Not every deal in real estate has a happy ending, just ask our President. Just because you have a willing buyer and seller doesn’t mean the deal will go through 100% of the time. Throughout the process there are many potential pitfalls and problems along the way that can derail your transaction at any time. Fortunately for you, most of these can be solved with a little negotiation and give and take among the buyer and the seller. When an issue makes itself known, both you and your real estate agent need to think the problem through and come up with an agreeable resolution for everyone involved using critical thinking and solid reasoning. These unexpected issues arise on almost every transaction; but its how you deal will them that separates a failed transaction from a successful one. The following post details our four resolutions for common problems that can derail a transaction.
Low Appraisal.Agreeing to a purchase price is often just the start of the transaction. If a buyer is using lender financing, they need to order an appraisal. In order for a lender to sign off on the appraisal the value of the appraisal must match, or exceed, the purchase price set by the seller. Typically, this will be the case unless the property has major flaws, unique characteristics, or the buyer was willing to overpay for it. Having the appraisal come in low does not always mean your deal is dead. To remedy this situation the buyer can first contest the value by giving the appraiser additional comparables. If the appraiser doesn’t budge, then the buyer can attempt to order a new appraisal and hope the value is different from the first one. From the seller’s perspective, the only real option that they have is to consider lowering the price to meet the appraised value. This may not be ideal but a new appraiser with a different buyer may just net the same results and end up costing you more money and time.
Financing Problems.Although things have gotten easier on the mortgage side of things in recent years, getting approved for a loan is far from a sure thing. There are still several hurdles needed to get past before your loan is cleared to close. A good lender or mortgage broker should know what these hurdles are prior to submission, so you don’t necessarily need to know how to jump these hurdles going in. But it can never hurt to do some of your own research to better understand how to approach these challenges. Once the deal is in the preliminary stages of approval the issues will be cut and dry. If it is just a matter of gathering documents or tracking down paperwork you should be open to an extension. But, if the seller is continually looking for extension after extension then you know you have a problem and you should take steps to rectify it.
Credits. Getting an interested buyer and seller together should, in theory, result in a net a sale. However, there are times when seemingly minor issues end up resulting in major problems. A seller may want a certain item removed, or left in the property as part of the contract; without it, they may look for some other sort of compensation and if this isn’t easy for your to agree on it can cause a big problem. As a buyer, you need to be careful not to overplay your hand and ask for items that are unrealistic. On the seller’s side, don’t let a few hundred, even a few thousand dollars, stand in the way of a much higher return. Spend the money to have the item removed, even if you don’t think you should. At the end of the day as long as you are satisfied with the bottom line don’t let pride or stubbornness get in the way.
Closing Dates.All buyers and sellers want to move on their terms. Sellers want to close as quickly as possible and buyers want to close when it is convenient for them. This is almost always a case of finding a middle ground and meeting in the middle. Sure, this may put you in limbo for a few days, even weeks, but it should not ruin the deal. Unless your market is booming with buyers, it may make sense to take the deal and figure things out. As a buyer, you may have to ask to break your lease or find a place to store your stuff, but this is a small sacrifice to make for a house you really want.
There are many things in a real estate deal that could prevent you from not moving forward. But with these four tips we hope we have showed you how to best avoid these issues. The key is always your agent, any real estate agent can close the smooth transactions, but it is when your agent pushes the difficult deals through the finish line that you will be glad you used a quality, experienced agent.