If your home is under contract that means it is sold, right?
That’s not always the case. When selling a home, there are three main stages during the transaction where contracts can fall out. Those are:
- The Inspection
- The Appraisal
- Final underwriting for the buyer’s loan
The Inspection Process:
The buyer pays the seller an amount that “buys” him days to inspect the home and the ability to cancel the contract. This is called the “Option Period.” During this time, the buyer can terminate the contract for ANY reason. The highest percent of contract terminations occur here.
The Appraisal Process:
The buyer’s lender orders an appraisal of the property to protect their loan investment. If the appraised value is lower than the agreed purchase price, there are 3 options:
- Seller can lower the price to the appraised value
- Buyer can bring more cash to closing to compensate for the price difference
- Seller and buyer can share the cost of the difference between the purchase price and appraisal value
- Buyer can terminate the contract and receive their earnest money refund
Final Underwriting for the Loan
This is where cash is KING – there is no underwriting required for a cash purchase. A prequalification letter from the buyer does not mean the buyer is totally approved for the loan. Typically, the lender has not reviewed tax documents, divorce decrees, overtime information, and many other items that could disqualify a buyer’s loan. This is done in the final underwriting process and at this point in the process, there is a small risk of contract fall out.
Of course, using a great realtor team like The Christenberry Group for your home sale and purchase keeps you in the know about your closing process, and helps you “fail proof” your move. Give us a call – 817-504-4338 or check out Jean Team Homes.