This has been a pretty good year for selling by owner. Buyers have been looking all year and with the increase in mortgage rates the buyers are signing contracts. Now what? For sellers, that means a few more things must fall into place. First, the buyer has a pre qualification letter, but does your house qualify. Here is a list of possible items the seller will have to deal with:
1. Home inspection: the buyer hires a home inspector to check the property for maintenance issues, heating/cooling/electrical issues, code issues, mold/moisture/roof/insulation issues, etc. If problems come up the buyer may insist you correct all items or they will back out.
2. Home appraisal: most contracts these days contain an ‘appraisal contingency’. If the appraisal comes in below the contract price, you may have to lower the sale price or the buyer may back out.
3. Title work: a title company will research the properties title to make sure there are no liens or encumbrances on the title and to verify who is the legal owner. Back property taxes, Federal tax liens, water bills, mechanics liens, etc are very common problems.
4. Mortgage company: the pre qual letter means the buyer is qualified for the loan, subject to verification. It takes the mortgage company several weeks to verify income, employment and debt of the buyer. Hopefully this all goes smooth, but some times it does not.
5. Buyer remorse: This is quite common considering the purchase of a home is the largest financial decision most people make in their life time. From contract acceptance to closing dates takes many weeks. This gives the buyer plenty of time to think about what they are about to do.
6. FHA/VA/FNMA: Most properties are bought using one of these government agencies. These agencies come up with more items the seller has to deal with. Right now with the government shut down, the mortgage pipeline is about to come to a screeching halt.
In the end, most properties under contract do close. Both buyer and seller need to keep a positive attitude.