What could delay a real estate closing?

On Behalf of | Jul 20, 2023 | Real Estate Transactions | 0 comments

Real estate closings could experience delays whether buying property with cash or through a mortgage. Buyers and sellers typically conduct appraisals to negotiate their purchase agreements. As noted by Bankrate, transactions can get held up when property appraisal values come in lower than expected.

If a property’s market value changes unexpectedly, the involved parties may begin stalling to obtain second opinions. Sellers may need to lower their asking prices to find buyers who could afford higher down payments. An unforeseen storm or natural disaster could also substantially change a property’s value.

Adding contingencies to purchase agreements

Bankrate also notes how some lenders may not approve a mortgage if an appraised value came in too low or if the property failed its final inspection. The involved parties may, however, add contingencies to their contracts to reduce the risk of a canceled transaction.

A negotiated appraisal or inspection contingency could outline when either party may back out. With an appraisal contingency, for example, sellers must agree to lower the price to close the transaction. With an inspection contingency, sellers agree to correct or pay for repairs found during a final inspection.

Discovering property or insurance issues

As noted by Forbes, some buyers conduct their own inspections; they may agree to fix any discovered problems when buying a property with cash. A mortgage lender, however, may require its own inspection to approve the loan. Delays could occur if a seller does not agree to lower the price to cover needed repairs.

Properties situated in areas prone to hurricanes or flooding may bring additional issues. Some carriers may not cover certain properties or demand high premiums for others. In some cases, buyers may decide to cancel the deal if they determine that the cost of insurance or repairs reduces their hoped-for gains.