A residential real estate transaction might be the single largest purchase someone ever completes in their lifetime. People often commit years of future income toward mortgage payments and may intend to live at that property until they retire or die. Given the amount of money changing hands and the degree of commitment involved, real estate transactions often take weeks to finalize.
A lot can transpire between when a seller accepts an offer and when the actual document signing occurs. Any of the three issues below could potentially result in the delay or cancellation of a scheduled real estate closing.
Issues with the inspection
Both the buyer and the lender financing the transaction may require an inspection before the closing occurs. A professional inspector could uncover latent defects that cursory inspection did not locate. Those defects could have a major impact on the actual fair market value of the property. Buyers may need to renegotiate if an inspector notices surprising issues with the property or may even need to cancel the transaction if they cannot reach an agreement about addressing those defects.
A low appraisal
Property values can change within a matter of weeks in response to a high-profile local crime or a major employer going out of business. When an appraisal is low, buyers may no longer feel comfortable with the price and previously negotiated for the property. Sometimes, a lender may refuse to finalize a transaction specifically because the appraisal comes in lower than expected. Either a change of the purchase terms or a cancellation of the closing could occur when the appraisal sets the property value below the offered sale amount.
Financial issues for the buyer or seller
Perhaps the buyer suddenly loses their job. They may not be able to finalize a mortgage and get the money they need to complete the transaction. Maybe the seller experiences some kind of medical emergency that might prevent them from moving. Market changes make it impossible for the seller to find a new property to purchase once they move out of the home for sale. Sudden changes in the financial circumstances of either the buyer or the seller sometimes force a delay in closing.
Both buyers and sellers may want to include terms in their agreements that protect against the possibility of financial setbacks related to a delayed or canceled real estate transaction. Having help when negotiating closing terms and reviewing real estate documents may take some of the risk out of a home purchase transaction.