Few things induce anxiety and frustration more than having a home sale delayed, especially when your belongings have been loaded onto the moving truck.
Yet, few paths from contract to closing are without an obstacle or two.
Good real-estate agents are attuned to red flags that come up, but consumers should also be aware of potential problems and how to avoid many bumps in the road.
“Purchasing a home is an intensely personal and emotional process. It is not uncommon for minor hiccups to become major issues due to the emotional nature of the transaction,” says Walt Danley a Coldwell Banker agent in Phoenix.
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Here are some of the most common:
1. The buyer has an existing home to sell.
Even if potential buyers have a mortgage preapproval and claim they can buy without selling their current home, some of these buyers balk when the deadline nears.
Quite often, the mortgage approval disappears, says Don Bruemmer, a broker with Plumb & Co. in Salt Lake City.
To troubleshoot a dilemma like this, and spare sellers the loss of valuable days on market, Bruemmer specifies a mortgage contingency requiring the buyer to apply to two mortgage companies.
A refund of the deposit would only be given if the buyer is declined by both companies.
2. Underground oil tank or an old septic system.
Environmental issues can muck up a deal, especially in states with strict regulations.
Underground oil tanks were popular in the Northeast at one time but are now considered a hazard because of potential leaks. Typically real-estate agents suggest sellers remove tanks before putting the home on the market.
Septic regulations vary by municipality and some states such as Massachusetts require a system be inspected and meet strict standards before the home is sold.
The repair or replacement can be expensive and time consuming, so sellers should get the necessary approvals ahead of time.
However, they should follow the timelines and dates required by their state and/or municipality.
3. The lender is unknown to the agents.
Delays in approvals and last-minute changes in terms can snag a deal.
Experienced agents suggest having the buyers be preapproved by a second lender, one both agents work with and know can complete the work in a timely fashion. Then if a glitch comes up there will be a fallback.
4. Phone calls or e-mails are not returned.
Good communication speeds negotiations. When title companies don’t respond or when an agent dodges calls, it can slow down the process or be an indication of a brewing problem.
Although there is no absolute solution, the best precaution is to be proactive.
If the seller is a bank, or the owner needs the bank’s approval (because the home is selling for less than the mortgage), the process can take much longer than a typical sale, and there is little real-estate agents or buyers can do to hurry the process.
5. A property-disclosure statement was left unsigned.
The property disclosure informs buyers about any known problems or defects of the property and explains what sellers have done to repair or resolve them. The price offered by buyers should take the disclosure into account.
Experienced agents won’t allow sellers to agree to an offer until the buyer signs the statement.
6. Out-of-town appraiser.
Appraisers unfamiliar with a type of property, price bracket or area are a caution flag for agents.
Even if there have been multiple bids on a home, banks and mortgage companies will not go above the appraised value.
Buyers can still complete the purchase but will have to close the gap between appraised value and sale price with additional cash.
Sellers should ensure agents can back up the list price with recent comparable sales. Although they can’t influence appraisers, agents can give them this information.
7. Garages turned into rooms and other additions.
Often the necessary permits were not obtained, have been lost or the municipality can’t locate the records. Usually this occurs when the owners have been in the home a long time.
Real-estate agents should be on the lookout for potential problems like this. Many will do the research to locate lost documents.
8. Inspection opens the door to new price negotiation.
Home inspections are performed to uncover hidden defects that are not easily observable to consumers and agents.
Sellers should be proactive and repair everything they can and/or get estimates for any work they know needs to be done, since even minor issues can have buyers questioning the price.
Also, rather than have any repair items deducted from the price and possibly delay the mortgage approval, some agents suggest sellers make a separate payment to the buyers.
Michelle Bellasari with Real Associates Florida Properties in Boca Raton, Fla., says she troubleshoots potential defects ahead of time, such as roof repairs that might be a deal breaker.
Most of her first-time buyer clients have limited funds and cannot afford to inspect a home if there are obvious and expensive near-term repairs.
9. A change in the terms of a mortgage.
Suddenly payments on a 15-year mortgage seem too high or high fees offset a low interest rate. Changing terms can restart the clock and delay a deal.
By law, a lender is required to provide a good-faith estimate of fees and rates within three days of receiving a mortgage application.
Even if they are only being prequalified for a mortgage, potential buyers should ask for a good-faith estimate so they understand fees and rates.
10. An unknown lien is uncovered.
Old paid-off mortgages that have not been registered are the most typical title issue uncovered. In rural areas, water rights, property lines or other easements can cloud the chain of ownership and they are often not uncovered until the title is researched.
Experienced attorneys who specialize in real estate can often find a solution so the sale proceeds on time.