When is a House Truly Sold?
When is your house really "sold?"
It is sold when the deed is recorded by the title and escrow company at the courthouse in your county.
In a perfect world, the moment the offer was made, accepted and signed the house would be "sold." But I know it surprises you to hear this isn't that perfect world, and there is many the slip twixt the cup and the lip. (Sure, you can quote us on that.)
First of all, some buyers just get cold feet. After all, the purchase of a home is probably the biggest financial decision of most people's lives. It is also an emotional and quality-of-life decision. Not surprising some buyers simply bail.
Next, there are inspections. The buyers think they are getting one thing, then the inspections reveal the house is only standing because the termites are holding hands inside the walls. Of course, it may not be that dramatic of a flaw, but bad roofs, improper drainage, cracked foundations, broken window seals, leaking plumbing, electrical problems and more can cause buyers to back out of the deal.
There of course is the question of a mortgage. Most people cannot go in and plop down cash on the table at the escrow company. The main reasons loans are not successful are bad credit, too much debt for the amount of income, condition of the house and appraisal. Mortgage companies have guidelines to follow when assessing income to debt. So if the buyers make $2000 per month, and the mortgage is $1800 per month, it just won't happen.
Houses which are in poor condition may not qualify for a loan. A third-party professional is hired by the mortgage company to determine the value of a home and make sure it matches the loan amount. The buyer might be willing to pay $400K for a home, but if the appraiser says it is only $380K it could kill the deal.
Another potential issue comes after the inspection period is concluded. The buyer now has all the information about the house - warts and all. So they may feel they offered too much for the home, considering the "hidden" flaws. Even though the California Association of Realtors purchase agreement is essentially an AS-IS contract, the potential buyers may come back and ask for a reduction of the sales price or completion of repairs. If a meeting of the minds is impossible, the deal could fall apart.
There are also sometimes flat out surprises. Because we are coming out of a time when transactions were occurring powered by bank foreclosures, there are sometimes title transfer problems which arise. A seller finds out the title still resides in the foreclosing financial institution's name. The mortgage company will pull the credit report of the buyer one last time before funding and something new will appear which needs to be fixed.
Each transaction runs under a time frame outlined in the contract. But if everyone is not on their toes, the time could stretch out. Some buyers or sellers can get very upset when this happens, and may just throw up their hands and walk away in anger.
Realtors work very hard to keep transactions moving forward smoothly. After all, we only get paid when all the work is completed and the title transfers. But though we cannot promise that the path to home selling or buying will be perfectly calm (in fact, it rarely is!) we do promise to be with our clients every step of the way. At Four Corners Real Estate Group, we believe in providing a Five Star Experience for every client.