You’ve been eyeing a property for weeks, and after some back and forth, they finally accepted your offer. While that’s something to celebrate, the deal isn’t done yet. The next step is closing on the property, transferring money, and ownership of the home. And, unfortunately, this can often be where everything comes undone. Here are 5 things that could go wrong when trying to close on a house.
Not all mortgage lenders require a pest inspection, but it is in your best interest to have one done. If they find evidence of a visible infestation, you can find out if the problem can be treated or if the property has suffered structural damage. If the issue can’t be repaired before closing or the seller won’t pay for it, you can walk away from the purchase agreement assuming your contract has the right contingencies.
Defects Found in the Inspection
Most purchase offers have a clause that says you can walk away from the purchase agreement if the home inspection reveals serious issues with the property. Depending on how the contract is written, you may lose your earnest money if you don’t buy the home based on the property inspector’s results.
You can try to negotiate with the seller to have the problems repaired or ask for money back at closing to pay for the repairs. If you require them to repair the issues, it may delay the closing date.
This is different from finding out that the house is in a high-risk area such as being in a flood or earthquake zone. That information is often legally required to be given to buyers during escrow, so you know about it upfront.
Title issues can prevent you from closing on the house. The person selling the house may not have 100% ownership of the home. There may be allegations of fraud or forgery, such as when someone tries to fake a signature to sell a home co-owned with someone else, or there may be liens and judgments against the proper.
To prevent issues like this, you can work with people like the bay title company that will allow you to do a thorough title search, flagging potential problems before you get any further in the property buying process. Title insurance can also cover issues like fraud, forgery, and liens against the property, but you want to know this before the insurer has to pay out.
Problems with the Appraisal
Mortgage lenders require an independent third-party appraisal to be done on the property. This is done to protect their interest in the home, since they may end up owning it if they foreclose on it, learn how to manage it and contact the London housing market to review your options.
If the appraisal comes back saying the home is worth much less than initially thought, there are several potential options. One is asking the seller to lower their price. Another is demanding they pay you the difference between what you’ve borrowed to pay for the home and what it is actually worth.
Sometimes one side or the other gets cold feet. The buyer found a better or cheaper house, so they want to back out of the purchase deal of this one. Or, the seller decides not to sell or sell to someone else who offered more money. If this happens, know that you as the buyer have the right to collect damages from the seller.
A lot of things can go wrong during the procedure that prevent you from closing on the property or needing to renegotiate the deal. However, you can take steps to protect yourself from unnecessary stress in the final steps of buying or selling a home.