Wednesday, 8 March 2017
Just how sure is a sure thing in real estate sales?
Well, as close as it gets anyways. Because, really, how sure is a sure thing when people are involved?
You have a legally binding contract for the sale of the house, so in a sense it is a sure thing. But we also know that contracts do get broken sometimes for a variety of reasons.
Even though the buyer may have made a firm offer, their bank or mortgage company may still want to do an appraisal. If the bank's appraiser decides the property is worth less than the buyer was (legitimately) willing to pay, this could leave them in a position where they have to make up the difference. Not all buyers are in a good enough financial position to cover this gap when the [appraisal goes "bad"]. They may find a way to make it work or they may walk away, breaching the contract - irresponsible as that is. Fortunately, people generally follow through on their agreements. Even if the appraisal is weaker than expected, well-informed and represented buyers don't make firm offers without being prepared and understanding what they are getting into.
But the lawyers could also turn up unexpected issues with the title search. This could be a 50 year old mortgage that never got discharged properly, a minor encroachment, or even a more recent mortgage fraud on your title that you didn't even know about. What is involved in correcting the issue can vary a fair bit from one situation to another, and some problems may get taken on and covered by title insurance. It is often only a matter of time to get these problems fixed, but it can make deals go sideways quickly.
And even if there are no surprises directly related to the deal, life sometimes gets in the way of things. The buyer's financial situation could change drastically if their spouse passes away unexpectedly through accident or illness, they could lose their job, or their current house could go up in flames and kill their sale and the expected cash proceeds they were counting on.
So we tend to move forward taking a firm sale as a sure thing... we just have to remember that when people are involved, a "sure thing" still means 99.99% at the most and never really a 100% guarantee. As with anything in life, we just deal with problems if they arise.