Buying A House? 3 Issues Outside Your Control That May Delay The Closing

6 December 2017
 Categories: Real Estate, Blog

If you are in the process of buying real estate, you probably want the whole process to be over as soon as possible. Unfortunately, sometimes issues outside your control may delay the process or even cause you to pull out of the contract. Here are three examples of such issues:

Title Issues         

A property's title refers to the legal rights that the owner of the property has on the property. For example, when you own the title to a property, you have the right to sell it, improve it (construct a building on the land, for example), subdivide it (other laws may apply), or even use it as collateral for a loan.

Getting a title report is an important step in real estate transactions. A title report will reveal issues associated with the title; for example, it will reveal whether the current owner used the property as collateral for a loan, so they cannot sell the property without the lender's approval. It may also reveal inaccuracies in the property ownership—for example, if the current owner doesn't own the property in its entirety. A smart buyer will halt the property purchase process if the title report reveals undesirable issues. 

Appraisal Issues

When a property buyer applies for a mortgage to buy a house, the mortgage lender will instigate an appraisal of the property to confirm that it is worth at least as much as the buyer wants to pay for it. This makes sense since the lender is investing in the property by issuing the mortgage, and they want to be sure that they will be able to recoup their investment (by seizing and selling the property) in case the borrower defaults on the mortgage.

It's possible for the appraisal to return a lower value than the price agreed upon by the seller and the buyer. In such a case, the transaction will be put on hold until a remedy is found. For example, the buyer may have to pay the difference using their private funds, renegotiate the price, or apply for a second mortgage.

Inspection Issues

It is also possible for the transaction to be delayed if the home inspection reveals material defects with the property. In fact, many buyers make purchase offers contingent on satisfactory home inspection reports. Therefore, the contract terms may need to be renegotiated if the home inspection reveals hidden termite damage or dangerous materials used in the construction of the house.