could theoretically prevent a real estate transaction from occurring. Buyers need to protect themselves from the risk inherent in real property by learning about their rights and submitting offer documents customized for their protection.
Addressing potential challenges preemptively can take much of the risk out of purchasing residential real estate. Buyers who include the right contingencies and other terms in their documents have less to lose if a closing doesn’t occur for some reason.
