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What Happens if There Are Problems Before a Closing

By Bill Gassett | June 7, 2023

What to Know About Final Walk-Through Problems

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.

Problems at Final Walk-Through

What is a Final Walk Through in Real Estate?

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.

The Real Estate Contract Gives You The Legal Right to Do a Walk Through

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 to Do If You Find Problems at The Final Walk Through?

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 Advice From Your Real Estate Agent

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.

Don't Close Until You're Satisfied

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.

Hold Back Some of The Sellers Funds

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.

Renegotiate The Sale

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.

Walk Away From The Sale

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.

Take Legal Action Against The Owner

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.

Final Thoughts on a Real Estate Walk-Through Before Closing

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.

Bill Gassett is an authority in the real estate industry with 38 years of experience. Bill is well respected for his informative articles for buyers, sellers, and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, the National Association of Realtors, Inman News, Newsbreak, Credit Sesame, Realty Biz News, and his own authoritative resource, Maximum Real Estate Exposure. He has been on of the top RE/MAX agents in New England over the last two decades.
  • One comment on “What Happens if There Are Problems Before a Closing”

    1. A bit of overkill here I would suggest. A lot of buyers are still moving out the day before or even the day of possession. Therefore it's not realistic to do a walk-through while that's going on. The only time I suggest a walk-through is the home has not been well taken care of and is obvious when viewing the property before the offer. If that's the case then a holdback might be in order. Initiating a holdback can often sour the negotiations as well. The seller feels like you don't trust them and get their back up because you're holding back some money they feel entitled to.
      If you do a walk-through and there is a problem, then you reach out to the sellers and hopefully get it rectified. If they don't agree, know you're getting a lawyer involved. How much does it cost to hire a lawyer to fight this claim? Is it worth the cost and hassle? These are questions you need to ask yourself.
      I find most people are genuine and leave a home in an acceptable condition 99% of the time. As I mentioned previously, if the home was in good condition and clean when viewing, it will generally be in the same condition when you take possession. Remember, the definition of 'clean' is different to one person as it may be to another!

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