selling your home

A Wicked Funny Thing Happened on the Way to an Offer …

A Wicked Funny Thing Happened on the Way to an Offer …

I once followed a buyer to a Dunkin Donuts as he had decided to make an offer on some land we had just visited. Of course the ever-prepared realtor  has a pile of offer packets in their trunk, which I did, but they were in my other car. So I just smiled and took out my pen and wrote the offer on a Dunkin’s napkin. The listing agent was horrified when I presented the offer and said she wouldn’t bring it to her seller. I immediately got her broker on the phone and guess what? She was instructed to present the offer to the seller and the seller accepted, he signed the napkin. I still have that napkin somewhere.

The moral of the story is … In real estate if it’s in writing and contains at least the following five things it’s real.

Offers can be on pre-printed forms or on a napkin or the back of an envelope … the medium really doesn’t matter. What does matter is that they include at least the following content and that they are presented to you in writing.

  1. Date: the offer is written and time frame within which it is valid
  2. Property description
  3.  Identification of the Buyer
  4. Identification of the Seller
  5. Price & Terms of paying the price – deposits, consideration, mortgage contingency etc.

The offer must also be accompanied by “consideration”.

This is also called Earnest Money Deposit. This is typically a check for $1000 but can be as little as a dollar if both parties agree. Who holds the deposit, where is it held, for how long, and its disposition at closing should be specified in the offer.

What important dates should be specified?

There are three key dates that should be included in the offer. The first is the date of execution of final purchase and sale contract (also called the P&S). The second is the closing date on which the buyer will take possession of the property. The third is the date on which the buyer will get their mortgage commitment from the bank.

What is a mortgage contingency clause?

The contract is conditional while the buyer uses good faith efforts to secure financing. The buyer is released from this agreement if turned down by lenders but they must notify you in writing prior to the expiration of their commitment period. There are specific dates for application and commitments that should be included in the offer.

What is a property inspection clause?

The contract is conditional while the buyer engages experts to assess the condition of the property, inspect for pests & insects, test for radon & mold and/or test for lead paint. They buyer is released from this agreement if any inspection turns up conditions they deem unsatisfactory. The buyer can also renegotiate the terms of the contract based on the findings if they still want the house. There are specific dates setting the time frame within which the inspections and release/renegotiation must occur.

Is a verbal acceptance by the sellers valid?

No.  The contract is not valid without signatures of both the buyers and the sellers and the conveyance of the consideration to the sellers (a copy of a check is not conveyance).

Seller Credits Explained … Can You Pay for Buyer’s  Closing Costs?

Seller Credits Explained … Can You Pay for Buyer’s Closing Costs?

In general, most underwriting guidelines allow for the seller to pay a buyer’s closing costs. However, no matter what you negotiate, the amount of the credit at the closing table cannot exceed the buyer’s actual costs.

The following guidelines currently apply:

Conventional financing:

  • 90.01% + 3% credit
  • 90% or less 6% credit

FHA financing

  • 6% credit

VA financing

  • 4% credit

 

A seller should not give money back to the buyer at closing for repairs, decorating allowance, new carpet, etc. A closing cost credit is the only way for the seller to give money to the buyer without affecting the purchase price.

If a concession falls outside of these parameters, then the underwriter will subtract the dollar figure from the purchase price and run the loan to value ratio. If the ratio now exceeds the threshold for the loan program, the buyer may need PMI or not qualify for the loan program.

If you have a relocation customer whose company is paying their closing costs, then the amount of the seller concession will be limited. The buyer can not be reimbursed twice.

Closing costs are all of the buyer’s one-time fees associated with obtaining their mortgage. It does include escrows and pre-paids.

Allowable Costs:

Points Tax Service Fee

Appraisal Underwriting & Processing Fees

Credit Report Municipal Lien

Attorney’s Fee Plot Plan

Title search Recording & Courier Fees

Flood Certification First year’s insurance binder

Title Insurance Tax, Insurance & PMI escrows

For More Detailed Information feel free to call or email Tom Coburn, William Raveis Mortgage Broker, mobile: 508-380-7975  email: tom.coburn@raveis.com

Closing Checklist … Items You’ll Need at Your Closing

Closing Checklist … Items You’ll Need at Your Closing

Okay, so now you’ve bought/sold a house and the closing is happening soon.

If it’s your first time or your first time in a long while here’s a quick primer.

If you bring the following, you should have everything you need.

  • New Deed drawn up by your attorney. (sellers)
  • Smoke Detector & Carbon Monoxide certificate of compliance (sellers)
  • Title V certificate of compliance (if serviced by private sewer) (sellers)
  • Final water/sewer bill, stamped paid in full (if municipal service not serviced by well) (sellers)
  • Keys and garage door openers ( leave duplicates in a drawer in the house) (sellers)
  • Copies of any paid bills or affidavits required for work done after home inspection issues were negotiated. (sellers)
  • Instruction booklets, receipts, builder drawings and anything else you have that the buyer could find very useful after moving in to your home (leave them in a drawer in the house). (sellers)
  • Copy of receipt or statement for fuel oil in the oil tank and/or propane in the propane tank (if applicable) (sellers)
  • Driver’s license or another form of personal identification. (sellers & buyers)
  • Your personal checkbook for miscellaneous items and/or adjustments. (sellers & buyers)
  • Certified check or cashier’s check drawn in Buyer’s name or whatever the conveying attorney specifies for the difference between the sale price of the property and the amount of the mortgage less any deposit already made. The final amount will be spelled-out in detail on the form known as the HUD1. (buyers)
  • At the closing, the bank may require 2-3 months tax payment (to be held in Escrow by the Bank); PMI when applicable will be collected for the first year. The exact amount can be obtained from the mortgaging bank prior to the closing; it will be spelled-out in detail on the  HUD1. (buyers)
  • Additional fees can be paid with cash or personal checks. The exact amount can be obtained from the bank’s attorney prior to or at the closing. (buyers)
  • Personal property of the sellers can be paid with cash or personal checks. (buyers)
  • Remaining fuel oil in the oil tank (if applicable) can be paid with cash or personal checks. (buyers)
  • Paid insurance policy or binder for the new property (whichever the conveying attorney specifies) in an amount equal to the amount of the mortgage. Ask your insurance agent for advice on this matter. (buyers)
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