There are many steps to successfully closing on a home, from making an offer to inspect the house by a professional to get your mortgage commitment to sitting at a closing table.
One final step in the closing process is a final walk-through before getting to the closing table.
A final walk-through is a buyer's final opportunity to inspect the house to ensure it is in the same condition as when an offer was made.
Many first-time buyers question what happens when problems are discovered at the final walk-through. The answer depends on the severity of the issue.
A common remedy is an escrow holdback of some of the seller's proceeds from the sale. A hold-back agreement may not be the only solution depending on the situation.
We will examine what you need to know when problems are discovered before closing.
A final walk-through in real estate is a crucial step in the home-buying process. It is essentially a final inspection of the property just before the closing. This walk-through aims to ensure that the property is in the same condition as when the offer was made.
The buyer will check to make sure that any repairs or agreed-upon changes have been made and that the property is broom clean and in good condition.
During the walk-through, the buyer will typically be accompanied by their buyer's agent. They may also bring along a home inspector or contractor if they have specific concerns that were agreed to resulting from the initial home inspection.
The buyer will check the property's major systems, such as plumbing, electrical, and HVAC, to ensure everything works. They will also check for any damage, such as holes in the walls or stains on the carpet.
If problems are discovered during the final walk-through, the buyer may request that the seller make repairs or provide compensation.
A remedy for a buyer could include a reduction in the sale price or an escrow holdback of some of the seller's proceeds from the sale. In some cases, the seller may agree to make the repairs before the closing, while in other cases, the buyer may be responsible for making the repairs themselves after the sale is complete.
In a sales contract, a provision typically enables you to conduct a final inspection of the property within a day before the closing. This allows you to ensure that the seller has vacated the premises, tidied up, completed all agreed-upon repairs, and complied with other stipulations outlined in the contract.
For example, if you negotiated after the inspection for the seller to make a repair and a permit wasn't taken out, you should ensure the seller gets the required permits. Otherwise, it becomes your problem in the future.
When doing a walk-through of a property, it is important not just to glance around. Take a few minutes to inspect the property thoroughly. Open doors and windows, check the air conditioning and furnace to ensure they function properly.
Turn light fixtures on and off, flush toilets, and run water in sinks to check for leaks. By thoroughly inspecting, you can identify and address any potential issues before they become bigger problems.
What you should do when discovering issues at a final walk-through will depend on the severity of the problem. Here is some general advice to keep in mind. Make sure you lean on your team of professionals for further counseling.
Get your real estate agent's opinion on the situation and how to satisfy it. It likely won't be the first time your agent has encountered a problem on closing day.
It is sometimes necessary to postpone the closing of a sale for a few days to ensure that any issues have been resolved before signing the final documents. This is a wise decision, as it can be difficult to rectify any problems once the funds have been transferred.
As mentioned, one of the more common remedies is to hold back some of the seller's funds from the transaction. A hold-back agreement keeps the seller honest and holds their feet to the fire to rectify any issues. Usually, the amount held back will be large enough so the seller has ample reason to come through.
The buyer's and seller's attorneys will typically negotiate an appropriate amount to be held in escrow.
When purchasing a property, reaching a mutually beneficial agreement with the seller is crucial. This may involve negotiating changes to the sales contract, such as the seller agreeing to cover the costs of any defects or agreeing to split the expenses with you.
Alternatively, you may be able to leverage your position to secure a lower sale price. Finding common ground with the seller is crucial for a successful transaction and ensuring a smooth move-in process.
The issue would have to be substantial to walk away from the transaction. Rarely is there a catastrophic problem that would cause a termination, but it could be an option in some circumstances.
Legal options are available if a seller is reluctant to repair an issue previously agreed upon during negotiations. Seeking the advice of a real estate attorney with experience in this area can guide you on the appropriate steps.
Steps to resolution may include the attorney drafting a letter on your behalf or representing you in court if the issue cannot be resolved through negotiation.
The final walk-through is a critical step before closing on a house. It gives the buyer one last chance to ensure everything is in order before they take possession of the property.
If any issues are discovered, the buyer and seller must work together to develop a satisfactory solution before the closing can proceed. Closing day for a buyer happens quickly. Getting any issues worked out before all the final paperwork is signed will be vital.