Keep Your Options Open When Buying a House

This past summer, the National Association of Realtors® reported the largest number of existing home sales since February 2007— and I expect we will see similar results when this fall’s final numbers come in. With more individuals looking to enter (or re-enter) the real estate market, buying a house can be expected to continue to be newly competitive.

That does not mean that you should adopt a defensive mindset. Even after finding what looks like a great deal on a seemingly terrific home, it’s wise to keep an eye out for unexpected developments that could make it necessary to walk away from the deal. Some of the situations that usually don’t (but still can) trigger that option:

• If the home inspection uncovers issues that you didn’t know existed, you have several options. The seller may offer to pay for needed repairs, or add a credit at closing. Depending on the extent of the problem, it’s sometimes wiser to simply take the credit and avoid complex amendments that could overcomplicate the contract. But if the seller refuses any concessions, it could be that you won’t be buying a house as quickly as hoped.
• A mortgage can fall through unexpectedly. An abrupt change in employment, credit downgrade, or if the bank has trouble verifying income, an underwriter may back away from the table. Most often, financing contingencies in the paperwork will allow you to walk away from the deal.
• An unexpectedly low appraisal can make buying a house financially unworkable. When a home appraises for less than the agreed-upon selling price, the bank will not finance. This means the seller will either have to lower his price, or you as the buyer will need to come up with additional cash to cover the difference. You may believe the appraisal is not a fair measure of the property’s true worth (at least to you) — but remember that should you later wish to sell, the next appraisal may not be much higher.

In all cases, whenever you contemplate buying a house an agent can help you reach smart long-term decisions.