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Closing a Home: How to Protect Your Sale

Monday, October 18, 2021

Did you know that 3.9% of home sales fall through each year? Although this number isn't high, it's enough to worry most sellers. 

If you're in the process of selling or buying a home and are worried about what could go wrong during the closing day, you came to the right place.

Read on to learn what you need to look out for when closing a home. 

1. The Mortgage Falls Through

While this problem doesn't affect all-cash buyers, mortgage fallthrough is a common problem on closing day if the buyer is getting a mortgage to buy the house. 

The buyer can lose the mortgage on the closing day for several reasons, such as inaccurate information, no pre-approval, a last-minute change in their creditworthiness. Even if the buyer qualifies during the pre-approval process, most mortgage companies will do another financial screening before the closing date. 

While there is not much you can do if the buyer's mortgage falls through, screening potential buyers more carefully will help reduce the chances. For example, ensure all potential buyers provide a pre-approval letter before anyone can view the property or make any offers.

2. Issues with the Appraisal Process

Before the lender can provide the buyer with a loan amount to purchase a home, they will need to get it appraised to determine the home's value. The appraisal value is what the home is worth regardless of the listing price. 

Sometimes the home appraisal is lower than what the seller is asking for, which can cause the sale to fall through. Because the lender won't provide a loan for more than what the home is worth, the seller and buyer must work together to find a solution.

To solve this roadblock, either the seller lowers the price, the buyer comes up with the cash, or both meet in the middle. 

3. Issues with the Inspection

Most buyers will choose to have the property inspected before the closing on a home. One of the pitfalls that can delay or kill a closing is an unsatisfactory home inspection.

While most homes will have issues that both buyers and sellers are aware of, some of these issues might be too big to ignore. 

To overcome this issue, the seller can work with the buyer to fix some significant problems. The buyer can communicate with the seller which issues are non-negotiable and which they can live with.

4. Title Issues

Before the lender releases the funds to buy a home, they must make sure there are no issues with the title. A title search often will reveal liens attached to the property, which can become a problem during the closing. 

Because title issues primarily affect the sellers, they must ensure there are no liens or outstanding debts against them. Purchasing title insurance is another way they can prevent this from happening. 

Are You Ready to Avoid These Issues When Closing a Home?

Now that you know the common problems when closing a home and how to fix them, you're ready to protect your sale. 

When closing a home, some of the most common things that can go wrong include issues with the mortgage, title liens, unsatisfactory inspection, and a low appraisal. 

Are you ready to discuss the benefits of title insurance or get a quote? Contact us today for more information. 

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