I sound like a self-serving broken record when I say that good agents head off small problems before they become big ones and understand how to solve problems quickly with the least amount of drama.
Here are a few common issues that can cause delays to closing (and maybe moving) and how to avoid them.
If you are financing a property, the bank will only lend based on the appraised value of the property. If the appraised value is less than the purchase price, you will need to come up with the difference. Appraisals are based on the past, while purchases are based on the present value of the home. When prices are appreciating quickly, they can get ahead of appraised values.
Solution: I always meet the appraiser at the property. We discuss the comparable sales and why the property is worth the purchase price. Appraisers know that local real estate agents have been inside of the comparable properties and we can provide them with inside information that the MLS may not have. For example, there was one low comparable sale and the buyer’s agent told the appraiser the home smelled like animal urine and needed new carpet and paint. This is information the appraiser would have been otherwise unlikely to have available.
I have seen lenders who will not lend on certain condominium projects in Park City. In one recent situation, a lender didn’t lend on a project because the HOA owned one of the units. Another time the lender thought the project was a condo-hotel because it used to have a front desk. Condominiums can be tricky in Park City.
Solution: I always recommend my condominium buyers work with local Park City lenders. Our lenders have condominium projects “pre-approved”, meaning they already have the necessary documents from the HOA and they know they can lend on it. Don’t take a chance of having to switch lenders in the middle of a transaction.
The Utah Real Estate Purchase Contract (REPC) is an “as is” contract. That doesn’t stop buyers from trying to get the seller to restore the property to its original condition. I have written about this before (see here and here).
Solution: When I am working with sellers and we know there are issues with the home, like a window with a broken seal, I encourage the seller to get an estimate right away. It’s much better to take the time and work through such issues before the heat of a negotiation. When working with buyers, I inform them that the purpose of the inspection is not to re-open the negotiation for the house. Some buyers intentionally offer a higher price and then expect to get significant price reductions after the inspection. This strategy is definitely not appreciated by me nor my clients. Almost any defect with a home can be fixed. The issue is who pays for it. This is when you need skilled representation.
The buyers do their final walkthrough of the home one day to one week prior to closing. The purpose of the walkthrough is to ensure the home is in the same condition as it was when it was purchased and to make sure any personal property and fixtures that were part of the contract are present in the home. The purpose is not to start nitpicking on defects that have always been present in the home.
Solution: Good communication between sellers and their agent is key. Recently, my clients told me the movers took a chunk of drywall out of the staircase during their move. The I notified the buyers’ agent and the buyers did not even ask the sellers for money to fix the drywall. The Utah Real Estate Purchase Contract says the home must be “broom clean and free of debris”. I remind my sellers to schedule a cleaning crew after the move. No one wants to move into someone else’s dust bunnies.
These are just some of the myriad of issues that can cause drama, delays and cancelled contracts. Have you ever had a closing delayed?