Death of a real estate deal

Flickr image by miikkahoo.

Take a proactive approach to buying or selling a home. By anticipating what could go wrong with your real estate transaction, you can take care of potential problems before they derail the deal.

Years ago, inspection issues were the likely culprit if a home sale fell apart. Defects were uncovered during the buyers' inspections that weren't known to them before they went into contract to buy the property. Sellers can reduce their exposure to transaction failure by ordering presale inspections before the property goes on the market.

Many of today's buyers use FHA financing, backed by the Federal Housing Administration. If your home is in great shape, there is a lower probability that FHA will require that work be done before closing. In one case, the work required by FHA couldn't be done in time and the sale failed.

HOUSE HUNTING TIP: Financing has become the biggest headache in the current market. Lender tightening on buyers' qualifying criteria and on appraisals continues to stymie many deals. And, the tightening isn't over yet. FHA is popular with low-cash-down buyers. The default rate on these 3-5 percent cash downpayment loans is rising. It's almost certain that FHA will modify their qualifying requirements this year.

Buyers can save themselves a lot of grief by making sure they're qualified for the financing they need before making an offer. Have your credit checked. Credit reports often contain erroneous information. This can keep you from qualifying for the best mortgage at the lowest interest rate. Repair your blemished credit report before your application goes to underwriting.

Expect the unexpected. Recently, homebuyers received underwriting approval and were told their loan documents would be ready to sign in a few days. Next, they were told that one more piece of information was needed before their loan documents would be drawn. This is not uncommon. ...CONTINUED

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