There are a lot more deals falling apart lately as a result of bank funding issues leaving many with questions. What happens when an offer on a house is accepted, but the bank will not fund the deal?

Also, why is the bank failing to fund deals when they may have pre approved the buyer for that amount during the due diligence phase. We will answer these great questions I keep getting from people on the street in this blog. 

The banks however are cautious, and the assessors they send out are being very diligent and skeptical. They are questioning the true value of the homes won by mortgage buyers in a bidding war against cash offers. The banks fear that the market may sour, and the bank be left with losses at resale.  Sometimes the assessor determines that the price agreed to is unacceptable, and will only partially fund the deal, or not at all. 

Assessors disagreeing with the fair market value of a deal is something that used to be rare in our market. Today it is common. 

I guess the simple lesson here is do not overpay for a home as a home buyer.

When A Deal Fails To Fund 

When a deal fails at the funding stage things can go wrong fast for the people involved. This is especially true if the problem happens late in the process on a tight schedule. 

The worst case scenario is that the buyer has no way to fund the deal after the deal is firm, loses their deposit and gets sued for additional damages. 

If the deal is not firm and the contract contains clauses about financing, the buyer may be able to back out of the deal without losing their deposit or being sued.

In the best case scenario the buyer may be able to find another bank to fund the deal, or get a private loan. Private loans are still at a much higher interest rate than the banks, but they are comparatively much more reasonable than they used to look. 

If you need some help learning about how a real estate transaction works, give me a call for a no pressure consultation at 519-300-6464. 

This blog is not professional advice. It is intended for general educational purposes and references commonly known information in the Windsor marketplace.