Don’t Let Your Home Sale Fail
It is important for buyers and sellers to be aware that the risk of a home sale falling through during the closing or escrow process is a reality for both parties. As a buyer, you should always know your back up plans when it comes to several possible worst case scenarios, including what to do if you need to back out. Sellers, on the other hand, need to take necessary measures to protect themselves from any risk they would have to relist their home because of a failed sale. No matter which side of the equation you are on, don’t let your home sale fail.
Life Happens, Buyers Prepare
What happens if you are days into escrow and you or your spouse lose your job? Since the recession began in 2009, losing your job at any moment during the process has become a realistic fear for many buyers. If you are using financing to purchase your home, make sure you include in your offer contract that the sale of the home is contingent with you successfully obtaining the proceeds from your loan, and if you are not able to secure a loan you will be refunded any deposits. Many lenders check to confirm you are employed as late as the day before funding, and that you are compliant within your loan terms before they qualify you for your mortgage. If you are properly safeguarded from liability for the loan contract and offer contract, even if you were to lose your job in the middle of the escrow process, you will see your full deposit returned.
Risks That the Sale Might Fail
Sellers can only do so much when the fate of a sale rests in the buyer’s hands. Don’t just jump at the first buyer offering full list price; you want to enter into a close with 2-3 backup offers. Until the close is fully and successfully funded, you can’t call the sale complete. Any informed home buyer knows to wait for the results from the home inspection and appraisal before they close a deal. As a seller, you want to know the appraisal value for your home, because if your home is overvalued you could cause the deal to fall through. Lenders will only lend up to the value of a property, and if the appraisal falls short, it becomes the buyer’s responsibility to make up the deficit. Before even listing your home, as a seller you will want to make sure you take care of any immediate and necessary repairs that might come up during a home inspection. The responsibility will ultimately land on you if your home inspection doesn’t pass the bill.
Life will happen, but you should always do your best to prepare for it. While you can’t control the emotional aspects that can wreak havoc on a deal, you can control how disrupting events affect you. The more knowledgeable and prepared both the buyer and seller side are when entering a deal, the less likely you will experience a home sale fail.