There are all kinds of issues that can arise between signing a contract for sale and the actual closing. Realtors always say don’t spend your commission ‘til the check is in your hand, and that is good advice.
The first thing as both a seller and buyer you should do if the buyer has a mortgage contingency is to get a full prequalification of the buyer’s financial position and their ability to get a mortgage. The next stumbling block is the property appraising, again if there is a mortgage contingency. Lenders will not loan money for a property that does not have the value that was agreed upon between the buyer and seller. If this happens, a compromise can be reached by the buyer upping their down payment or the seller reducing the price of the home.
The dreaded home inspection applies to all sales and is where everyone in the transaction holds their breath. Licensed inspectors are checking primarily for structural damage to the property, wood destroying organisms and mold. In addition, home inspectors also check systems including septic, electrical, plumbing, heating and air conditioning and appliances. Frequently issues that come up in a home inspection are the result of deferred maintenance.
Usually, an agreement can be made between buyer and seller to either repair the defect or to give the buyer the funds to do the repairs. However, if an agreement can’t be reached, the transaction is canceled and the parties go their separate ways. It’s not uncommon for sellers to obtain their own home inspection at the time the property is placed on the market as an enhanced marketing tool and a heads up for sellers if there are potential problems.
The final step prior to closing is purchasing title insurance. There are two types of policies: One is the owner’s policy, which protects the owner if there are any future title issues, and the other is the lender’s policy protecting the lender, required if you are getting a mortgage. The premium for title insurance is a one-time fee issued only after the title company has conducted a search of the public records and cleared the title for any liens or restrictions that would affect ownership.
After you’ve finished the closing dance, the closing paperwork will be concluded, the deed recorded and the new owner usually walks away with the keys to the property and takes possession immediately. Like every aspect of a property sale, it sounds more complicated than it is. There are a variety of professionals along the way to help and advise you, and the majority of the time everything goes smoothly.
A final note about the national sales statistics for June reported by the National Association of Realtors. The number of properties sold were at a nine-month low, completely decimating the spring sales season. However, sale prices rose to $435,300, a record in data going back to 1999. As a comparison, Manatee County single-family home median home sale price for June was $440,000, down 15.2% from last June.
With the home prices high and interest rates not moving, buyers are sitting back and not making purchasing decisions. The one glimmer of hope is a possible rate cut in September at the Federal Reserve’s next meeting.
Meanwhile, if you are fortunate enough to be in contract on a property, be aware of all the pitfalls that can creep up before you get to the closing table. And if you’re not, chill out at the beach.
