Your Home is NOT SOLD when the contract is signed!
The signing of the contract is just the beginning and there is still a long way to go.
Many times a real estate transaction between the seller and buyer can start out smoothly but as Realtors know the transaction can unravel for a number of reasons. Understanding some of the potential problems and being prepared can help you avoid them.
1. Buyer changes his/her mind or gets cold feet. All residential contracts have a option period which allows the buyer to cancel the contract for an agreed upon number of days. The option period and monies paid for that option are negotiated by the parties to the contract. During the option period a buyer can exercise their right to terminate the contract at any time for any or no reason. Most of the time the cancelation is the result of an inspection. 2. The inspection may bring to light items that the buyer is not prepared to repair or the seller and buyer can not agree to the needed repairs. The inspection is typically done by a licensed professional inspector that will examine the home and identify problems. This process can many times introduce elements that can disrupt the transaction or end it altogether. 3. The buyer can not secure a loan. With all the changes in the lending industry it is not uncommon for a buyer to be denied financing. A good listing agent will encourage you to ask for a pre-approval letter from the buyer before agreeing to a offer. However, a buyer may still find as they go through the underwriting process that they do not qualify. The time allotted in the Third Party Financing Addendum will be the buyer and sellers guide as to the return of earnest money and to whom the earnest money will be returned. 4. The home is not worth the purchase price. Unless the transaction is a cash purchase the lender will require an appraisal of the home prior to making a loan. The home must appraise for the sale price or the lender will not loan the money. 5. Title problems. The title company will send each party to the transaction a commitment for title insurance along with schedules and exceptions to coverage. It is during this process that any liens against the property will be brought to the attention of all parties. Easement issues or ownership issues will also be discovered at this time.
As one can see many factors can derail a promising real estate deal. The above list demonstrates just a few of the most common problems that a seller and buyer should be aware of.
Whether you are a buyer or a seller, your Realtor can help you avoid many of these scenarios and provide you with good advice and resources should a problem arise.
For more real estate tips, advice and information about buying, selling or leasing please email or give me a call.
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