2 Big Problems That Could Derail Your Home Purchase After an Accepted Offer
by Christy Bieber | Updated July 19, 2021 - First published on May 22, 2021
If you've had an offer accepted on a home, you may assume you'll get to closing -- but that's not always the case.
When a home seller accepts your offer to buy their home, you may assume that it's a done deal and you'll soon be moving in. Unfortunately, that isn't always the case.
In fact, there's not just one, but two big problems that could interfere with your home-buying goals. Keep reading to learn more about how inspections and appraisals can derail your home purchase.
1. An inspection that turns up serious problems
In most cases, when you make an offer to purchase a home, you'll make it conditional upon the outcome of a home inspection. That's a smart financial choice because you don't want to buy a home without knowing about any potential problems.
Unfortunately, while requiring an inspection as a condition of buying makes sense, it could put you into a difficult position if it turns up major and expensive problems with the house. When that occurs, you'll likely want to try to renegotiate the terms of the deal with the seller, either by asking them to lower the price to cover the cost of repairs or requesting they make the fixes themselves.
If the seller agrees to address the issue, then you can move forward with the sale as long as they repair the home to your satisfaction. But if they won't work with you, or if the problems can't be resolved easily, you may decide you can't go forward with the sale because you'd just be buying a house with too many problems.
2. An appraisal that comes in way too low
In most cases, your mortgage lender is going to require that you have the home appraised before they give you a loan to buy it. That's because they want to know its market value so they can determine the loan-to-value ratio. The loan-to-value ratio refers to the amount you're borrowing relative to the fair market value of the home as determined by an appraiser.
Unfortunately, home appraisals can sometimes derail the home purchase, especially if your home doesn't appraise for as much money as you're paying for it. If you want to borrow $200,000 to buy a home that only ends up appraising at $190,000, the lender is not going to end up approving the loan.
If your appraisal comes in very low, you'd likely have little choice but to try to renegotiate the price with the seller or come up with a larger down payment so you can maintain the loan-to-value ratio the lender requires.
If the seller won't drop the price due to the low appraisal and you can't or won't pay the extra money you need to buy the house, you won't be able to follow through with the purchase.
While it can be disappointing to have an inspection or appraisal derail the purchase of a home that you want, it's actually a good thing to find out if the home has problems or if you are overpaying for it. After all, you wouldn't want to move into a home that you immediately have to pay tens of thousands of dollars to repair, nor would you want to overpay for a property and end up owing more than the home is worth.
Fortunately, once the problem arises, you should be able to get your deposit back -- assuming that you made your offer contingent on both a satisfactory inspection and appraisal. Then you can move on to buy a property that doesn't come with these major problems.
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