Top 5 Surprises that can Stop your Home Purchase Cold in Fairfax County
When a seller wants to sell a home and finds a buyer who wants to buy it, you’d think they’d have a deal. What could go wrong?
These days, plenty. In this tough financial climate, there are both longstanding pitfalls and a crop of new ones. At best, these can cost you time or money. Or both. At worst, the home you want could slip from your grasp.
1. The Appraisal Kills the Deal
Even after you and the seller have agreed on a price, the appraiser — the expert assigned by the bank to authenticate the home’s value — can ruin everything. Appraisers arrive at a home’s value in part by comparing recent sales of nearby homes. But falling prices, and foreclosures and short sales in the neighborhood, make these comparisons tough.Your sale can suffer if the appraiser doesn’t know the neighborhood. Choose an agent with deep experience in the neighborhood.
2. Your Lender Demands Home Repairs
In this fussier climate, lenders may hold up a sale if the appraiser points out even minor repairs that need to be done. There’s nothing new in lenders insisting that homes they finance be shipshape. But a few years ago, a lender might let the buyer and seller agree to complete the sale and fix any minor problems later, paying for them out of the seller’s proceeds held in escrow. Today’s buyers and sellers rarely are given that kind of slack. To anticipate issues an appraiser might raise, scrutinize the home inspector’s report for any potential problems with the property.
3. Past Claims on the Home
For example, there’s a chance, given all the financial turmoil these days, that someone besides your seller has a claim on the house.
- A bankruptcy — not uncommon these days — may have produced creditors who have filed claims against the home to get what’s owed them.
- Your seller may have argued with a contractor who did work on the house years ago. Contractors or suppliers with beefs against the owner can file mechanics leins against the property, preventing it from being sold until the claim is settled.
- Maybe the seller lost a lawsuit and failed to pay — or perhaps didn’t know about — a court judgment worth thousands of dollars. You can’t buy the home until the debt is satisfied. Ditto for unpaid child support or alimony.
Missing permits are another deal-stopper, Sellers occasionally complete do-it-yourself remodeling and think, “What the heck, I don’t need those expensive permits.” But they do. Buy title insurance. With insurance, your claim to your home is protected. Warning: If an insurer declines to insure the title of a home you want to buy, walk away from the deal.
4. Tougher Financial Requirements
Financing is a deal-stopper for many buyers. Lenders are edgy these days. They’re rejecting a quarter of all mortgage applications. A few years ago, the average credit score for a mortgage loan was 720. Now it’s 760. Get your ducks in a row before home shopping. Start a year ahead if possible. Clean up your credit score and squirrel away a big down payment. Apply for financing and get preauthorized before hitting the open houses.
5. Preapproved? We Changed our Mind
Experts advise you to apply — and comparison shop — for a mortgage loan before shopping for a home. This is called getting “preapproved.” Unlike a “prequalification,” a quick check of your credit score and employment, preapproval is supposed to bind the lender to give you a loan at specific terms in a specific time period. But lenders may preapprove you and later back out. More than a quarter of loans that are preapproved are ultimately rejected. Ask your lender how firm your preapproval is and what else could be required. Your lender should say you’ve been preapproved under certain conditions and should name them.