As a seller, just because you’re under contract doesn’t mean it’s time to relax. It’s a bit like reaching the summit of a mountain. You’re only halfway to the finish line, which in this case is the closing table.
The due diligence period, typically the 15 to 30 days following contract signing, is the first hurdle for the seller. During this time period, when inspections, appraisal and repairs are done, the buyer can back out of the deal for any reason without penalty.
Appraisal problems typically arise when the appraised value comes in lower than the sale price and the lender balks at loaning anything more than the appraisal figure. To keep the deal alive, a seller can seek another appraisal or come down on the price of the home. The buyer can add more cash to the deal so the lender isn’t loaning more money than the appraisal. Your agent can also appeal the appraisal and provide the lender with different comparable sales.
The inspection report is another big hurdle between contract and sale. Minor repairs can easily be worked out but major issues, such as plumbing problems or significant roof repairs, can stall or derail a sale. Use the due diligence period to agree on repairs and a timetable for completion. A seller may opt to provide money at closing to cover the cost of repairs to be completed to the buyer’s specifications after the purchase.
The loan process is typically the biggest obstacle to a successful closing. Ideally, the buyer is pre-approved by a reputable lender for a certain loan amount. However, job loss, fraud, divorce or an undisclosed tax lien can all affect a loan’s status and cause the bank to withdraw its financial support. Not all lenders are equal either. Some work quickly and professionally to close a sale while others aren’t as organized. If problems with the buyer’s lender arise, try to get them resolved as soon as possible.