A contract is signed. The buyer and seller and are excited. But both parties should take a deep breath, because there’s still a long way to go. Unfortunately, sometimes real estate transactions that start out just fine unravel for any number of reasons. When you’re aware of these potential problems, you may be able to avoid them.
A buyer is entitled to change his mind
The residential contract includes a termination option. This is an option a buyer pays for that gives him the ability to get out of the contract for a certain number of days. The amount the buyer pays and the length of the option are negotiated by the parties. The buyer’s right to terminate the contract during the option period is unrestricted. That means he can call the whole thing off for any reason whatsoever. A prospective buyer may get cold feet, change his mind, find a property he likes better, or learn something about the property that he didn’t know when he negotiated the contract. Or he doesn’t even have to offer a reason.
Upon closer inspection …
Speaking of learning additional information about a property, most buyers hire a professional inspector to thoroughly look over the home and identify problems. Most of the time, this occurs during the option period. When an inspection turns up something significant, the buyer may decide to exercise his option or he may decide that he still wants to proceed. He also may attempt to amend the contract, either by changing the price or by getting the seller to make repairs at the seller’s expense. Obviously, this introduces elements that can disrupt the transaction or end it altogether.
Show me the money
It’s not enough for a buyer to tell the seller how much he will pay for the home. If the purchaser isn’t able and willing to pay cash for the property, he will need a mortgage. And if he can’t get that financing, that’s a deal killer. What happens next when a buyer cannot secure a loan depends on how the contract was filled out. In some instances, the buyer may be on the hook for the earnest money – sort of a good-faith deposit – he paid. In other cases, the buyer will receive a refund of his earnest money.
It’s just not worth it
Even if a buyer can qualify for the loan amount, the property may not. That is, most lenders require an appraisal of a home prior to making a loan. The lender wants to know that the collateral for the loan – the property itself – is actually worth the purchase price.
What’s in a title?
Some homes have title problems that can grind a transaction to a halt. Perhaps there’s a lien on the property or an easement that affects the quality of life of the property owners. There may even be a claim that the person selling the home isn’t the true owner after all.
The list goes on …
As you can see, there are many ways a promising real estate deal can crash and burn. Add the following to the list above: agreed-to repairs that the buyer deems unsatisfactory (or that aren’t made at all); a surprise during the final walkthrough of the home, such as an item that was supposed to convey that is no longer in the home; a sudden request right before or at closing; and plain-old default. Whether you are a buyer or seller, your Texas Realtor can help you avoid these scenarios and give you good advice when a potential deal-killer does arise. Sometimes, your Realtor may suggest you turn to a lawyer, inspector, engineer, or other professional for assistance; other times, your Realtor may be able to put things back on track with a phone call or two. Either way, it’s nice to have someone on your side to help you achieve your goal of buying or selling a home. For more information, I invite you to visit TexasRealEstate.com.
For your real estate needs, please contact RE/MAX Genesis at 830-833-2000.