When you’re in the market to purchase a property for yourself and your loved ones, the journey can run smoothly, especially if you manage to avoid working with an unprofessional real estate agent. You found the house you can turn into your dream home, and you’re buying new furniture and packing your bags, getting ready for the move. You might also be looking to sell a property, and the buyer gives all the signals that the closing date is nearer. But then something happens. A call from your agent or directly from the other party sheds light on something new, and the situation changes.
If you are in the middle of negotiations, you might want to push through as the sale is almost complete. You’ll have your dream home, or you’ll sell your current property, and the next step is right around the corner. However, there are some cases where you would be better off just walking away from the potential transaction. Not every negotiation reaches the closing date, and not every transaction is finalized. You shouldn’t suffer through headaches, stress, and anguish just for a sale.
These are situations when you can tell the seller that the house is no longer a fit and can be put back on the market. You can move on to another property, and the seller can start looking for another buyer. Either of these situations can be frustrating if the negotiation continues, and neither of the two parties will be satisfied with the end transaction.
As a buyer, purchasing a house usually includes a mortgage. While you already made an offer to the seller, the mortgage lender demands an appraisal to determine the appraised value. Based on this, they determine the loan they are willing to give to purchase the property. If the appraised value is below the price you offered, you’ll either have to pay for private mortgage insurance or increase the downpayment to cover the amount that is not included in the mortgage. Either way, you’ll be overpaying for the property if the seller doesn’t accept the property’s appraised value.
Example: If your offer for the house is $300,000 and the appraised value is $250,000, the lender will only lend 80% of the appraised value. You’ll have a mortgage of $200,000, and instead of a downpayment of $60,000, you’ll have a downpayment of $100,000.
Every home purchase should involve a home inspection. Both new and old homes can include problems that are not always visible to the naked eye. Severe problems like termite infestations or water damage can demand costly repairs that would further affect your wallet in the long run. Home inspections can also help discover minor issues that will allow you to demand concessions from the seller. Still, an unstable foundation should tell you to walk away from the purchase altogether. This is one reason why disclosures in real estate are so important and many states take serious action in case the disclosure isn’t accurate.
If you decide to go through with the purchase, you should figure out the real cost of repairs. The last thing you’d need is to assume the cost would be $200 and wind up paying over $5,000 for the underlying problem to be fixed.
This should be a no brainer, but the construction that has been done on the house that does not have the proper paperwork and necessary permits for construction can throw you in legal battles with the local government. The blame will not fall on the previous owner but you, and while you may try to sue the previous owner for damages, that would only add to you and your family’s stress.
Besides that, the unpermitted work that has been done on the house needs to be inspected. This can mean opening walls to determine if the electrical wiring was done correctly. If the construction didn’t respect proper building codes, it will need to be fixed or torn out. The worst-case scenario might be that the inspectors decide to fine you and tear down the unpermitted upgrade, be it a pool, an added room, or a fireplace that might affect the house’s whole structure.
The reason homeowners don’t get the permits necessary might be financial or simply knowing that they won’t be allowed to make them. Prior to closing on the property, the seller has the option to fix this, but if they were stingy on the permits, they could also be stingy on the upgrades as well.
No matter how much you want and need to sell your property, some instances might be the best option when walking away. Several instances should make you stop negotiating with the buyer, even if that means that you lose that buyer. There will be others interested in your property.
When selling a property, things may come up that could have or should have been fixed. Some are understandable, and it’s best to put yourself in the buyer’s shoes and wonder if you’d buy a property that has some underlying issues. We can help you figure out what must be disclosed when you sell your home. If we talk about termite infestations or other significant issues, the story is clear. As a seller, you should fix the problem before the sale, or else you could face charges. The only problem with concessions is when they get out of hand.
Major issues with the property should be fixed prior to sale, or the cost of the required repair should be taken out of the home price. However, minor issues, cosmetic imperfections, and the likes should not be deemed concessions. Most new owners implement changes into a house after they move in, and if the buyer demands that you pay for or “fix” things that are not dangerous, you might be dealing with unreasonable home buyers. This can be like they want you to make the changes they want on the home they don’t yet own.
If the buyer doesn’t have proof of funds to purchase the property, this should be a red signal. A real estate agent can check with the buyer’s lender if they are eligible for the loan, and the proof of funds should be forwarded with the offer they make on the property. If neither can be verified, that means that the potential buyer will not go through with the transaction.
A buyer should have a prequalification ready and also funds available to deposit money into the escrow by a specific date. The former acts as a promise for the future purchase, but if the deposit wasn’t forwarded, the promise is void, and so will be the sale. At that point, it’s better to forbid the buyer to put forward another deposit and push through with the contract. Those are enough red signals to help you determine how serious they are about the purchase or able to go through with it.
When someone buys a property, a closing escrow is set. The close of escrow is the date established by both parties for the property exchange to take place. As a seller, you should move out by that date because the buyer will move in on that date. Some sale and purchase agreements (SPA) default to 6 p.m. on the close of escrow date, and the buyer should not move in before that time. The reason for that is that any damages done to the property prior to that time will have you as the one responsible for them.
Buyers can try to push for a shorter close of escrow date, but you are under no obligation to grant it to them if that doesn’t fit your timeline. You as a seller can extend the close of escrow date even after the sale was finalized, if the buyer agrees, through a different occupancy agreement that sets the length of your rent.