Top 3 Real Estate Deal Killers In Utah-how buyers can avoid them
Pretty explanatory right? We see real estate deals come to fruition (like that word, makes me seem smart) all the time, but occasionally we have the dreaded “DEAL KILLER” that rears its ugly head and the transaction falls apart. Here are the top 3 deal killers and how buyers can avoid them (well, sellers can too, but this is mainly for buyers).
1. The Appraisal Comes In Low!Search For Homes In Murray
Now, most buyers would be doing the happy dance over this one because the natural assumption in this deal killer is that the seller Has to come down in price to match the appraisal, right? Yes, in a perfect world that would be true, but in the post melt down world where homeowners bought their homes at the top of the local market, they may not be able to come down in price and repay their loans. Homeowners must then either come to the closing table with their own money (not really likely) or they may opt to go into a Short Sale situation which could put your closing off for several months…or kill it altogether!
How can buyers avoid this real estate deal killer? This is probably the trickiest one to avoid because the buyer has so little control over appraisals, especially with lenders who utilize appraisers from outside the area.
We once had an appraiser come from a very rural area to appraise a condo in an urban area who didn’t even use the comparables within the complex. The appraisal came in too low, and the deal almost folded…we eventually closed on it, but there was a lot of pulling hen’s teeth (ok, does that date me too much) to make it happen.
So, buyers, use an agent who will do the research on the home before you make an offer. Offer reasonably, and don’t get caught up in a bidding war when there are multiple offers on your cute little house. Another tip…use a local mortgage broker who is attached to a mortgage bank (we know a great one by the way….Lance Sorenson) These loan officers usually have a smaller group of appraisers who work in the Salt Lake or surrounding area and are more familiar with your intended neighborhood.
2. Condition of the Property
Condition of the property in a real estate transaction can be a deal killer and is of paramount importance to both the buyer and his lender. No lender (or buyer for that matter) wants to secure a property for a mortgage if its well…a dive…and especially if it is unsafe for habitation or there are major issues with it. In both FHA and conventional loans, condition of the property contributes to the property value. FHA requires a partial inspection of the property during the appraisal and we have seen many conditions that must be corrected coming back from those. Peeling paint seems to be a biggie with FHA as of late, (we have gone in and painted a garage door the day before closing because the lender found it on the appraisal…true story). Search For Homes In Sandy
How can buyers avoid this? Check with your agent about minimum conditions standards when you are viewing homes. As Realtors, we deal in properties every day and can pretty much tell you what will be an issue with a lender (and if you are working with us…we go through the house and point these things out!). And keeping these standards in mind as you hunt for your home will help you avoid the dreaded “conditions” deal killer.
3. The Loan
Now, we are assuming you all know that getting pre-approved for a loan is an important first step toward purchasing your new home. However, that is only the first step.
Once you find “the one” and put it under contract, this will set the loan process in motion. The underwriter of you loan will begin to put all the paperwork together in a nice and tidy package that they will eventually have you sign at closing.
Now underwriters as wonderful and necessary as they are in the scheme of things, sometimes will nitpick over the information in front of them…asking for further documentation from employers, drivers licenses, the color of your hair, and the ever present ” I need one more comp on the appraisal” …you get the idea….and this can hold up the process if you are not on top of things and provide the information in a timely manner. So, you, your agent, and your loan officer must be in contact and ever vigilant in overseeing the loan and bringing this puppy home!
Oh and one more thing…don’t change anything in your economic life during this time, like quit your job, buy a fridge for the new house…nada…nothing. This is the biggest deal killer in the world.
We once had a client who went out and used his down payment money to purchase things he thought he would need for his new home. When the underwriter went to verify his funds, oops they weren’t there. He had to take everything back and put the money back in his account. See You Might Be Turning Your Realtor’s Hair Gray for more of these.Search For Homes In West Jordan
Now… there you are, 3 real estate deal killers and how you can avoid them.