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Real Estate Nightmares
Real Estate Nightmares: Things That Can Go Wrong
Paul Newman played the petty thief Luke Jackson in the classic film, Cool Hand Luke. Although Luke was only going to serve two years and with good behavior less than that, his only thought was to escape from pretty much day one.
Yet his multiple attempts at escape were futile. He was always caught and returned to prison. And when he did escape one last time, well, let’s just say he didn’t make it back. Whatever could go wrong during his escape attempts, ultimately did.
In real estate, there are things that can go horribly wrong. It’s a delicate transaction and there are lots of things that need to fall in place before the home can be transferred from the seller to the buyer.
If one or both parties during negotiations refuse to budge on price or repairs, there will be no transaction. Those that are not willing to compromise can kill the deal.
If the appraisal comes back lower than the sales price listed on the contract, then there is a problem. Lenders use the lower of the sales price or appraised value to establish a loan basis. The buyers must then decide to make up the difference or renegotiate the sales price.
If the seller refused to lower the price, the deal is dead.
The inspection reveals significant damage beyond simply peeling paint or a stain on the carpet. For example, say there are apparent diagonal cracks along a door jamb which could indicate a damaged foundation. Such damage will cause a lender to refuse to finance the property.
Sometimes buyers don’t listen to their loan officers and don’t lock in their interest rate and rates move up in the meantime so high the buyers no longer qualify.
What if the buyers need to sell their current home before they can buy the next one? This contingent sale could make the new purchase null and void if the buyer’s home falls out of escrow.
These are just a few of the things that can go wrong during a real estate transaction but things that cause a real estate transaction to come to a halt are for a very good reason. When such an event happens, it ultimately can be a good thing.
Brett has been in the real estate / mortgage business since 2005. After specializing in mortgage origination, Brett came to the belief that it would be best for the real estate and mortgage functions ....