Your Real Estate Transaction: Common Mistakes That Can Jeopardize The Sale & How To Avoid Them
Both the buyer and the seller have an equal obligation to ensure that their real estate transaction goes smoothly. Common mistakes include financing falling through, surprises with the home inspection and errors in paperwork. Let’s walk through these scenarios in more depth so that you can understand how to avoid them.
Issues With A Home Inspection
A home inspection is a common practice in the majority of real estate transactions. On the flip side, it can also contribute to a sale falling through. Issues uncovered during the home inspection may require further negotiations to determine who will be covering the cost. Or a buyer might choose to walk away altogether depending on the severity of the findings.
For example, it is brought to light that your home needs a new roof. The buyer may choose to negotiate down on price and handle the roof replacement themselves. Alternatively, they may ask that you (the seller) have the roof installed prior to the closing date. As a seller, you can eliminate any surprises by conducting a pre-listing home inspection before putting your home on the market. Knowledge is power, and this will give you a clear picture in regards to the state of your home. Being ahead of the curve will allow your real estate agent to price your home more strategically and limit surprises at closing time.
Financing Falling Through
Financing problems are one of the leading issues that mar the closing of a real estate transaction. This can be caused by buyer’s not getting pre-approved, sudden changes in a buyer’s financial situation (maybe they lost their job), changes in the lending procedures and rules, etc. Serious buyers should get pre-approved. By going through the pre-approval process, they will have checked most of the boxes and be set for closing. Pending any huge, unexpected changes in their financial situation.
In tightly competitive markets, such as the peak of the Toronto real estate market, many sellers were only accepting offers from serious buyers who had secure financing in place. That meant that if you weren’t pre-approved or didn’t have financing confirmed, the seller wouldn’t even entertain your offer. Of course, the unexpected may arise but it’s important that both the buyer and the seller work with qualified experts to get all of their ducks in a row.
Errors Coming Out Of The Woodwork
On closing day, you will be fast and furiously signing all sorts of documentation. Let’s reiterate that buying/selling a house is both a financial and legal transaction. All documentation tied to the sale is considered to be a legal document. This means that names, addresses, numerical figures, and so on, need to be extremely accurate. Right off the hop, it’s important to provide your real estate agent with correct information and have them verify it back to you. Where possible, you will also want to ask for all documentation surrounding your impending real estate transaction ahead of time. Why should you aim to complete a review ahead of time? On closing day, you will be signing all paperwork quite quickly, so the more you review ahead of time, the smoother it will go. You don’t want to get to the finish line and realize that your name is spelled wrong.
Alternatively, there can be issues with the title search that halt the sale from going through. Outstanding loans, liens and overdue property taxes are just some of the things that can bring the transaction to a screeching halt. Work with your real estate agent to uncover any title issues well ahead of your closing date.
Selling your home can be a daunting task. Educating yourself ahead of time is a great place to start. Our Seller’s Guide will walk you through the process step by step so that you can approach your next real estate transaction with confidence.