In residential real estate transactions, the closing is always the light at the end of the tunnel. Getting to closing can have its challenges. Sometimes a transaction doesn’t make it there.
The phrase “fell out of escrow” can mean a welcome bargain for a buyer who can swoop in and purchase the property after something happened that required the previous buyer to back out. Often by that point, the seller needs to unload the house in a hurry in order to relocate for a new job or take possession of their new home.
Thorough – and maybe multiple – inspections
As a buyer, you can prevent some unexpected last-minute problems by having a full inspection of the property done. That may include special inspections for everything from asbestos to termites.
If something is uncovered, you can decide whether to proceed with the purchase presuming the sellers are willing to take care of the problems or pay you to do so. That’s why it’s important to have the needed contingencies in your purchase agreement. These detail when either side can walk away from the deal without penalty.
Other issues with the property
Many of the other unexpected hurdles you could face on your way to closing involve the property. If your lender appraises the property as being worth less than you’re paying for it, they won’t finance it unless you’re willing to take a smaller loan or the seller lowers the price.
The property may be uninsurable if there was already a large insurance claim for something like water damage and/or mold. The home could be in an area with some kind of natural hazard risk that requires additional (and usually expensive) insurance. There could also be title issues, such as a lien on the home that possibly the sellers didn’t even know about.
These are the kinds of things that some due diligence early in the process can uncover. The fewer surprises near the end of the transaction process, the less chance you have of closing being delayed or the entire transaction being called off. That’s why it’s wise to have as much professional guidance as possible.