Real estate purchases are expensive and complex. Even just the offer to buy usually involves submitting a multiple-page contract with many specific details about the terms of the offer. When a seller accepts an offer, both parties eventually meet for a closing where they sign paperwork, transfer finances and pass the title from one party to another.
If you have made or accepted an offer on a property, congratulations. Up until your closing, however, you will need to watch for these three possible issues that could delay or completely derail the transaction.
Problems with the title search
A seller can only transfer ownership of a property when the title is clear. The lender for the buyer will require title insurance, and many cash buyers will buy their own title insurance to protect their investment.
Sometimes, the policy research phase for title insurance turns up title blemishes like unpaid liens against the property or someone else’s name on title. For example, perhaps someone never recorded the deed removing their ex-spouse from the title of the home, and now they can’t reach their ex to have them sign a deed. Such issues can definitely complicate a sale.
Issues with the appraisal
New York City is famous for having a strong real estate market. Buyers often need to be competitive about what offers they make if they hope to become homeowners. Buyer competition might lead to someone making an offer so high that the appraisal comes in lower.
The lender providing the mortgage may not agree to finance the full purchase amount, forcing the borrower to either use more of their liquid capital for the purchase or possibly bringing the whole transaction to a halt.
Unexpected property defects
You could live in a home for six years and never realize there’s an issue with the foundation until after an inspector comes through and spots the warning signs you would never have noticed. You can tour a property with your real estate professional and think that you have a good idea of its condition, only to learn that the roof actually has completely rotten decking and requires replacement.
Depending on the extent of the issues discovered during inspection, the buyers may back out of the sale or attempt to renegotiate the price. Sellers may also sometimes agree to split the costs of certain repairs just to move forward with the transaction disrupted by surprises during the inspections.
Understanding what hiccups might disrupt your real estate transaction can help you plan to protect yourself in case it takes longer to complete or the sale completely fails.