Buyers and sellers want to get to the closing table. Buyers may be eager to move in before their child’s school year starts. Sellers could be in the process of buying another home that is contingent on the sale of their previous one. If you have ever been through this, you may remember how stressful a real estate transaction can be. It feels like your life is up in the air. In addition, it can be demoralizing when a deal falls through despite the time, money, and emotional commitment you’ve put into it.
We wanted to go over the common reasons why people never reach the closing table, so you (along with your attorney and real estate agent) can adequately mitigate these challenges.
Getting Final Loan Approval
First-time home buyers may not know how extensive the loan application process is. Pre-approval is drastically different from final approval. Though the former takes minutes, the latter takes months of submitting documents showing your income, assets, credit, and other requests from the loan’s underwriter.
With that in mind, be honest and forthright during your pre-approval process. Anything short of sheer honesty is short-sighted. You jeopardize your loan when your paystubs and income statements don’t match your original claims. Another common error buyers make is taking on more debt before their loan is approved. Typically, lenders advise their clients not to make purchases over a specific dollar amount until final approval has been given.
The Value of the Home Comes Back Low
If you make an offer on a home for $200,000, and it gets accepted, you will have to get the property appraised during the due diligence period. (This may not be required during all-cash sales.) If the appraiser’s report states the home is worth $150,000, then the lender will not likely loan you more than the home is worth. As a buyer, you need to be prepared for this hurdle. You can use your own cash to make up the difference, or you can renegotiate the sale price. Buyers may be willing to entertain that because:
- They know the lender will not loan you enough to cover the original offer
- They don’t want to start over with another buyer
- They are eager to sell the home (for a multitude of reasons)
- They may run into the same issue with the next buyer if they go back on the market without adjusting the price
Get in Touch With a Real Estate Attorney
As eager as you are to get to the closing table, you may be quick to sign a lengthy document to advance to the next step. When you work with a real estate attorney, you have someone who not only wants to help close the deal but will protect your interests along the way. At Auricchio Law Offices, we review every contract to ensure it is written correctly and that you are fully aware of what you are committing to by signing them. Before you begin your next real estate transaction, contact Auricchio Law Offices to schedule a free consultation.
Auricchio Law Offices
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