Many
people believe that the hard work is done once a property goes under
contract. This is wrong! The hard work is actually just beginning.
Many things can go wrong at this phase of the contract. Some of the
pitfalls can just be minor disturbances and others can cause the deal to
completely fall apart and have the property go back on the market. To
prepare yourself fully it is important to understand the processes
involved before continuing and make sure you are fully aware of any
potential problems. If you’re working with a REALTOR® he or she can
guide you through this process.
Loan approval.
Buyer-financing problems are the No. 1 reason houses don't close.
After what the market has gone through, lenders are leery. Most offer
will come with letters from the buyer's direct lender, saying that the
buyer had been preapproved for the loan. That's pretty standard.
Tip:
As added insurance, however, ask for a pre-approval letter instead.
The difference between approval and qualification is simple. A
pre-approval with include the lending broker verifying what the buyers
have told them (credit reports, income verification, etc). A
pre-qualification will be based on what the buyers have said with no
verification.
Appraisal.
In today's market, getting a home to appraise for the purchase price is
a big problem. Housing values are rising faster than appraisals, which
rely on past sales. Banks base loans off either the purchase price or
the appraised value — whichever is less. So if a buyer is taking out an
80 percent loan, the bank will loan 80 percent of the lower number. If
the house appraisal is lower, the buyer either has to pay more, the
seller has to lower his price or the deal is dead. Low appraisals kill
about 40 percent of deals.
Tip:
Have a good idea of what the house should appraise for. A seller
should have a CMA which includes past sales. Appraisers will normally
go no further back than 6 month and no further away than 1 mile in a
suburban area. Keep this in mind when looking for what other homes have
sold for.
Home inspection.
Buyers should have an inspection done within a week of signing the
contract so parties can address issues early. Deals rarely fall apart
over a home's physical condition, but buyers can use these reports to
get sellers to lower the price, make repairs or both.
Tip:
Have the house in good repair before you list. Or, be proactive and
have an inspection done before the house is listed. Present that report
to buyers saying the home is for sale "as is." The buyer can get a
second inspection, which won't likely be too different but having the
inspection up front protects sellers from buyers who want to nitpick.
Also remember there are certain repairs that will be lender required.
This will have to be done in order for a bank to loan money. There are
also some repairs that won’t be lender required. There is no mandate to
fix these types.
Title clearance.
A property's title lists who owns it and any liens against it, which
owners are often unaware of. A house has to be clear of liens to
transfer to a new owner, and all owners must agree to sell. Title issues
rarely end deals, but can hold them up.
Tip:
To head off such issues, title problems should be addressed before
being listed or at least be in the process of being cleared before a
home is listed.
Contingencies: Many buyers make offers contingent upon another transaction, such as their house, they currently own, successfully closing.
Tip:
If presented with a contingency contract take a good look at how solid
the other deal is. For example if a buyer brings you a contract stating
it’s contingent upon their house selling but their home is not even
listed yet, this is not a good idea. Not too many contingent offers are
being accepted in this market.
Once
clearing all these hurdles, the good news is it is time to close on your
house. Team Johnson of Watson Realty Corp prides itself on its strong
listing presence. We list and sell more units than another agent or
team of agents in our region. We have successfully negotiated and
closed many homes and would love the opportunity to add your home to our
list of success stories. For more information give us a call at
904-495-0146 or email us at teamjohnson@watsonrealtycorp.com
Team Johnson
Watson Realty Corp
St. Augustine, FL 32086
904-495-0146
Click Here to Search the MLS Like an Agent
View My Website
Click Here to Email Me
Congratulations!
If you’ve gotten this far you have placed an offer on a house and the
seller has accepted it. Now what? This is actually the most crucial
part of the home buying process. If something could go wrong on either
the buyer or seller’s end, it will be here. With a good, experienced
agent, some organization, and some planning it will be easy to get
through this process and you will be moving into your new home soon.
Immediately After Approval
If you have not already done so, you need to make your escrow deposit.
Some agents will not collect an escrow deposit until you have an
accepted contract. Once you have an accepted, fully executed contract
it is vital you make the necessary deposit according to your contract.
Within the First 3 to 5 Days
Contact Your Mortgage Person. You should already have a working
relationship with a mortgage person as he or she would have given you a
pre-approval or pre-qualification letter to send with your offer. Now
that you have a contract you need to go see your mortgage person so they
can begin the financial process. This will include ordering an
appraisal. A bank will only loan up to the appraised value of the
home. If the home does not appraise you will have three options: 1)
come out of pocket to make up the difference; 2) petition the seller to
meet the appraised price; 3) walk away from the deal with no penalty.
Order Your Home Inspection. A home inspection is not required,
but is highly recommended. Your home is no doubt the largest purchase
you will make. Spending a couple hundred dollars to have a qualified
person thououghly inspect your future home may prevent thousands of
dollars of unexpected repairs later on. Contact a licensed home
inspector of your choice. If you are working with a real estate agent
he/she should be able to recommend one. The inspection must take place
during your inspection period, usually 10 to 15 days from acceptance of
your offer.
Submit Your List of Repairs. Before the inspection period ends
you need to submit a list of items you want repaired by the seller
before closing. It is important to remember not all items will be
necessary in order to close. A scratch in the paint on the wall is not
something that has to be repaired in order for a bank to loan on the
property. A roof at the end of its life and leaking into one of the
bedrooms is a repair that could impact financing and would be within
reason to ask for repairs. The only exception would be if you were
buying a home “as-is.” Most bank owned properties and short sales would
fall into this category. The bank gives you your inspection period and
your options are to take it, or leave it as it stands. With any
contract, you can walk away penalty free, as long as it is done within
the inspection period.
Inform Your Landlord. If you are renting you need to inform your
landlord. Most landlords require at least 30 days notice that you are
moving out. Failure to do so could result in forfeiture of your
security deposit. You will also want to work out a move out date that
allows for extra time should your closing get delayed.
Within 30 Days of Acceptance
Contact Your Insurance Provider. You do not want a lapse in
coverage between the sellers and yourself. If you are financing your
home, most lenders will not lend if you do not have insurance in place.
They also usually require you to pay one year’s insurance premium up
front. Your insurance broker can let you know how much this will be,
and will provide a binder for you to bring to closing.
Stay In Contact With Your Mortgage Person. You must obtain a
mortgage commitment letter before your financing period ends. This date
can vary depending on the type of financing you are attempting to get.
You want to make sure you do not “fall through the cracks.”
Arrange For a Mover. This should be done 30-45 days ahead of the
closing date. Make sure not to make firm arrangement until you have a
confirmed closing date and you have received your financial commitment
letter from your mortgage person. Many people make preparations and
sometimes fully move out, just to find their closing delayed a week.
This can cost hundreds of dollars in storage fees.
1 to 2 Weeks Before Closing
Arrange Utilities. Contact the utility company and have the
utilities transferred into your name. This includes (if applicable)
gas, electric, water, sewer, telephone, cable television, and internet
service. Be sure the effective date is when you take possession of the
house. You do not want to be paying for the seller’s usage. Also,
don't forget to have your current utility services disconnected
Make Sure You Have the Funds Available for Closing. If you are
paying cash you will want to be sure the funds are available and in a
guaranteed form. If you are financing, Your mortgage person should have
given you a good faith estimate of the amount that you will need. If
not, contact him/her as soon as possible.
Make Final Arrangements With Movers. At this point you should have a clear to close date. Once you have that, you can make final arrangements with movers.
1 to 2 Days Before Closing
Arrange For a Final Walk Through. Your agent will arrange a
final inspection of the home you are about to purchase. Most likely
everything will be fine, but check to make sure everything is in the
same condition as when you first put your offer in.
Verify the Time and Place of Closing. Call the closing agent or title company for the time and place that the closing will occur. Your agent may do this for you.
Get the Final Amount You Need to Bring to Closing. Call your mortgage person for the amount of the certified or cashier's check you need to bring to the closing.
For the Closing
You will need the following at closing:
1) Picture I.D. (drivers license, passport, etc.) The closer will need to make a copy of it for the registry of deeds.
2) Personal checkbook. In case you have to pay for any incidental charges such as taxes that have already been paid by the seller.
3) Certified Check in the amount given to you by your lender.
4) Insurance Policy or binder.
5) Your personal attorney, if any.
Congratulations!
At this point, you can move into your new home. This entire process
can seem lengthy and troublesome but this is where a good agent comes
into play. A good agent will specifically guide you through this
process. They will handle some of the items above for you (submitting
repair issues to the seller) or at the very least remind you to complete
tasks that you will have to do (obtain insurance). Team Johnson of
Watson Realty Corp treats each buyer as if they are our only customers.
We do not believe in passing you off to a closing coordinator. This is
the most crucial period and we believe you deserve our full attention
in this final but most important phase. If you have any question please
feel free to contact us at 904-495-0146 or email us at
teamjohnson@watsonrealtycorp.com
Team Johnson
Watson Realty Corp
St. Augustine, FL 32086
904-495-0146
Click Here to Search the MLS Like an Agent
View My Website
Click Here to Email Me
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