Buying a home can be an exciting and rewarding experience, but the home buying process is full of unexpected pitfalls. Many prospective home buyers are unprepared for the negative home buying process that awaits them. While there are many positives associated with home ownership, there are also some unexpected events during home buying that can throw a wrench into the works. In this blog post, we will discuss five negative (and unexpected) things that can happen during the home buying process.
1) The appraisal comes in low
One of the most disheartening events during the home buying process is when the appraisal comes in lower than what you offered for the home. A real estate appraisal is a professional assessment of the market value of a property, and it is important to both buyers and lenders. When an appraised value is lower than your purchase offer, the lender will not give you a loan amount that exceeds the appraised value.
This can be difficult if you already put down a significant amount of money and are expecting to get a loan for the full purchase price. It can also create problems if the seller is unwilling to reduce their asking price. In these cases, you may have to bring extra cash to the closing table or come up with other creative solutions to satisfy both parties.
It’s important to have realistic expectations when it comes to appraisals. If the local real estate market is very competitive, it is likely that an appraisal will come in lower than expected.
Additionally, appraisers may take recent home sales into consideration, even if those sales are much lower than your offer. It is important to do your research before entering into a home purchase and understand the value of similar homes in the area. This will help prepare you in the event that the appraisal comes in lower than expected.
Explore this topic more in depth. See How to Deal With a Low Appraisal
2) The Loan Falls Through
For many homebuyers, one of the most disheartening and frustrating surprises can be when the loan falls through. Even when you’ve been pre-approved for a loan, it can still fail to be finalized after all the paperwork is complete. It’s not just that you’re out of luck and need to start the entire process over again, but also that you may be out any earnest money you put up during the process.
There are several reasons why a loan can fall through. One common problem is when a loan does not meet a lender’s specific criteria or is suddenly deemed too risky for them. This can happen even when you have a great credit score and a substantial down payment, as some lenders will simply change their policies on loan amounts or interest rates without warning. It can also occur if the appraised value of your chosen home comes in lower than expected.
Another possible scenario is when the lender requests additional documentation from you, but you do not provide it in time. If they don’t receive the paperwork they need by the required date, they may consider the loan to be in default and deny it. Furthermore, if there are significant changes to your financial situation during the loan process, such as switching jobs or having a sudden decrease in income, this can cause your loan application to be denied.
To avoid having your loan fall through, it’s important to keep your lender informed about any major changes in your financial situation. Additionally, make sure to provide them with any requested documents as soon as possible and double-check that your credit score is in good standing. Most importantly, ensure that your down payment is large enough and that the appraisal comes in at an acceptable level. By following these steps, you can greatly reduce the chances of your loan falling through.
3) The Home Inspection Turns Up Serious Problems
The home inspection is one of the most important steps in the home buying process, and it can often uncover potential issues with the property. Unfortunately, the inspection can sometimes turn up more serious problems than expected, such as structural damage or mold infestations.
If the inspector discovers a major issue that needs to be addressed before you close on the home, it can add considerable time and expense to the home-buying process. In some cases, the repairs may be more expensive than the home is worth, and you may have to walk away from the deal.
In some cases, the seller may agree to make any necessary repairs if it’s discovered during the inspection. However, if the seller is not willing to do so, you may have to decide if the repairs are worth making or if it’s best to move on to another house.
4) The Seller Backs Out
When buying a home, the seller backing out can be one of the most unexpected and difficult things to navigate. Although it is not a common occurrence, it does happen and can be a huge setback for potential buyers.
A seller can back out of the contract for a variety of reasons, but the most common ones are they had a change of heart, they received a better offer, or they were unable to meet the requirements of the contract.
If you’re in the unfortunate situation where a seller backs out of the contract, the best thing to do is review your contract and consult with a real estate lawyer. Your lawyer will be able to advise you on your options and rights under the contract. In some cases, you may be entitled to certain damages or even be able to cancel the contract. The key to remember if the seller backs out is to remain calm and work with your lawyer and real estate agent to get the best outcome possible. While this may be a discouraging event in your home buying process, take it as an opportunity to reassess your budget, timeline, and goals for buying a home.
5) A Buyer Gets Cold Feet
No matter how much research you’ve done and how ready you thought you were to purchase a home, you may find that you’re simply not ready to commit. This happens more often than you might think, and can even occur right before closing. It can be an unsettling feeling, and it’s one that only you can truly understand.
The important thing to remember is that if you’re feeling this way, it’s likely for a reason. Don’t be afraid to speak up and voice your concerns. Talk to your real estate agent or a trusted financial advisor about any reservations or questions you have. It’s also perfectly okay to take some time away from the process and come back with a clearer mind when you feel ready.
In the end, buying a home is a huge decision and it isn’t one that should be taken lightly. If you’re feeling like you need a break, don’t be afraid to take one – it may just be the best decision for you.
