Once the buyer and seller agree on a price, the paperwork is signed and it heads off for the bank for them to do their part, you want to breathe a sigh of relief right? Well hang on, because it’s not always over as there are some pitfalls that can happen – problems that can cost you time and money. The good news is, often times, these problems can be corrected, but in the worst-case scenario, the home you just made an offer on can slip from your grasp.
Banks don’t loan money until they know more about your home purchase which is why they hire an appraiser to make certain your new home is worth what you are paying and what they are loaning. Banks have been sitting on a record number of foreclosures in the past seven years, and they are watching carefully to be sure more aren’t added to the total. Appraisers will determine the home’s value by comparing recent sales of nearby homes in the area. So even though you and the seller have agreed on the price, the appraiser has the final word. It helps if you get an appraiser that knows your neighbourhood however, the banks choose who to send out. However, don’t throw in the towel if the appraisal comes in low. Over 15% of sellers will agree to lower the price if the appraisal comes in below the agreed upon price. What we suggest: Always, hire an agent who has a wealth of experience in the neighbourhood you select. An agent can tell you if a home is overpriced, and, if they feel the appraiser is wrong, they can show them the neighbourhood comps to see if a mistake has been made.
Yes, this is what many consider the second stage of negotiations when dealing with a home purchase. Home inspections are common deal breakers when a buyer and seller can’t reach an agreement over repairs. I always suggest the buyer attend the home inspection appointment. This is the perfect time to ask questions and get a rough estimate on how expensive any repairs will be. Once the report is finished, an agent and buyer will carefully go over each page and determine what steps to take next. For sellers, I also recommend that they get inspections BEFORE a property is actively on the market. While buyers will still get their own, it gives everyone, buyers, sellers, agents, a better idea of what to expect.
Failure to Disclose
Again, this is where it’s important a buyer has an experienced real estate agent who knows the neighbourhood at their side. When information isn’t disclosed and the buyer finds out that the vacant property next to them will soon be a supermarket, or a drug den was recently discovered two doors down from your property, it’s not a good time. For sellers, again, disclose, even when in doubt. Problems always escalate when buyers find out any problems during the contract phase. Many buyers walk out of a deal because they simply lose trust in the seller. They simply feel the seller is hiding more information and they don’t want to waste any more emotional time or financial investment in the property.
Whatever you do as a buyer, don’t think that the bank won’t find out if you go and buy expensive furniture, appliances and run up your credit while you are waiting for escrow to close. Your credit can change in a nano second. All mortgage companies conduct a final credit check before finalizing the paperwork. Hold off on any major purchases until you are well settled in your home. There was one case where a client bought a car and when the bank found out, they cancelled the loan as their credit ratio was now too high. It wasn’t until the client borrowed money from his parents to pay for the car did the bank reconsider.
Contracts often fall through because the necessary paperwork is not completed. Buyers need to make sure they take the time and provide the necessary information to their real estate agent and mortgage companies in a timely manner. Without it, a deal won’t go through. Make sure you have a real estate agent where communication is key. When lots of people and documents are involved, it can be a confusing and often crazy time. It is important to have an agent that knows what they are doing so the paperwork is turned in on time. Return phone calls and emails as quickly as you can to keep the ball rolling.
All buyers want their home purchase to be successful as well as a good investment with the least amount of stress possible. Hiring a professional real estate agent who has excellent recommendations, who understands what you can afford while carefully researching property values are just some of the steps you can take prior to looking for homes. While issues can arise when buying a property, I have found that those who think with their heads and not get too emotional about the process have a head start in successful home buying. Remember, this is a huge expense and investment. Whenever a buyer has a question or concerns about the Windsor home buying process, remember that we are here to walk you through.