Issues in Buying Residential Real Estate

Whether you are buying your first piece of property or purchasing residential investment land, there are many stages of the purchasing process in which issues and concerns may arise. Some of these issues are enough to terminate the transaction and the contract, while others can be resolved with a little bit of communication and compromise. When in doubt, work with real estate professionals to ensure legalities are met to everyone's satisfaction.

Title

Most lenders require a title search and insurance, which states that the subject property is free of liens from any prior owners. Before residential land is transferred from the seller to the buyer, all debts held against the property must be paid in full and any disputes or concerns must be resolved. Even if you are not obtaining financing to purchase the property--if you intend to resell the property--title needs to be clear. The longer property disputes linger, the more difficult it will be to obtain the proper paperwork and signatures necessary to discharge these disputes from the county clerk's records.

Inspection

During the formal inspection of the property and any buildings on the premises, considerable issues could exist, which would not be identified by the average person. These items may include major mechanical or structural defects, termite infestation, issues with underground wells or oil and septic tank.

While some issues can be resolved with a credit from the seller or an agreement to remediate prior to closing, if the damage or issue is significant, it can cause the deal to fall apart. In addition to a home inspector, a specialist, such as a plumber or an environmental engineer, may need to examine the property to provide an estimate of the cost to repair or replace an item. Typically, unless the damage is a major mechanical or structural defect, the contract cannot be voided without the consent or agreement by the seller.

Financing

In most cases purchasers need to secure some amount of financing in order to pay for the property. Considerable issues may arise during the underwriting process that could result in the delay or termination of the real estate transaction. Many individuals believe that pre-approval by a lender means they have successfully secured funding but until an underwriter determines the risk and writes the policy this is not true. Additional documentation regarding income, employment, savings and investments, and other financial data or asset checks may be needed to close on the loan.References:

• Environmental Considerations When Buying or Selling Real Estate
• National Association of Realtors: First-Time Homebuyer's Basics