People often become so focused on the outcome of the home-buying process that they rush through it and put themselves at unnecessary risk as a result. It is beneficial to act with certainty when people find a property that fully meets their needs. However, buyers who acquire real estate or simply make an offer on a property are very vulnerable throughout the process.
Things can go wrong that might endanger their financial resources. They could find themselves locked into an unfavorable homeownership scenario. Although people may try to represent themselves or work solely with a real estate agent during a transaction that could define the rest of their lives, the risks involved might make it worthwhile to partner with a lawyer in addition to or instead of an agent. The following are generally the biggest risks that buyers have to address in a real estate transaction in this way.
The protection of earnest money
When making an offer on real property, buyers typically deposit earnest money with their agents. That money is part of their down payment and also proof that they intend to follow through with their offer. Unfortunately, if people don’t go through with the closing, then their earnest money is potentially at risk. Adding appropriate contingencies to an offer can help people protect against the scenario in which they cannot afford to make another offer after one transaction falls apart.
The risk of financial over-extension
Buyers who find a property that seems perfect are often eager to make a competitive offer on the property. Unfortunately, their enthusiasm may lead to them offering more than the property is actually worth. An appraisal gap scenario could leave someone unable to acquire financing and might lead to the cancellation of a closing. If buyers come to the table with a cash offer, they could lose their capital and end up responsible for a property in mediocre condition that may not warrant the price they paid for the home.
Challenges assuming possession
People frequently assume that once they close on a home, the risk involved in the process is over. However, the seller may not leave by the possession date. Buyers often need to protect themselves by including post-occupancy possession terms in the offer that they negotiate with the seller. This can provide them with financial compensation for any delays in assuming possession and can potentially motivate a seller to vacate the premises in a timely manner. Buyers are also at risk if there turn out to be issues with the title for the property. Outside parties could eventually take legal action seeking to gain access to or control over the property.
Those preparing to buy real estate may need help researching individual properties, negotiating favorable contract terms and including the right provisions in their offers for optimal protection. Understanding the challenges involved in acquiring real property may help people obtain the protection they require.