FAQ

In very busy Seller Markets you can it is possible to get multiple offers. In a multiple offer situation you and your Realtor will set a time when offers will be presented to you, the Seller. During that meeting the Seller should look over all the offers. Some of the things most important to review will be:

1. Down payment or all cash offer (the larger the down payment the easier the loan process will go for the buyer. Cash offers are not subject to loan approval).
2. Buyer’s approval letter from their lender and the days in the finance addendum.
3. Any cost the Buyer is asking Seller to pay (Home Warranty, Title Policy, Buyers Closing Cost)

After reviewing all the offers the Seller can choose to respond to one offer at time or counter all the offers and see who responds first. In most cases the Seller will pick the best offer and work with one offer at a time. Once you have an executed contract (Both Buyer and Seller have agreed) you can ask if one of the other Buyers would like to be in back up position.

When you sign a contract, you’ll also pay a deposit called earnest money, usually 1% of purchase price, to show that you’re serious about wanting to buy the house. The earnest money is applied towards the purchase price if the deal goes through. If the deal doesn’t go through then you can generally get your earnest money back, though this depends on how the contract is worded. If you default on the contract (for example, by not having the house inspected in the timeframe specified in the contract), then you can lose the earnest money.

It is important to make sure you have the money available in your bank account because the check will be deposited into an escrow account immediately. The earnest money is held in escrow by independent third party, the title company.

Once you sign the contract, make sure to have the inspection, survey, and appraisal performed per the contract, or you can lose your earnest money. The buyer does have the right to have earnest money refunded if they cannot obtain loan approval on or before loan approval is due per the contract.

If a home does not appraise for the sales price in the contract, the Buyer and Seller can renegotiate. The Buyer can offer to pay part of the difference and the Seller can reduce the price accordingly. The Buyer can ask the Seller to lower the price of the contract to meet the appraisal value. The Contract can remain the same and the Buyer can pay the difference. There is no norm for this situation. It is up to the Buyer and Seller to come to an agreement.

You might be surprised that just like you can get a warranty for a TV, you can get one for a house. A company will promise to repair electrical, plumbing, and heating/cooling problems for an annual fee ($300-600) and a per-incident house-call fee ($60-75).

So how does this relate to the contract? Well, there’s a place on the contract where you can check whether the seller will reimburse you for a service contract that you might buy. Some sellers buy the service contract to make the buyer more confident about buying the house, especially in the case of first-time homebuyers. But the inspection should have given you a great idea of the condition of the house, and you should expect to have to pay basic maintenance for your home’s upkeep.

The title company and your lender will require that you have a survey of the property, which is an official drawing indicating property lines and dimensions of the house. You might be able to get this from the seller, who should have a copy of the survey from when they bought the house, but if it’s rather dated then the title company will require that a new survey be done. A survey runs around $400-600, and you might be able to have it be part of the closing costs that you pay at closing, rather than having to pay it up front.

The title company has documents that need to be signed to close on the purchase of the property as well as any loans originated to purchase the property. The escrow officer will review all of the documents with you, answer any questions you might have, instruct where to sign the documents, collect any funds needed to close, and get lender approval. Lender approval can take several hours, so sometimes the deal is not complete until several hours after both buyer and seller have signed the papers and funds have been exchanged.

Generally, you need to bring a picture ID along with a cashier’s check made out to the title company for the amount specified in the closing statement or HUD 1 document. You can check with your Real Estate agent, lender or title company to get the exact number you will need to bring to closing.
Some lenders require two forms of ID to close, so check with your lender before coming to closing to make sure you have exactly what you need!

Once the closing documents have been signed by buyer and seller, and buyer funds have been delivered to the title company, it can take anywhere from 10 minutes to several hours for the deal to “Fund” or close. The title company will hold the keys until the deal has been approved by the lender and officially funded.

Closing with a Loan- generally 30-45 days from executed date until closing and funding.

Cash Deals- closing time can be shorter if buyer and seller agree.

Unless an unmet contingency triggers the abandonment of the contract, it’s a binding legal document. Buyers who fail to perform can lose their deposit money. Sellers who try to back out can be sued for “specific performance,” which forces the sale of the home to the buyer. Many contracts also specify that disputes must be brought in small-claims court or presented for arbitration or mediation.

You need to talk to your lender BEFORE any gift funds are deposited into your accounts. Each lender has different requirements for how and when this money should be deposited and recorded. The lender will most likely ask for a gift letter signed by the individual gifting the funds, and they might also ask for a bank statement from the individual gifting the funds.

The title company is the business that does three important things:

1. Holds the earnest money
2. Issues the title insurance policies – This is a cost included on the HUD-1/Settlement Statement that is based on the purchase price of the property
3. Handles all the paperwork related to the closing, including:

1. calculating the amount due from you after all the fees, and preparing a Settlement Statement that shows where all the money’s going
2. getting all the signatures from you and the buyer at closing
3. submitting the documents to the local government to officially record the sale
The fees are the last thing you need to worry about, as they generally run around $250(+/-).

1. Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true Real Estate Professional is an expert in their market and can guide you through the stacks of paperwork necessary to make your dream a reality.

2. It is important for your home to be priced correctly from the start to attract the right buyers and shorten the time that it’s on the market. You need someone who is not emotionally connected to your home to give you the truth as to your home’s value. According to the National Association of REALTORS, “the typical FSBO home sold for $185,000 compared to $245,000 among agent-assisted home sales.”

3. So maybe you’re not convinced that you need an agent to sell your home. However, after looking at the list of parties that you need to be prepared to negotiate with, you’ll realize the value in selecting a Real Estate Professional. From the buyer (who wants the best deal possible), to the home inspection companies, to the appraiser, there are at least 11 different people that you will have to be knowledgeable with and answer to, during the process. Get the most out of your transaction by hiring a professional.

4. There are countless actions that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, someone who knows what these actions are, to make sure that you acquire your dream?

5. Hiring an agent who has their finger on the pulse of the market will make your buying or selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

BOTTOM LINE: You wouldn’t replace the engine in your car without a trusted mechanic. Why would you make one of the most important financial decisions of your life without hiring a Real Estate Professional?

The Purchase: The IRS says you can deduct interest in the year that it is paid, and that is usually part of each monthly loan payment. Much more importantly, the IRS says that, in most cases, loan discount points and origination fees are tax deductible to the buyer, regardless of who pays them.

Mortgage Interest: In general, you can deduct interest charged on a loan used to acquire or improve your principal residence in the year that it is paid. In the early years of a loan, most of your monthly payment is interest, so this can really add up. In addition, you can always deduct interest on an additional $100,000 of mortgage debt, which can be used for any purpose. This is called the “Home Equity Loan” exception, and it allows you to tap into your home equity for any purpose.

The Sale: If you have owned and occupied your principal residence for at least two of the past five years, you can earn up to $500,000 on the sale of that house and pay no federal income tax whatsoever. That’s assuming you are married – singles get up to $250,000 tax free. You can do this as often as every two years for the rest of your life
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Typical costs include the brokers’ commission, a home inspection, a termite inspection, escrow or attorney’s fees, a title search, an owner’s title insurance policy, transfer taxes and recording fees. The price tags on these items can vary greatly. Who pays for what is a matter of both local custom and negotiation.

A big deposit — called “earnest money” — and a substantial down payment are generally seen as a sign that the buyer is serious about completing the transaction. From the seller’s point of view, the more money the buyer places in escrow and the sooner the money is transferred, the better.

The mortgage escape clause is a must for buyers, unless they’re paying all cash for the home. Without this contingency, buyers can be legally obligated to purchase the home even if they can’t obtain financing. Further, an open-ended statement that says the buyer will obtain a loan “at the prevailing rate of interest” leaves the buyer completely exposed to interest rate fluctuations. A statement that says the loan must be at an interest rate “not to exceed xx percent” and on specified terms is preferable.

Technically, anything that’s permanently affixed to or installed in the home is real property. Everything else is the seller’s personal property. This distinction is a narrow one and it naturally leads to a fair amount of confusion. Sellers who intend to remove anything that’s attached to the home should have that spelled out in the contract. And the same goes for buyers who expect to acquire any of the furniture or other movables.