For those purchasing real estate, having a seller accept an offer often feels like a victory. Although it may mean that someone is in the home stretch, an accepted offer does not mean the race is over yet. Plenty can go wrong before people sign final documents and transfer a title for property to new owners.
It is impossible for individuals to foresee every potential issue that could impact a pending real estate transaction, but it is still possible to protect oneself as a buyer from the most common issues that arise.
1. Issues with financing
Sometimes the people who intend to purchase real estate are not able to because they do not have the capital required to complete the transaction. Economic downturns could decimate the holdings of prospective cash buyers, forcing them to walk away. A job loss, although a temporary setback, might mean that someone cannot get the mortgage they needed to finance the purchase. It may even turn out that the buyer offered more than an appraiser thinks the property is worth, leaving them with an appraisal gap and a lender who doesn’t want to finance this transaction even though they will still provide a mortgage.
2. Issues with the property
Sellers have an obligation to buyers to communicate any known issues with the property and to preserve the home in the same condition until they leave and give possession to the buyer. Sometimes, an inspection will uncover significant defects with the property that convince the buyer to back out of the transaction. Other times, some kind of issue could occur, like a fire, before closing that leaves the home in far different condition and motivates the buyer to back out of the transaction.
Those who make offers on real estate typically try to protect themselves from these unforeseeable cancellations by including contingencies in their offers so that they don’t have to worry about losing their earnest money if a sale falls apart before they sign final papers. Understanding the issues that can complicate residential real estate transactions can help buyers and sellers better manage what may be the biggest transaction of their lives.