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Kathy S. Koops GRI

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What is I.F.A.?

filed under: Real Estate posted on December 18th, 2017

Many sellers don’t understand the importance of I.F.A. when selling their property. 

thinking about real estate

What is I.F.A.?  Inspections, financing, and appraisal.

It’s so easy for sellers to get caught up in getting their house on the market that they don’t take time to discuss what happens after they accept a purchase contract. Getting rid of clutter, staging, pictures, showings and open houses overwhelm owners.  Selling a home happens in steps.  The first step -getting a purchase contract is only the first step in a convoluted process of getting to the closing table.

I.F.A. (inspections, financing, and appraisals) have the potential of throwing all sorts of roadblocks into the road to closing.

Inspections

The majority of today’s sellers don’t have a “pre-listing inspection done.  After the sale home inspections can be a sore spot for sellers because buyers want every problem fixed or addressed.  Some buyers minor inspection issues as a reason to legally back out of the deal.  Bottom line inspections can be a sticking point for both buyers and sellers.  Defective items need to be fixed and sellers who don’t fix it for the first set of buyers is fixing it for the next buyers.  

Purchase contracts are bilateral leaving the decision to buyers and sellers about what really needs fixing.  Not working out inspection problems is one of the first places a sale can go down. Questions?

Financing

All borrowers and lenders are the same.  A good buyer can provide all the documentation for a pre-approval letter and material required for a loan by the lender and still get turned out at the last minute.  It happens! 

It’s pretty rare when a borrower is just too lazy to pull documentation together for the lender.  Most buyers are super efficient jumping through mortgage hoops and getting to the closing table.  But through no fault of the borrower, some lenders get cold feet – an underwriter doesn’t like the debt ratio or some pay stub doesn’t have enough information and they deny funding the loan 2 or 3 days before closing.  Bummer!  

Financing another one of the hurdles to jump before the closing.

Appraisal

Appraisals continue to be a problem on lots of real estate deals.  Since the real estate crash, appraisers have been under unbelievable pressure.  Rather than risk overvaluing a home or condo, some appraisals are estimating value below market value.  And a low appraisal tied with a low down payment usually means no mortgage and no closing.

Impact of I.F.A.

Sellers (and buyers) need to understand that in spite of their Realtors┬« doing everything legally possible some deals go down.  And sometimes the sale falls through at the last minute.  Sitting down with your agent at the early stages of the process to discuss the potential pitfalls isn’t fun.  But knowing that “things” go wrong in spite of everybody’s good intentions might change some decisions sellers make during the selling process.

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