29 Oct What Exactly Are Buyer and Seller’s Rights During House Closing?
Things can get tricky between making an offer and closing a deal.
Getting swept up in the frenzy of buying or selling a home is easy. After the honeymoon phase comes that awkward stage between agreeing on a tentative deal and reaching the closing table. You might encounter many unforeseen situations in this window, and both parties have specific buyer’s and seller’s rights designed to prevent a major decision from becoming a major regret. These protections will ensure you don’t lose money or endure an unnecessary battle in the process.
Seller: “I accepted an offer, but now I’m wondering if I could have sold for more. Can I keep looking at others?”
Were you anxious to sell and worried another offer wouldn’t come rolling in? According to experienced real estate agent Kendra Todd, at Kendra Todd Group in Seattle, WA, accepting an offer doesn’t mean you can’t at least look at other offers. But once you are officially under contract, you are obligated to sell to that buyer (barring any other contingencies). But here’s the consolation prize: “[Sellers] can put a secondary buyer into back-up position so if the first contract fails for any reason, the second buyer is automatically under contract.”
Buyer: “The sellers didn’t disclose something about the property—are they on the hook?”
While it might seem disingenuous for a seller to not disclose to you that, say, a death occurred on the property, it may not be a requirement. That depends on where the home is located. Disclosure laws vary by state—and even city—so make sure you know what is required in the area where you are purchasing a home. If you’re buying in Washington state, for example, Todd explains, “The seller is required to fill out the seller disclosure statement, which has over 75 questions and covers a variety of areas—everything from whether they have the right to sell the home, to the sewer system and property defects, to if they have ever used it to manufacture illegal drugs.”
This guide explains state-by-state seller disclosure requirements.
Seller: “The buyer’s financing fell through before the close date. Can I walk away?”
If your buyer’s financing falls through or they are unable to obtain financing by the closing date indicated in the contract, you have the right to walk away from the offer. Lauren Rowland, an agent with Kenney & Company in Colorado, says a change in the buyer’s financing can also provide the seller with an out.
“If the buyer needs to put less down or change their loan from a conventional to FHA, or if any of the terms differ from the loan terms outlined in the contract—and would negatively impact the seller—the seller can choose not to accept them,” Rowland explains.
Buyer: “Uh-oh. I have some qualms with the property’s HOA contract. What can I do?”
From maintenance requirements to painting restrictions, HOA rules and fees aren’t always the easiest to live with. Thanks to one buyer protection, you won’t necessarily have to. Rowland explains, “In the Colorado contract, there is a date set for when the buyer must have the HOA documents for review. After the documents are reviewed, if the buyer is unhappy with anything in the HOA, they are able to back out—as long as they do so by the objection date in the contract.” Though the exact amount of time the buyer has to review the HOA Declaration of Covenants, Conditions, and Restrictions varies by state, every state has a grace period.
Buyer: “The inspection raised some issues I wasn’t expecting and the house appraisal doesn’t match the contract price. Can I back out of the deal?”
If the home inspection digs up issues with the property, like faulty wiring or plumbing, poor drainage, or defective heating, for instance, you may not be prepared to foot the bill. When this is the case, and the seller isn’t willing to fix the issue, you have the option to walk away.
In addition, if the property appraises for less than your offer, you have a few options. Since lenders won’t lend more than what the property appraises for, you can bring more cash to the table, wait for the seller to adjust the asking price, or rescind your offer altogether.
Buyer: “What are my options if my current home doesn’t sell before our closing date?”
Worried you’ll be strapped with two mortgages? You can make an offer that is contingent upon the sale of your current home, which will allow you to back out within a predetermined time frame. However, a seller may require a “kick-out clause” which means they can keep the home listed. If they receive another offer without a contingency, you will have a certain amount of time (usually 72 hours) to remove the contingency and move forward with the contract, regardless of whether your home has sold or not.