Things that could go wrong!
The unspoken words, and situations you forget about in the excitement of buying a home. It's such a happy time, and I don't want to be negative, but until you go to closing, and everything is funded, closed, and keys in hand....things can go wrong!!!!
So let's just jump right in to the few situations that could come up.
1) Inspections - So, the whole purpose of an inspection is to find out what may be wrong with the home. Usually if there is something wrong this is the Buyers opportunity to ask the Seller if they would be willing to fix said issue. Now, don't be offended by this, but they don't technically have to fix anything under the terms of an AS-IS contract. Should they if it is a major item? Yes, to feel ethically okay and to sleep at night they should, but they don't have to. Now, if it is something major, we could run into financing issues with the lender, but that is a different issue.
This is also the time where you decide if you want to continue with the contract if you feel the items are a little more than you want to take on. So if you end up canceling the contract during the inspection period you will lose that money invested in the inspection. Usually about $250-$500.
2) Next is the APPRASIAL - This is a big one!!
This is a lot of times where I see people lose the deal to a number of reasons.
The most common reason - If you are asking the Seller to pay some or all of your closing costs. It becomes an issue when you really NEED the closing costs to make the deal close. So, we get to the appraisal point, and it appraisers under the contracted purchase price Seller and Buyer have agreed to. For Example, Seller and Buyer have agreed on a purchase price of $200,000 and it only appraises for $190,000.
Side Note: You have to look at this from both sides so we will start with the Sellers side. They technically do not see it if you are the buyer in this situation buying the home at $200,000. If you are asking them to pay for up to 3% of the purchase price in closing costs then to them it really looks like $194,000.
So with that being said, when the property appraises at $190,000 and you still need closing costs now the number goes from the viewed offer of $194,000 to $184,300. So you can see how this would become an issue.
There are cases where the Seller comes back and says "I will sell it to you at the appraised value and agree to come down to the $190,000, but I will no longer contribute closing costs". Uh Oh, you can see how this poses an issue...especially if the buyer really needs the closing costs to make the deal work.
When you look at it from both sides the Seller sees it as, he is losing money, and that now he knows what it has appraised at he can sell it to someone for $190k, and not pay any closing costs. Again not to sound negative or harsh but it is not the Sellers fault if you as a buyer need the closing costs assistance.
In the same respect, I feel for the buyer especially if they are on a budget and don't have a ton of money to buy a home, but want to fulfill that dream of owning a home.
Its something to consider when buying a home. If you need closing costs, you have to know this is a VERY REAL situation that happens often. So just being aware this can happen, helps prepare you to make sure you have the appropriate money saved for cases like this.
If you have any more questions on this matter I would be happy to answer them! I hope I didn't leave anything out because this is one that I see often.
Now, if you do have the funds and everyone agrees then you can move on to closing. :)
Happy Buying & Selling Folks!
Happy Monday :)