New home buyers to the housing market do not always realize that to buy a home means competing with other interested parties. Placing a contract on a property is one phase in the process. Taking steps to avoid the failure of escrow is paramount to ensure the sale goes through. Hiring a real estate professional is an insurance policy against this scenario.
Closing a deal on a house isn’t always easy as the road is often paved with frustration and uncertainty for the parties involved. Both buyers and sellers have to deal with circumstances that they might have never encountered before and hiring a real estate agent will smooth their journey. The nature of the real estate industry allows for the unexpected and preparing for every scenario will diminish the chances of a sale falling through before closing. Here are some tips with insights to help navigate possible issues and reach the finish line at the same time as your counterpart in the transaction.
Each state has real estate laws to adhere to and specific forms to complete. They protect home buyers by giving them time to exercise due diligence while providing full disclosure. The home buyer is afforded the right to walk away for a variety of reasons. For example, if the home inspection reveals needed repairs or structural deficiencies, the escrow can fail.
The disclosure is another example that buyers review that may raise concerns negating the deal. These scenarios show the importance of enlisting the expertise of a real estate agent. Knowing the conditions of each MLS listing, the value of comparables for the area and the ability to negotiate are other critical skills they bring to the table.
It is essential that you don’t misplace the seller's disclosure statement or the purchase contract and closing statement. If you work with a real estate agent, either them or your escrow officer will provide these documents for you at closing. All these documents should be kept in case something unexpected happens when escrow closes. Having them on hand might help you avoid any later trouble. Having a real estate attorney on your team will offer an added layer of security as their expertise can provide you with more than just tips. The suggestions offered here should not be taken as legal advice. Legislation, as mentioned earlier, can differ from one state to another, so having local legal representation and counsel is always a good idea.
The financials of the deal can also prevent the closing. To buy a home, individuals have obligations and responsibilities beyond down payments. One accounting sticking point is confirmation of the necessary pre-qualification of the home buyer before contracts are made. Rejection by banks means there are no funds to make the purchase. Next, buyers will also need to refrain from any new credit activity until after the closing to avoid moving the debt-to-income ratio numbers to maintain their creditworthiness.
Finally, the issue concerning the appraised value differs from the bank’s figures and the outside contractor. The discrepancy would be the cause for sellers to rebuff the offer. While this is often out of the home buyer’s hands, it has a direct impact on the success of the deal. The real estate agent will be aware of these risks and can give the necessary advice to prevent them.
For buyers, a substantial earnest money deposit increases the level of confidence and interest in the sale. Doing this in the first 24 hours after your offer was accepted will motivate the seller to move forward with the sale. A pre-approval or, even better, a loan commitment shows the seller security that the financial aspect of the process is taken care of. The seller should refrain from contacting their insurance agent until the purchasing contract has been recorded just in case. Depending on how the payment plans were, they might get a refund for their homeowner’s insurance.
The benefit of a cash purchase is not only motivating sellers with a large sum of money upfront, but also simplifying the whole process. Like this, the transaction is no longer dependent on the bank. The seller and buyer decide when they close or what the price is. The buyer isn’t subject to the lender’s mercy and does not have to deal with appraisals and inspections from them. If the seller has other offers on the table, submitting a full cash offer can help buyers win bidding wars. The buyer and seller are in control and the only safety measure required is a financing contingency.
Being cognizant of contingencies is another critical factor that can cause the real estate transaction to fail. A contingency would be repairs made by a certain date or sellers closing on a new home before selling the old one. The experienced real estate agent has the knowledge to write contingencies and review them with buyers. They can monitor deadlines and manage communications to avoid complex problems. To buy a home, those in the real estate market need this expertise to verify that conditions are met to mitigate any surprises.
The most common contingencies in real estate that buyers must fulfill before closing day are:
Regardless of whether you work with a real estate agent to smoothly navigate the real estate process or not, knowing how to negotiate makes a big difference. Several methods can improve your chances of becoming a homeowner or a successful home seller based on your means and flexibility. For instance, a simple escalation clause increases your chances of becoming the new owner of your dream home in the current highly competitive market. Through this, you ensure that, up to a certain limit set for your budget, your offer will outbid any other offers on the home you set your eyes on. Sellers can submit a counteroffer either way if it’s in their best interest but that does not mean that your offer is refused, it just means that the price was increased. Know that if you follow this path, a lawyer will be required to write this clause within the contract.
Homes purchased with a mortgage will require you to start the payment plan one month after closing. Depending on your situation, you can sweeten the deal for the seller and offer to pay “rent” for the first month of occupancy or allow them to remain in the home for that extra month. While these aspects are best to be discussed in advance if the seller needs more time, either of these two options will increase the chance of the sale going through. Otherwise, the seller might have to reject the offer as your timeline does not fit with theirs.
The real estate process has many moving parts, with several professionals involved in the transaction. This includes attorneys, bankers, and real estate agents, and real estate brokers. Buyers should be clear that partnering with firms that can meet the demands is as important as finding the perfect MLS listing. If you are asking yourself what real estate attorneys do, just follow our real estate tips and advice column to find the answer.
For more information regarding the ways through which you can ensure that your real estate transaction does not fall through, you can contact us or comment in the comments section below. We understand that diving into the real estate market without a life-preserver is risky, which is why we advise you to do your homework and delegate work to professionals. Whether they are real estate agents, attorneys, inspectors, or financial advisors, their knowledge and experience can be hired. Like & Share this article with friends and family that might embark on a real estate adventure. In today’s market, having all the tools available to make an informed decision is essential.