What Buyers Shouldn't Do During Escrow: A Guide to Smooth Real Estate Transactions

What Buyers Shouldn't Do During Escrow: A Guide to Smooth Real Estate Transactions

Escrow is a critical phase in a real estate transaction, during which the buyer and seller work together to ensure a successful closing. However, certain actions or decisions made by buyers during this period can jeopardize the process and potentially result in the deal falling through. To help buyers navigate this crucial stage smoothly, this blog post will highlight some common mistakes buyers should avoid during escrow. Let's explore these pitfalls and provide expert advice based on industry sources.

1. Don't Make Large Purchases or Open New Lines of Credit:

During escrow, it's essential for buyers to maintain their financial stability and avoid any changes that could affect their creditworthiness. Making significant purchases or opening new lines of credit, such as buying a car or applying for a loan, can negatively impact the buyer's debt-to-income ratio and credit score. Lenders carefully review these factors before finalizing the mortgage, and any sudden changes can raise concerns or even lead to loan denial. It's wise for buyers to consult their mortgage professional before making any major financial decisions.

2. Avoid Changing Employment or Income Sources:

A stable employment history and consistent income are crucial factors that lenders consider when approving a mortgage. Changing jobs or sources of income during escrow can raise concerns about the buyer's ability to repay the loan, potentially causing delays or even the cancellation of the transaction. It's best to maintain steady employment and income during this critical phase to avoid any complications.

3. Refrain from Neglecting Property Inspections:

Property inspections are vital for buyers to uncover any hidden issues or potential problems with the property. Neglecting or rushing through the inspection process can lead to unpleasant surprises after closing. It's essential to hire a reputable home inspector and schedule the inspection promptly to allow enough time for additional evaluations or negotiations if necessary. Buyers should carefully review the inspection report and discuss any concerns with their real estate agent before proceeding.

4. Don't Disregard Contingencies:

Contingencies are protective clauses in a real estate contract that allow buyers to back out of the deal under specific circumstances, such as unsatisfactory inspection results or failure to secure financing. Failing to respect or adhere to these contingencies can put buyers at risk of losing their earnest money deposit or facing legal consequences. Buyers should understand the contingencies outlined in the contract, seek professional advice if needed, and strictly adhere to the agreed-upon timelines and conditions.

5. Avoid Unauthorized Changes to the Contract:

During escrow, it's crucial for buyers to communicate any desired changes to the contract through their real estate agent or attorney. Unauthorized alterations made directly on the contract without proper consultation can lead to disputes or even the nullification of the agreement. Buyers should seek guidance from their trusted real estate professionals to ensure that all changes are correctly documented and agreed upon by both parties.

Navigating the escrow process successfully requires buyers to be cautious and avoid certain actions that can undermine the transaction. By refraining from making significant financial decisions, maintaining stable employment, prioritizing property inspections, respecting contingencies, and seeking professional guidance, buyers can contribute to a smoother and more successful real estate transaction. Remember, a diligent and informed approach during escrow can save both time and money while securing your dream home.