Buying a house can be as risky as it is thrilling. You may feel so excited when you find a house in the right school district that is within your budget that you can barely contain yourself. You may have an emotional response to the perfect breakfast nook or a professionally-designed garden in the yard. You immediately start thinking of the property as your new home.
People often become so fixated on factors like location and appearance that they might overlook potentially big issues with a property. Lack of knowledge about common house defects combined with a focus on specific features might mean that someone misses warning signs of a big problem when touring a home.
Having a professional inspection protects you as the buyer and is usually mandatory when you finance your home purchase. The lender wants to know that the home is in appropriate condition. What happens if the property fails the inspection?
Your financing may be at risk
When a house doesn’t pass inspection, the sale process will likely grind to a halt. Your mortgage lender may require certain repairs before they underwrite the property. In some cases, those repairs could be thousands of dollars.
Sometimes, they may not be realistic at all. For example, with an FHA loan, a house built in the 1950s may be subject to current housing standards. You might have to tear out and rebuild the staircase just to qualify for the loan.
Some people are able to find alternate means of financing that work around the defects found during the appraisal.
You may need to negotiate with the seller
If you still want to move forward with the purchase, you may need to change the price or request some concessions from the seller. Reducing the price by the cost to make the necessary repairs is a common request. So too is asking the seller to split the cost with you.
If the seller refuses to cooperate and compromise, you will have to decide whether the financial impact of those defects is sufficient to withdraw your offer or if you will absorb those losses and buy the home anyway. Understanding that an appraisal could completely derail your residential real estate closing can help you have realistic expectations when buying a home.