After an offer is accepted on a home, a period of vulnerability
in unleashed for both buyers and sellers. It is important to understand different milestones that need to be
passed as discussed in yesterday’s Consumer Tip Tuesday. It is also important to understand that all
sorts of unforeseen circumstances can arise in between these milestones and
that is why we urge potential clients to ALWAYS use an agent! You need someone who is familiar with these hiccups
as well as someone who knows what that means for the deal. Almost always terms will need to be adjusted
to remedy hiccups. Let’s go through some
together.
Major Inspection Hazards
This tends to be the first hurdle to jump for both sellers
and buyers. Say a buyer paid to have a
home inspection (as they should) and the inspection report reveals issues such
as polybutylene pipes, large amounts of mold, a moist and shifting crawl space,
or an electrical panel that is not up to code. These are all significant safety concerns that would cause issues and
would need to be addressed in order to pass lender standards. This is where your agent comes into play
with negotiating a new sales price, a buyer credit for future repairs (if
repairs do not need to be done in order to secure financing) or some other
creative option to keep the deal alive. This is also when an agent can help give realistic pricing and
recommendations if the deal is still worth pursuing.
Home Does Not Appraise
This is a less likely scenario but it still happens often. As discussed in previous blogs, not all
appraisers are created equal. Say the
buyer is trying to secure FHA financing, the appraiser/inspector will have a
more detailed list of requirements and they will most likely use a more
conservative figure. Conservative
appraisals are used when they are government backed or if a home owner is
trying to secure additional funds for construction and home improvements. These lenders want to lower their level of
risk. Very understandable but it can put
a seller in a pickle. Your agent will
structure your offer with an appraisal contingency. This means that if the house does not
appraise within a certain amount of time (typically a 21 day period), the buyer
has the right to walk away from the deal and still get their earnest money
back. The deal can be renegotiated to
the appraised price and continue as normal, but expect pushback from
sellers. Again, your agent is the person
that will get this sorted out for you.
Contingency to Sell Buyer’s Home Before New Purchase
This contingency is seen often especially when dealing in a
more suburban area. A lot of times,
buyers will need the funds from the current house they own in order to qualify
for the new house they want to purchase. Sellers are agreeable to this unless they know they have other potential
buyers. As a buyer, your agent will help
you create a strong offer in order to negate this potential headache. This is another contingency that has a
time-frame. If the buyer cannot meet this
obligation, it is time to renegotiate. A
seller would have a lot of time vested at this point and may ask for additional
earnest money or a price increase. This
is not something you would want to negotiate on your own. A lot of emotions are involved in situations
such as this. Agents from both sides
will work together to come up with a creative solution.
Underwriting Extension
So the inspection looked great, the appraisal came back fine
but now the lender has set conditions on the buyer that no one was
anticipating. This setback could cause
the deal to not close on its original proposed closing date. THIS HAPPENS A LOT! While some buyers and sellers are flexible
with their moving arrangements, other times people are squeezed for time. A buyer might have a lease that ends and they
will be out of a home, a seller might be trying to purchase another home and
now that closing will be affected and the same can happen with the buyer in
regards to selling their current home. More negotiations for the agents to work out.
Are you beginning to see how valuable your agent is to the
success of your transaction? They are
not just paper pushers. There are so
many other unknowns that can come into play, but these are some of the more
common ones to keep in mind. Buying and
selling real estate is an exciting adventure. If you equip yourself with a great agent and a basic foundation of what
to expect, you can and will be successful!
-Published by guest writer, Jana Lambros
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