Things That Can Go Wrong in a Real Estate Transaction
Posted by Kati Tague on Monday, February 24, 2014 at 11:18 AM
By Kati Tague / February 24, 2014
1 Comment
It is the wise client that prepares for problems before they happen! For this reason, we would like to share with you some of the things that can go wrong during a real estate transaction. Since no transaction is closed until it is closed, the folowing are potential road blocks. We have also given you a delay of closing estimate next to each problem. The ones with asterisks (*) are potential deal killers. Here we go!
Things that go wrong with the . . .
LENDER . . . Approx. Delay
1.Lender does not properly pre-qualify borrower .... 2 weeks to*
2.Lender decides last minute they don’t like borrower .... 2 weeks to*
3.Lender decides last minute they don’t like the property .... 2 weeks to*
4.Lender wants property repaired or cleaned prior to closing .... 1 - 3 weeks
5.Lender raises rates, points or costs .... 2 weeks to*
6.Borrower does not qualify because of a late addition of info .... 2 weeks to*
7.Lender requires, last minute, a reappraisal .... 2 weeks
8.The borrower does not like the fine print in the loan
documents they receive 3 days before closing .... 3 days to*
documents they receive 3 days before closing .... 3 days to*
9.Lender loses file .... 1 - 3 weeks
10.Lender does not simultaneously ask for info from buyer,
they ask for info in bits and pieces .... 1 - 4 weeks
they ask for info in bits and pieces .... 1 - 4 weeks
COOPERATING AGENT . . .
1.Won’t return phone calls .... 1 - 3 weeks
2.Transfers to another office .... 1 week
3.Did not pre-qualify the client for motivation .... 2 weeks to*
4.Goes on vacation, leaves no one to handle file .... 1 - 4 weeks
5.Does not understand or lacks experience in Real Estate .... 1 week to*
6.Poor people skills with buyer .... 1 - 3 weeks
7.Gets client upset over minor points .... 1 - 3 weeks
8.Does not communicate with their clients .... 1 - 4 weeks
BUYER . . .
1.Did not tell the truth on the loan application .... 1 week to*
2.Did not tell the truth to their agent .... 1 week to*
3.Submits incorrect tax returns to lender .... 4 weeks to*
4.Lacks motivation .... 1 week to*
5.Source of down payment changes .... 1 week to*
6.Family members do not like purchase .... 1 week to*
7.Is too picky regarding condition .... 1 week to*
8.Finds another property is a better deal .... 1 week to*
9.They are “nibblers” (always negotiating) .... 1 week to*
10.The buyers bring an attorney into the picture .... 2 weeks to*
11.They do not execute paperwork in a timely manner .... 1 week to*
12.They do not deliver their money in “good funds” at closing .... 1-2 days
13.Job change, illness, divorce or other financial setback .... 3 weeks to*
14.Come up short on money .... 1 week to*
15.Does not obtain insurance in a timely manner .... 1-4 weeks
TITLE COMPANY. . .
1.Fails to notify agents of unsigned or unreturned documents
so the agents can cure the problems relating to same .... 1 week to*
so the agents can cure the problems relating to same .... 1 week to*
2.Fails to obtain information from beneficiaries, lien holders, title
companies, insurance companies, or lenders in a timely manner .... 1 week to*
companies, insurance companies, or lenders in a timely manner .... 1 week to*
3.Lets principles leave town without getting all necessary signatures .... 1-2 weeks
4.Incorrect at interpreting or assuming aspects of the transaction
and then passing these items on to related parties such as
lenders, attorneys, buyers and sellers .... 1 week to*
and then passing these items on to related parties such as
lenders, attorneys, buyers and sellers .... 1 week to*
5.Too busy .... 1-3 weeks
6.Loses paperwork .... 1-3 weeks
7.Incorrectly prepares paperwork .... 1-3 weeks
8.Does not pass on valuable information .... 1-4 weeks
9.Does not coordinate well so that many items can be done
simultaneously .... 1-4 weeks
simultaneously .... 1-4 weeks
10.Unknown special assessments show up at last minute .... 1-3 weeks
11.Does not find liens or problems until last minute .... 1 week to*
12.Does not bend rules on small problems .... 1-3 weeks
SELLER . . .
1.Loose motivation (i.e. job transfer did not go through, etc.) .... 1 week to*
2.Illness, divorce, etc. .... 1 week to*
3.Has hidden defects that are subsequently discovered .... 1 week to*
4.Unknown defects are discovered .... 1 week to*
5.Home inspection reveals average amount of small defects
that seller is unwilling to repair .... 1 week to*
that seller is unwilling to repair .... 1 week to*
6.Gets an attorney involved .... 1 week to*
7.Removes property from the premises that the buyer
believed was included .... 1-3 weeks
believed was included .... 1-3 weeks
8.Is unable to clear up problems or liens .... 1 week to*
9.Last minute solvable liens are discovered .... 1-3 weeks
10.Seller did not own 100% of property as previously disclosed .... 1 week to*
11.Seller thought partners signatures were “no problem”
but they were .... 1 week to*
but they were .... 1 week to*
12.Seller leaves town without giving anyone power of attorney .... 1-3 weeks
13.The notary did not make a clear stamp when notarizing
the seller’s signatures .... 3-7 days
the seller’s signatures .... 3-7 days
14.Seller delays the project move-out date .... 1 week to*
15.Septic or water tests fail (rural properties) .... 2 weeks to*
ACTS OF GOD . . .
1.Tornado, fire, flood, etc. .... 1 week to*
APPRAISAL . . .
1.The appraiser is not local and misunderstands the market .... 1-3 weeks
2.No comparable sales available .... 1 week to*
3.Appraiser delays (too busy, etc.) .... 1-3 weeks
4.Incorrect appraisal .... 1-3 weeks
5.Appraisal too low .... 1 week to*
INSPECTION COMPANY . . .
1.Too picky report .... 1 day to 8
2.Scares buyer .... 1 week to*
3.Infuriates seller .... 1 week to*
4.Makes mistakes .... 1-3 weeks
5.Delays report .... 1 week to*
We want you to understand these issues for the following reasons...
1.A transaction cannot close until everything has cleared up on all of the previously mentioned problems.
2.To let you know that an agent will have great experience in heading off these potential pitfalls.
3.To make you aware of these pitfalls so that you can warn your agent of any potential problems.
Discussion
Under BUYER
Buyer changes their mortgage lender mid-stream because they find a better rate, but doesn't compare closing costs and fees.
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