Buying residential real estate can be a relatively involved and lengthy process. People often need to wait for weeks after making an offer before they can close on a property. Even then, the transaction could still fall apart at the last minute, leaving them back in the search stage of home buying.
Those hoping to buy real property often need the process to move forward along the specific timeline to avoid financial setbacks and logistical challenges, such as not having anywhere to stay if they cannot take possession on the agreed-upon date.
Some issues might lead to closing delays, while others might require its cancellation entirely. What challenges might lead to a residential real estate transaction falling apart instead of closing successfully?
Inspection issues
Buyers can make an offer on a property that seems to be in excellent condition, only to learn later that the property is not how it appears. The inspection process could turn up signs of issues that weren’t obvious during a walkthrough. An inspector might find latent defects with the wiring or the foundation that drastically alter what the property is potentially worth. Either the buyers or their lender might want to cancel a transaction because of what the inspector finds at the home.
Appraisal issue
Sometimes, there aren’t any surprises about the condition of the property but instead an unexpectedly low appraisal. What buyers think the home is worth and what a real estate professional believes it is worth could be very different figures. A substantial appraisal gap could lead to the cancellation of a closing because someone cannot finance the full purchase price like they initially thought they could. Shifts in the local real estate market or buyer enthusiasm could contribute to the likelihood of an appraisal gap preventing a closing from taking place.
Financing issues
Maybe a buyer needs to sell certain investments to have the capital necessary for the transaction. If the market takes a sudden downturn, they may not be able to come to the table with the full agreed-upon price. Financing through a mortgage can be equally unpredictable. Even pre-approved buyers could find themselves denied a mortgage if they lose their jobs or take on too much debt in between getting pre-approval and moving forward with the purchase.
All of these complications are issues that buyers have the power to potentially minimize with an unemotional approach to the purchasing process and the right contingencies in their offers. Having appropriate contract protections can take a lot of the risk out of a residential real estate transaction. Buyers who partner with lawyers may have documents that better protect them from the risk inherent in acquiring real property.