The process of buying your first home can be both an exciting and overwhelming experience. Often, it is the largest investment a person will make in their lifetime and a transaction that can come with a lot of legal and financial risk. With that being said, with good communication, meticulousness and compliance with the process, a real estate deal should proceed without any drawbacks along the way.
Nevertheless, it is best to be prepared for the worst case scenario should it transpire. Many buyers and sellers may be taken aback when they learn a transaction falls through between signing the Agreement of Purchase and Sale and the closing date. Here are some of the possible reasons why:
Home Inspection Concern Arises
Obtaining a home inspection from a reputable company is a must-do during the home buying process. If the existing survey is outdated and/or you plan to make some major changes to the home, hiring a qualified surveyor to complete an updated survey is recommended.
Unexpected discoveries about the condition of the property can impact the sale or rather the non-sale of the property in question. The best case scenario is the buyer is able to negotiate a discount off the price, and worst case scenario, the buyer withdraws their initial offer completely if the offer was conditional upon a home inspection.
The Buyer Unexpectedly Cannot Secure Financing
A pre-approval from the bank does not always guarantee financing. This situation can go one of two ways. At best, there will be a delay or extension of the closing date until finance is secured.
Alternatively, and maybe the most straightforward remedy, is the seller to accept the breach of contract, terminate the agreement and keeps the deposit. As the seller, you then have the benefit of walking away and selling to another buyer.
The Buyer Changes Their Mind
It is common to have second thoughts when purchasing what you thought was your dream home. However, once an Agreement of Purchase of Sale has been signed with no conditions, the situation can get complicated.
Check your Agreement – for pre-construction condominiums, often there is a 10 day "cooling off period" clause where buyers can walk away from the deal within that time period. In other circumstances, you are legally bound to follow through with the transaction or be subject to a penalty.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.