The Three Main (Usual) Hurdles To Getting To Closing


The Three Main (Usual) Hurdles To Getting To Closing
By Scott Rogers • November 4, 2021
While every home sale is different -- with unique contingencies based on the needs and situations of the buyer and seller -- there are three main hurdles that most buyers and the houses they are purchasing must clear to make it to closing. So if you are selling your house -- where is your contract in this process? Have you cleared 1, 2 or 3 of the hurdles, thus far? There will be plenty of other details to attend to, but these are the three main areas of focus. Evaluating the property condition, the property value, and the buyer's finances.... INSPECTION - This is an evaluation, by a home inspector, of the condition of the house. Clearing this hurdle typically involves requesting that the seller make some repairs to the house (or negotiate further on price) based on new information about the property condition discovered during the inspection process. APPRAISAL - This is an evaluation, by an appraiser hired by the purchaser's lender, of the value of the house. If the property appraises for the contract price (or higher), all is well -- otherwise, the buyer and seller may need to renegotiate the contract price based on the appraised value. LOAN APPROVAL - This is an evaluation, by a lender (and their underwriters) of the purchaser's financial situation. The lender must confirm that the buyer has the income to support the mortgage payment required for purchasing the home. Again - there are many other smaller hurdles (for example, a termite inspection) and larger hurdles (for example, a home sale contingency) that may need to be cleared in your purchase (or sale) of a home -- but these three main hurdles (inspection, appraisal, loan approval) are the three main mileposts during the contract-to-closing process that we'll be focused during the transaction. NOW, TECHNICALLY, 2021 IS A BIT DIFFERENT... Some buyers in today's market are skipping a home inspection -- so you might be dealing with two hurdles instead of three... ...and some buyers in today's market are not making their contract contingent on an appraisal -- so you might be dealing with just one hurdle instead of two or three. BUT YOU MIGHT ALSO BE DEALING WITH SIX HURDLES! Would you rather have three main hurdles to clear, or six? Let's imagine that you receive two offers on your house, which is listed for $250K.... Offer 1 = $245K, contingent on an inspection, appraisal and loan approval Offer 2 = $250K, contingent on a home sale, inspection, appraisal and loan approval In Offer #2 -- even if the house that they need to sell is already under contract, you must remember that by accepting a contract with a home sale contingency, you are likely, effectively doubling up on all of the main contract contingencies. You're setting out six hurdles to be cleared, instead of just three. The home inspection must be resolved successfully on your home, as well as your buyer's current home. The appraisal must be approved on your home, as well as your buyer's home. You're waiting on your buyer's loan approval, as well as your buyer's buyer's loan approval. So -- a slightly higher sales price, with a home sale contingency, is not always more valuable to a seller than a slightly lower sales price without a home sale contingency. Selling your home can be quite straight forward and a very smooth process -- but we typically have one, two, three or even six significant hurdles to clear before we successfully make it to closing. Receive Updates by Email Recent Articles: Is There A Price You WOULD Pay For This House? There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 22, 2024 (unless otherwise noted).
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