How to Avoid Falling Out of Contract When Buying a House in Norfolk

ContractEntering a contract to buy a house in Norfolk is exciting, but it also means the beginning of a sometimes complex journey. The process between having an offer accepted and closing can be a bumpy road. 

Before you set out to look for homes for sale in Norfolk, there are a couple of things you need. First is a team of real estate professionals with local expertise. You can trust us to walk with you through the entire process, so contact us any time. Second, you need to understand what is in your control to set yourself up for success in the escrow process. Here's what you need to know. 

What does it mean to be under contract to buy a house?

Buying a house is a complex process that involves numerous steps, from house hunting to negotiating offers and navigating the intricacies of contracts. Unfortunately, not all real estate transactions reach the finish line. 

Real estate professionals us the term "under contract" to describe the phase of buying a house between your offer being accepted and the home actually becoming yours. Another term used synonymously is "in escrow." 

Being under contract simply means that both buyer and seller have agreed on terms of a sale, but there are steps that need to be taken before the sale closes. This usually includes an inspection and appraisal, and possibly other details depending on the condition of the home, financing challenges, or unique features of the property. 

What can cause a contract to fall through when buying a home in Norfolk?

Just because you are under contract to buy a home doesn't mean you are definitely going to buy it. Understanding the common reasons for this a contract falling through is crucial for prospective homebuyers.

Some of the most common reasons for this include:

  • Financing problems: One of the primary reasons houses fall out of contract is financing-related problems. Buyers may have difficulty securing a mortgage, or the terms of the loan may change during the process. When you get ready to make an offer on a home, your lender will conduct thorough assessments of your financial situation to determine your eligibility for a mortgage. Any negative alterations to credit scores or financial standing during the escrow process can impact loan approval because the lender will check again before you close. To avoid unnecessary delays or losing out on a home, make sure your financial documents are in order, do what you can to maintain stable employment, and refrain from making major financial changes during the home buying process.
  • Appraisal shortfall: Appraisals play a pivotal role in real estate transactions, as they determine the fair market value of the property. During the escrow period the property will be appraised, and if the appraised value falls short of the agreed-upon purchase price, it can create a discrepancy that may lead to the contract falling through. Be aware of this possibility and create a plan for how to handle such a situation if it comes up. We can help you determine what might be best for you, either renegotiating with the sellers, covering the difference in cash, or reevaluating the purchase price.
  • Home inspection issues: Home inspections are crucial for uncovering potential problems with a property. If significant issues arise during the inspection, such as structural concerns, water damage, or electrical issues, you may reconsider your decision to move forward with the purchase. It's essential to thoroughly review inspection reports and, if necessary, negotiate repairs or price adjustments with the seller to address any discovered issues. We can help you navigate this challenging scenario.
  • Contingency challenges: Purchase agreements often include contingencies that allow buyers to back out of a deal under specific circumstances, such as unsatisfactory inspection results or failure to secure financing. However, if these contingencies are not carefully navigated, it can lead to the dissolution of the contract. Additionally, some contingencies include the necessity for a buyer's current home to sell in order to qualify for the new mortgage, and this does not always line up as we hope.

When is it a good idea to consider backing out of a contract to buy a home in Norfolk?

In some cases, it is going to be in your best interest to back out of a contract and start your search over again. You might want to consider this in scenarios like these:

  • If a home inspection uncovers severe structural, safety, or health-related issues that the seller is unwilling or unable to address, it may be prudent to reconsider the purchase.
  • If, despite your best efforts, you encounter insurmountable obstacles in securing financing, it might be wise to step back from the deal. We can regroup, talk with new lenders if needed, and create a new budget or strategy that works for you.
  • If contingencies specified in the contract are not met or addressed to your satisfaction, it may be a sign that the deal is not progressing as expected. 
  • A contract is a legally binding agreement, and both parties are expected to fulfill their obligations. If the seller fails to meet their commitments outlined in the contract, such as making necessary repairs, it may be grounds for termination.
  • Life is unpredictable, and unexpected events such as job loss, health issues, or other personal crises can impact your ability to proceed with a home purchase. In such cases, it may be necessary to reassess your priorities and make decisions in line with your current circumstances. When life throws you a curve ball, you want to have a great agent on your side to help. 

What happens if I back out of contract to buy a house in Norfolk?

The contract you enter into to buy a home is a legally binding document, so you may be wondering what happens if you back out. The results will vary depending on the contract itself and a variety of other factors. 

In general, you will probably forfeit your earnest money. In most real estate transactions, buyers provide earnest money as a demonstration of their serious intent to purchase the property. If the buyer decides to back out without a valid reason specified in the contract, they may risk forfeiting the earnest money to the seller. The amount forfeited is typically outlined in the contract and is intended to compensate the seller for their time off the market.

The terms of the contract play a crucial role in determining the consequences of backing out. If the contract includes contingencies, such as a satisfactory home inspection or obtaining financing, and the buyer invokes one of these contingencies to legally exit the contract, they may be entitled to a return of their earnest money. This is one of the many reasons you want to choose an agent who will write a contract carefully and with your best interest in mind. 

In some cases, both parties may agree to terminate the contract amicably. This could happen if the buyer and seller reach a new agreement or if there are unforeseen circumstances that make it impractical or impossible to proceed with the sale.

In even more rare cases, a seller may pursue a legal remedy known as specific performance. This means the seller could seek a court order compelling the buyer to fulfill the terms of the contract and complete the purchase. However, specific performance is an uncommon remedy and is typically reserved for unique or irreplaceable properties.

If the legal complexities of buying a home have you concerned, we want to help. Contact us any time to learn more about homes for sale in Norfolk and successfully finding yours. We can help you make an offer with confidence and peace of mind.

311 Properties
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Open 3/1
300 Yarmouth St #310 Norfolk,  VA 23510
$275,000
Neighborhood: Archers Walk
2
Beds
2
Baths
1,066
Sq.Ft.
1988
Year Built
1
Day on Site
10521381
MLS
$245,000
Neighborhood: Fairmount Park
2
Beds
2
Baths
1,069
Sq.Ft.
1906
Year Built
1
Day on Site
10521357
MLS
$295,000
Neighborhood: Alden Heights
3
Beds
1
Baths
1,158
Sq.Ft.
1948
Year Built
1
Day on Site
10521436
MLS
$255,000
Neighborhood: Norvella Heights
3
Beds
1
Baths
1,100
Sq.Ft.
1953
Year Built
1
Day on Site
10521468
MLS
$249,900
Neighborhood: Ghent
2
Beds
1
Baths
1,200
Sq.Ft.
1929
Year Built
1
Day on Site
10521401
MLS
$479,900
Neighborhood: Ocean View Cottage
4
Beds
2F11/2
Baths
1,990
Sq.Ft.
2002
Year Built
1
Day on Site
10521546
MLS
$354,000
Neighborhood: Meadowbrook Woods
3
Beds
3F11/2
Baths
1,494
Sq.Ft.
1983
Year Built
3
Days on Site
10521386
MLS
$217,500
Neighborhood: Lafayette Terrace
3
Beds
1
Baths
1,200
Sq.Ft.
1947
Year Built
3
Days on Site
10521391
MLS
$700,000
Neighborhood: Larchmont
4
Beds
2F11/2
Baths
2,800
Sq.Ft.
1920
Year Built
4
Days on Site
10521079
MLS
$325,000
Neighborhood: Lake Terrace
3
Beds
2
Baths
1,528
Sq.Ft.
1963
Year Built
4
Days on Site
10521212
MLS
$299,990
Neighborhood: Brookfield Park
3
Beds
1F11/2
Baths
1,231
Sq.Ft.
1955
Year Built
4
Days on Site
10520283
MLS
$162,000
Neighborhood: Lafayette Annex
3
Beds
1
Baths
973
Sq.Ft.
1924
Year Built
4
Days on Site
10521260
MLS
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