Top 3 Deal Breakers
Buying a house used to be fun. All the excitment involved was an enjoyable process. Now it's more of a huge hassel. Buyers wait for roadbumps to come their way and handle them when they have to. Sometimes these bumps can be deal breakers. Here are three of the most common deal breakers and advice on how to avoid them.
1. Too Low of an Appraisal
Every now and then buyers believe they are benefitted by a lower appraisal price than the agreed upon purchase price. This will force the seller to lower the price. Today most sellers rarely break even so this is the most common deal killer. If the appraisal is barely below the contract price, most sellers will bring their price down a little and the buyer will meet the seller halfway.
The buyers and sellers hands are tied when they receive the appraisal. There are two things the buyer can do to minimize the risk of letting a low appraisal kill the deal. Check the comparable homes that have sold in your area with your agent. Then do not make an offer above the average range of comparables even if there are multiple offers for this property. Next consider working with a mortgage broker who originates loans through its own bank. These lenders select from a smaller pool of appraisers that are qualified and knowledable in your area.
2. Property Condition Drama
Lenders today are concerned with two things: property condition and the number of distressed houses on the market. Most homes with crappy painting, faulty electrical systems, wood rot, etc. aren't likely to fare well when the appraiser walks though, let alone qualify for the asking purchase price. The seller would be willing to do some work but certainly not all if it because it probably isn't in their wallet.
Prevention is the best remedy for transaction ailment. If you are considering buying a short sale or a REO the bank literally means AS-IS! You should ask your mortgage broker to fill you in on what condition your lender is stating your house to be in. keep this standard in mind while searching. Your agent will help guide you which houses will and will not pass.
3. Loan Approval Takes too Long
It's common knowledge that buyers get a preapproval for a mortgage before they start house hunting. However, it's not common knowledge that this preapproval is just the tip of the iceburg. Getting your preapproval loan months before you have a contract is the best way to go because a lot can happen in the mean time.
It's pretty common for contract to include a contingency period of 17 days. The appraisal may take longer than that to come in, or the underwriter will want various forms of documents just to cause problems. htey also ask you for these things at different times, so it may take longer than 17 days to get all the requested forms and have the underwriter sign off on them.
Only remove your loan contingency when you get the green light. Most buyers ask to get an extension from the seller or the deal dies right there. Most sellers understand and will give you an extension, but bank sellers are hesitant to give the extension and especially when there are other offers.
here is the advice. Be ready to provide document information (more than once) and do it quick. the faster you get these to the underwriter, the better things will be. it might be in your intrest to work with a mortgage broker who has previously worked with an agent. This way your agent will stay on top of any loan process road bumps and inform the listing agent about the extension instead of asking for an extension at the last minute.