Your emotions may run high in the period following an acceptable offer on your home, and you may not be thinking about inspection issues or title issues or financing issues. Instead you think… whew. Finally. The hard part is done and now we just need to go about getting ready for our move. It’s about time we focused on our next location. You’re ready for your closing. After all, what could possibly go wrong if you’ve already gotten a signed sales contract for your home? The answer is…. plenty.
Exactly how many issues could arise will depend upon your own particular legal contract and terms. Hopefully you’ve worked with your listing Realtor to hash out the terms of the contract to suit your needs before you agreed to anything. But often there are issues that nobody could have foreseen.
Let’s focus on some issues from the Seller’s point of view. The time to protect your options is BEFORE you sign any purchase agreement.
ISSUES & TOOLS FOR SELLERS:
*** INSPECTION ISSUES: Sellers should expect that the potential buyers will want to conduct a home inspection prior to agreeing to a final (ratified, in some states) contract. There’s no reason to try to hide any kind of inspection issues: good inspectors will find them anyway. Instead, invest some energy and attention to correcting any known issues that might deter your potential buyer. Solicit suggestions from friends or family before you list your property, because they might have an independent observation about issues like smells or clutter or repairs. If you have an offer that gets revoked due to an inspection problem, you’ll likely have that same issue with every potential buyer. Correct the problems.
***TITLE ISSUES: Prior to closing on your home, the Buyer will want to conduct a Title search to assure that there are no issues (“clouds”) on the title to the house. Those issues may be something from the current seller (tax lien or contractor’s lien, for instance). Or the title clouds could be from a claim made by a relative/co-owner of your home. If you have an older home which has not been through a title search, you could even have some claim against your property pre-dating your own ownership. If the search reveals any clouds on the title to the house, it could prevent the closing from going through, so it pays to know in advance if there are problems that you need to correct. Bank financing will insist on a clear title, and even a wise seller who intends to pay full price in cash will want to know that there are no claims against the property. Most Offers To Purchase include language to address this situation. Don’t wait for surprises.
***INSURANCE ISSUES: If you or a previous owner of your home has made extensive insurance claims about repairs or problems on your property, those claims will be a part of the criteria report that a lender will use when deciding if they will fund a loan for a buyer. This one could really surprise you, because of its timing. You think you’re all ready for your closing…you’re packed and ready to drive to your next home…and at the last minute before closing the buyer’s loan is denied due to too many insurance claims during the past five years. The workarounds for losing this financing aren’t fun and your realtor can help. But both Buyers and Sellers should be aware of the impact of C.L.U.E. reports on a home closing.
***BUYER FINANCING: In our experience, a common issue for a seller is that the buyer might be unable to obtain the necessary financing to complete the purchase in the agreed time period. Or perhaps they can get partial funding but not enough. Contracts in most states allow you to specify what will or what will not happen in that instance. Ask your Realtor if there’s a way to update an appraisal or arrange alternative financing.
*Sometimes issues fly in from left field. You can’t force a buyer who becomes deceased to finalize a purchase, sorry. Have a backup plan just in case anything unexpected occurs.