Here in the DC Metro/Northern Virginia area, inventory is so tight in certain price ranges that there are often multiple potential buyers for a home. You worked hard, staged your home just right, and the asking price for your home attracted multiple buyers. You now have an accepted offer, and are sailing toward closing. Nothing could go wrong, right?
Not so fast.
Problems can and do arise during the time it takes to get to closing. Here are just a few potential issues that could arise.
This happens semi-regularly in areas like Northern Virginia, where short supply drives up prices and bidding wars between multiple buyers can cause a competitive frenzy. The desire to win may override common sense. After sleeping on it for a few days, or after finding out that their mortgage company may require them to come up with the difference between the appraised value and the offer price, the buyer may regret the purchase. The buyer can back out. It’s bad form, and you’ll get to keep all or part of the earnest money as consolation, but you’ll be back to square one.
Yes…this is a thing! You may think you are ready to move, but as you start packing, the memories start flooding in about all the things you love about your home. The kids’ growth marks on the door jams, years of sweat equity to get the home just the way you like it, the little tree in the backyard you planted on your first anniversary (that isn’t so little anymore!), whose branches provided shade and whose trunk served as home base for many games of hide-and-seek. Yeah…you may not be as ready as you think. You may be able to back out of the contract, but expect to pay a heavy penalty to the buyer, and the buyer DOES have the right to sue to enforce the contract.
Mortgage Underwriting Issues
Pre-approvals, while they certainly help mitigate potential problems down the road, do not guarantee a smooth closing. Sometimes buyers are pre-approved who shouldn’t be, through human error or an oversight, but the more stringent underwriting process will shed light on these issues. Sometimes, buyers just make rookie mistakes…they go buy a car, or they put a bunch of furniture for their new home on credit. Any changes to credit or major purposes will stall the mortgage process.
Challenging Inspection Results
Getting a pre-inspection will help you, as the seller, know what hidden problems could be lurking in the recesses of your home. However, if the buyer’s inspection turns up major structural issues, mold, or other issues that impact the value of your home, the buyer may decide to walk away.
Appraisers Gone Amuck
Appraisers are human. They make mistakes. Sometimes mortgage companies send appraisers that are from outside the area, and they don’t know that your home is situated in the most desirable section of the best subdivision in town. Or the comps present a challenge in determining the overall value. Whatever the reason, if the appraisal comes in low, it could impact the mortgage approvals. The mortgage company may refuse to lend the amount necessary to close the deal, if the appraised value will put the buyer in a negative equity position. These results can be appealed, and new appraisals ordered, but not without cost and delay.
Disputes Between Buyer/Seller
It’s extremely important to be clear on the seller disclosure what conveys with the property and what does not. The antique chandelier in the dining room that belonged to your great-grandmother may have to stay with the house, unless you disclose that it doesn’t convey. Even better, remove it and replace it with a different fixture before you start showing the home.
If the seller agrees to make any repairs after the inspection report comes in, the buyer may dispute that the repairs were done properly. It’s best to use contractors that provide warranties to complete this work. It might be tempting to DIY to save money, but it’s not recommended. You have enough on your plate with the move. Avoid the cost of redoing the work by using a licensed contractor that will warranty their work.
Someone Drops the Ball
While this doesn’t happen often, it is possible for human error to impact your closing. The closing process is time sensitive, with many moving parts. There are tasks that need to be completed by the mortgage company, the title company, and the realtors on both sides. If any tasks are missed or delayed in the process, it could hold up closing. Potentially, it could even cause one or both parties to walk away from the deal (especially if there is tight timing between the sellers closing on their new house, or the buyers closing on their previous home).
The Bottom Line
While there are a number of things that can go wrong between an accepted offer and closing, you can help mitigate these issues by using an experienced, professional Realtor® with a proven track record of successful closings. The right agent can help shepherd the process, provide the best advice, and keep the contract process flowing smoothly. The Gresh Team can help you ensure the best possible outcome on the sale of your home.
If you have any questions about the selling process, give me a call at 703-328-3434 or send me an email at [email protected]. We can discuss specific details about your property and what you can expect from The Gresh Team to help mitigate problems in the contract process. I look forward to hearing from you!