Only situations

My wife and I recently took our children to the Caribbeans and our fantastic tour guide said something that I hope our kids never forget: "We have no problems, mon. Just situations, and we take care of them before they become problems."

In 2002, I started my real estate career in the commercial office brokerage sector. The terms of each transaction were unique and often complex. Each deal required a high level of sophistication and typically involved separate attorneys negotiating each aspect of an agreement before terms were finalized.

Comparatively, residential real estate transactions are straightforward, and our state contracts are usually negotiated without an attorney. We strive to create a smooth process throughout, but situations inevitably arise. Navigating and providing creative solutions is essential to achieve a successful outcome.

Here are some of the top situations we see:

Hidden/Latent Defects

After the close of the transaction, buyers may find damage that wasn't previously visible: mold, foundation issues, termites, plumbing — the list goes on… Who's responsible? It can be tough to determine and costly to remediate.

Tips:

• Sellers: Get your own appraisal and inspection (including for pests) to know the property's condition and minimize your liability. Always disclose known defects — no matter how minor.

• Buyers: Before submitting the offer or reaching the closing table (prior to the contingency period expires), hire an appraiser and/or inspector you trust.

Breach of Contract

Sometimes it's inevitable that one of the parties in the purchase agreement will need to breach the contract. Though it's generally done so with careful consideration and good intentions, both parties need to be prepared for the consequences and take steps to avoid the situation in the first place.

Tips:

• Ensure the agreement includes everything you want and contingencies to protect your interests (your Realtor will guide you here).

• Be prepared to lose your deposit if you're the buyer or to return the deposit as a seller.

• Communicate openly with the other party and your Realtor and address issues as soon as they arise.

Title Issues

It can happen that the seller isn't aware of encumbrances (loans, liens, or other deed claims) against the property, throwing a sizeable wrench into the gears at or after closing. These can be discovered before closing (preferred) or after (the buyer and lender could be liable).

Tips:

• Sellers: Pay for a comprehensive title search before listing the property.

• Buyers: Conduct a title search with a reputable company. Get title insurance to protect yourself from third-party claims that may arise in the future. Lenders generally require this. Make sure to get coverage if you're paying all cash or buying a property out of probate or that's been inherited.

Financing Challenges

What if the buyer can't qualify? The situation can become tenuous and the transaction may fall through if it's close to closing. This is a common situation and best addressed in advance:

Tip:

• Sellers and buyers: Require or obtain a pre-qualification and proof of funds before accepting/submitting an offer. Ensure the buyer is aware of how interest rate increases may affect affordability and approval potential.

There are plenty more situations that would take too long to delve into here. If you're considering buying or selling, reach out to me to discuss potential issues that might come up in the transaction.

After working through hundreds of successful closings, my team knows what warning signs to watch for before and during escrow. -Henry