When to Walk Away from a Real Estate Transaction
Your home purchase is more than likely going to be the largest investment that you will make in your lifetime, so it is important to make sure you are represented fairly and are getting the best value for your purchase. While every aspect in a purchase is important, there are a few key points in your contract that can make or break your deal, and knowing when to walk away if needed is powerful knowledge to have on your side.
Unrealistic Price. We have all seen them. Whether the Realtor is clueless or the seller is ultra stubborn, some houses are simply priced too high. When writing an offer your Realtor will be able to do their own market research to determine a fair value for the home, which is the smart place to start with your offer. If a seller is unable to settle on a price that is lower than they are asking and closer to what the home is really worth, it can be a good time to move on. This is also where an appraisal can be to your benefit; if you have agreed on a sale price and have moved forward with your purchase, one step in the sale process will be having an appraisal ordered by your lender. An appraiser will take one of three approaches to determine the value of the home you are purchasing, most will use an approach that determines the value based on comparable properties that have sold in the area. If an appraisal value comes in lower than your sale price, this is a good time to renegotiate the price with the seller, and walk away if they are unwilling to negotiate. No one wants to pay more for a home than it is really worth.
Excessive Repairs. An experienced Realtor will advise you to have a home inspection performed while you are in contract on your future home. Your home inspection will summarize parts of the home that might need to be repaired or replaced. If the seller is unwilling to make the repairs you believe are necessary, this might be a good time to walk away. As a buyer, you must require the seller to make the necessary repairs before you complete the purchase of the home. You definitely don’t want to buy a house that is going to cost you thousands in repairs, unless you are intentionally looking for a “fixer-upper” property to improve and sell for a profit, in which case you will be paying a much lower price.
Clouds on Title. Once in contract your Realtor will request a title report from a title and escrow company which will show if there are any “clouds” or defects on the title, or deed. In most cases a title issue can be repaired, but some defects take a lot of time and money, and others may stay on your title for years to come. If you come across issues on title that are going to adversely affect your purchase, this might be a good time to consider moving on to another home that will be an easier purchase.
A Realtor who has ulterior motives. Now that you have reached the point of buying a home, hopefully you have chosen an honest and ethical Realtor to represent you. If at any point in your transaction you feel forced to buy a home that you may not be so sure about, it’s absolutely your right to back out and find someone to fairly represent you, and not be favoring the sale and commission. You should be comfortable about your decisions and not be pushed into anything that might not be the best fit for you.
Keep in mind that buyers are not the only ones who have the ability to walk away from a transaction. Sellers have just as many rights as a buyer to make sure they are treated fairly in a deal. Granted, buyers will have more back-out opportunities in the course of a transaction, but sellers still have the right to a fair sale price and fair negotiations throughout the process.