When to Walk Away From a Home Purchase
You’ve found your dream home after going to countless open houses and making several offers on properties that fell through. You’re finally ready to take the plunge. But be aware there are still snafus that can happen late in the game. When they do, you may need to re-evaluate. Here’s how to know when to walk away from a home purchase.
1. The appraisal is less than the contract price
In active markets where there can be multiple interested parties for a home, it’s not unusual for the bank’s appraisal to be below the contract price. When this happens, you may need to bring additional funds to the table, which might not be an option. Or you can try to negotiate with the seller for a lower price. But with multiple offers, why should the seller take less, especially if another buyer is ready to take your place?
You could try getting a new appraisal from another bank. But if you’re new to the process and this feels uncomfortable, you should walk from the deal.
2. The inspection report reveals lots of problems
Sometimes buyers who proclaimed upfront that they wouldn’t consider a fixer-upper later decide they’re willing to do work on the house of their dreams. After all, a great deal in the best neighborhood is probably a deal for a reason. Most likely, the home needs lots of work.
But you should be realistic about what you can tolerate. Consider living through six months of construction, constantly having to make decisions, and managing multiple aspects of the project, on top of having a full-time job. If you’re not up for that, walk.
3. You’ve made a compromise that no longer feels right
The home search starts off with a long list of must-haves and nice-to-haves. As you move through the process, however, you’ll find yourself making compromises. You might have to surrender the spa-like master bathroom, a renovated or open kitchen, or your desired neighborhood or school district to get a home you can afford, in the area where you want to live.
But if you give up on your top criteria just to make a deal work, you might regret it later. Take a step back and listen to your gut.
4. You’re at the top of your original price range
Initially, you may be comfortable with $600,000 as the top of your price range. But three months later, you’re in a multiple-offer situation on an underpriced house and offer $625,000.
Only you know your true comfort and price limit. If you don’t feel like you can swing it financially, pull back. Do you want to live in an empty home because you maxed out your budget and can’t afford to purchase furniture or window coverings?
5. You’re purchasing with another person and you aren’t both 100% on board
Buying a home is a joint decision for many people. Before you start home shopping, talk through your must-haves, wants, desires and needs with each other. Understand which compromises will be tough and try to iron them out well in advance.
Both parties must be on the same page. If either of you feels even slightly uncomfortable with the deal, it may be time to jump ship. Almost everyone feels uncomfortable at some point, of course. And a certain amount of nervous energy comes with a home purchase. But know when enough is enough and be willing to walk away if necessary.