Buying a home is an exciting but potentially very stressful experience. Although a new house brings with it new possibilities, the process of purchasing it is often fraught with potential pitfalls that could derail the sale. Here are the six most common things that might go wrong when buying a house.
1. Financing falls through
One of the most common things that can go wrong when buying a house is the financing does not go through. Sometimes as a buyer you think you will qualify for a mortgage, but when you apply for it you may discover that you aren’t able to borrow as much as you expected. Bad credit is a common reason, but it can also be tied to income or loss of a job. Even if you’ve prequalified for a mortgage, if you lose your job in the middle of the process, your financing may fall through.
2. Low appraisal
Sometimes the home’s appraisal comes in lower than the agreed price. When this happens, a bank will not finance the full amount. This means if you still want to purchase the home, you will have to come up with the difference.
Sometimes buyers and sellers can come to agreement to lower the cost or split the difference, but this is not always the case. A realtor should do a market analysis ahead of time so that the home is listed at market value.
3. Issues discovered during the home inspection
Often concerns of current or future damage and repairs are discovered during a home inspection. Sometimes the seller will agree to lower the sale price, make the repairs, or offer to provide money at closing to fix the items. However, there are cases when neither the buyer or seller want to negotiate. This can be a deal breaker that causes the sale to fall through.
4. Buyer can’t sell home
Sometimes when buying a house, your purchase is contingent upon being able to sell your current home. This is called a buyer’s home contingency. This contingency is noted in the purchase offer. If you cannot sell your home within a certain period, then the agreement is void and the home goes back on the market. A good real estate agent should be able to talk to you about market trends and make an educated assessment as whether you will be able to sell your home during the period of your sale contingency.
5. Unpaid liens or taxes
When a mortgage company is working to approve a loan, it researches the title of the property. Unfortunately, sometimes this can turn up unpaid debt resulting in a lien on the home, which prevents it from being sold until the debt is paid.
Sometimes the seller is not even aware of the issue. For example, if a fence was installed and the general contractor failed to pay the installation subcontractor, then the subcontractor can put the lien without the knowledge of the homeowner. A mortgage company may also find unpaid property taxes. No matter the case, these debts must be paid before the sale can go through and the mortgage approved.
6. Survey issues
Before a mortgage is approved, the lender will ask for a survey. This is to ensure there is documentation of what the mortgage is for and what the buyer is purchasing in terms of the property and its boundaries. However, sometimes there is a survey dispute and issues on where property boundaries are located. This can be because of items like zoning or fences on property lines, as well as many other things. If a seller is concerned this may cause issues, then they may want to get their property surveyed before placing it on the market. Otherwise, as a buyer, this may throw a wrench into your purchasing plans.