Can I afford to wait while a seller resolves a property dispute?

Posted by  on Jul 30, 2014

Q: My wife and I found what we consider to be close to our dream house, but the deal has hit a snag. The sale has been held up because of a property-line dispute involving a neighbor. The owner wants us to hang on until this gets resolved. We are not in a particular hurry, but I am concerned about this dragging on and on. What do you think?

A: Your concern is understandable. It would probably be worth familiarizing yourself with the nature of the problem by looking at any court documents filed by both parties. This might give you a clue as to how complicated the legal matter might turn out to be, and also let you know what is at stake. One way you have to think about this is whether or not it might change the "dream house" status of the property if the neighbor wins the dispute. You also have to ask yourself whether the circumstances indicate that you might be moving next to an overly-litigious neighbor.

Beyond the dispute itself, what may be the biggest problem with agreeing to wait is uncertainty about mortgage rates. Right now, you can still take advantage of some of the lowest mortgage rates on record. However, inflation started to perk up in the second quarter, and if this continues, it does not seem likely that today's mortgage rates can be sustained. Current mortgage rates are very much the exception rather than the rule, so don't take them for granted.

Perhaps the best course is to make no commitments to the current home owner, but do not call things off just yet. Meanwhile, resume your search for your next home. If the legal matter gets wrapped up before you find an equally desirable property, you can always revert back to the original deal. However, continuing to look around allows you to start formulating a back-up plan so you don't get caught waiting once mortgage rates start to rise.

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