One of the biggest investments one can make in their lifetime is buying a new home. Similarly, your ability to sell a property and close deals seamlessly says a lot about you as a real estate investor and instantly diversifies your portfolio in the ever-competitive real estate market. However, like every massive transaction, real estate deals also come with a significant amount of risks, both financial and legal.
If you take a closer look at important real estate transactions, you’ll see how most deals are finalized as soon as both parties agree to the set terms and conditions and sign the documents accordingly. While this may happen in most cases, these transactions fail for several reasons, even when the agreements are signed. This ultimately increases the need for real estate lawyers, buyers, and sellers to be mindful of unexpected problems in real estate transactions.
An excellent way to prevent an important real estate deal from falling through before the closing date is to work with a real estate property law firm that you can count on. Here are some common reasons a real estate deal might not work out as anticipated.
The Buyer Doesn’t Get Mortgage Approval
When a buyer decides to buy a new residential or commercial property, the first thing they do is apply for a mortgage. They even manage to receive the lenders’ pre-mortgage approval, especially if there’s a high demand for the property they’re interested in. However, there’s always a possibility of a property buyer failing to get a mortgage for a property they’re looking to buy.
This is a significant risk both parties should always be aware of before proceeding towards finalizing the purchase deal. Lenders are entitled to turn a purchaser down for a mortgage if they don’t seem like the right fit for a loan. In fact, you can even fail to get a mortgage if you’ve been pre-approved before the closing date.
It’s always good to seek a property lawyer’s help to determine the next steps when this happens.
The Purchasing Party Is Unable to Close a Deal on an Existing Property
Many people rely on selling their existing property to buy a new one. This ultimately puts a condition on a new real estate deal, making it challenging for the seller to determine whether the deal is worth the risk. The purchaser, on the other hand, continues to ensure that their existing property is sold before they’re able to close a new property deal.
These deals often involve contingent offers. There’s a high chance that a real estate deal like this won’t fall through, especially if you’re struggling to sell your existing property at the desired price.
The Lender Suddenly Appraises the Property
Another common reason real estate deals don’t work out as planned is when the purchaser’s bank suddenly appraises the property’s value. This happens when the appraisal value isn’t as high as the actual selling price of the house.
A case like this often results in the buyers’ inability to afford the property they were initially interested in. Similarly, once the appraisal happens, most sellers don’t prefer reducing the property’s price. As a result, unaffordability becomes a factor affecting the real estate deal in such circumstances.
Unexpected Discoveries During Home Inspections
Besides financial complexities, many real estate deals don’t close when the purchaser finds multiple unexpected problems during home inspections. Problems like plumbing, damaged foundations, roofing, and others often influence buyers’ decisions to invest in a property. As a result, they pull out of a deal right before the closing date approaches.
A Sudden Change of Mind
Lastly, when a seller or buyer changes their mind last minute, a real estate deal fails to pull through. There are various reasons this may happen. A buyer may have found a better property at a lower price, or a seller might have a new buyer willing to pay a fortune to buy their property.
A sudden change of mind can also result in unprecedented disputes among both parties, increasing the need for a property lawyer to mediate and resolve such matters.
If you’re looking for a real estate law firm in New York that can assist you in resolving property disputes and ensuring they don’t fall through, make sure you work with the real estate property lawyers at Ledwidge & Associates. Their 15 years of experience makes them a leading law firm in New York. You can now count on their estate planners, family law attorneys, property lawyers, and probate lawyers to make financial management easier in a state like New York. Contact them to learn more today!
Guest article written by: The author is a property lawyer in New York who devotes his practice to a wide range of real estate categories, specializing in negotiating and closing deals and resolving prevalent disputes in residential real estate transactions. He works closely with brokers and investors, using his over 15 years of experience to counsel them on developing strategies to avoid disputes. As a leading real estate lawyer, he keeps his client’s interests in mind, especially when probate concerns are involved in buying and selling properties.