3 Most Popular Buyer questions...What happens if?
1. What happens if I do not get the loan for the house?
Most Real Estate contracts are subject to the buyer qualifying for financing. The type of loan, terms of the loan and time frame to apply for financing and providing the loan commitment is all spelled out in the contract.
If you do not qualify for that particular loan (listed in your contract) and you have diligently applied for financing and submitted all the required documents, your escrow deposit will be refunded.
In addition, if you do qualify for a different loan, or a higher loan amount, you are not contractually obligated to take it. You are also not required to start applying with additional lenders unless you agreed to that in your contract...or you want to.
2. What happens if the property does not appraise?
Typically when financing, the terms of the real estate contract is conditioned upon the property appraising at the purchase price. (unless you waved your appraisal contingency.)
The lender will use the appraised value or the purchase price...whichever is LESS
If the appraisal comes in less than the purchase price these are your options:
- The seller can reduce the purchase price to the appraised value.
- The buyer can make up the shortage by bringing cash to closing.
- Both parties can negotiate a compromise.
- Buyer can cancel the contract, because the terms under which the buyer agreed to buy have now changed.
In most cases, I have found that when the seller still wants to sell and the buyer still wants to buy, a successful compromise is negotiated.
In a hot sellers market like today, many appraisals are coming up short, but that does not necessarily mean that the property is not worth the contract price. Besides, an appraisal is only an opinion, it is not science.
3. What happens if I do not want to buy the house after inspections?
Let's assume for a minute that inspections revealed deficiencies that are either serious, costly, or a complete turn off to you.
If your contract is subject to your home inspections, then “yes” buyer can cancel the contract (during the inspection period) and get all deposited escrow monies refunded.
You must however:
- Have an inspection contingency in the contract.
- Cancel within your inspection time frame stipulated in the contract.
Don’t let anyone convince you that you “must” still buy the property. Even on a Florida “AS-IS” contract you still have the right to do home inspections and renegotiate the contract or choose not to buy the property without you having any penalties.
Go here to learn more on what “AS IS” means…
More questions? call Buyers Broker of Florida 727-202-9130. We will be glad to answer them.