Just the other day I ran across a sellers disclosure from a property that was listed for sale. The seller had just marked one line through all the items that needed to be disclosed as âDo Not Knowâ and in a small memo box indicated that the seller never lived in the property. Continue reading âDo Not Knowâ Residential Real Estate Sellers Disclosure
Category Archives: Short sale
Easy âno costâ seller ideas to use to sell your home when you are in trouble.
When you are faced with being forced to sell your home and you do not have the money to invest in repairing it, you may then have to sell it âAS-ISâ.
Here are several things you can do to give your home the best chance to sell quickly even if it needs repairs.
Think of what you can do and not what you canât doâŠâŠ
None of these ideas cost you money and it is possible they may make you some money! (OK one maybe will but only if you have no other option)
In the sellers disclosure identify what needs to be repaired. Better to disclose than to hope the buyer will not see the areas that need attention.
- Start clearing out and start selling items you do not need. Look in every nook and cranny.
- Remove all your personal pictures and notes from the walls, desks, tables and refrigerators. Buyers are not interested who is in the house they want to know about the house.
- Vacuum the carpets all over the house, under the bed, under the couch, and the chairs.
- Deep clean all of the bathrooms, and the Kitchen. Do not forget behind the stove and under the refrigerator. People will pull the shower curtain to see how clean the shower is.
- Take a damp sponge and clean off all the finger smudges of the walls by the light switches and other places you can find. Donât scrub hard be very gentle.
- Clean out overstuffed closets. Put the excess in to storage or sell it.
- Organize your kitchen. Get rid of the junk drawer (we all have one).
- Clean off the kitchen counter top. If you keep it cluttered, you are telling the buyer that you do not have enough storage room for your items.
- Clean out the garage. If you have to sell some of the stuff you have then do so!! Otherwise put it into storage. Do not use the garage as storage unless you are planning on telling the buyers that the house is too small and does not have enough storage.
- Clean up the yard!!!
- Mow the yard and keep it trimmed!!!
- Ask friends or family members if they have some plants you could plant in your yard when you have none.
- Clean your windows and open the curtains to let light in!!!
All these ideas, except for putting some of your items into storage, will cost you no extra money you would not be spending anyway. What you will be spending mostly is your effort to get it done.
The faster you can sell your home, the faster you can get back on track, and the faster you might be able to get in to a new home. The longer it takes, the larger the shortfall will be. In this case time is money!!!!
DIFFERENT TYPES OF LISTING CONTRACTS THAT ARE AVAILABLE TO SELLERS
Every seller has the right to sell their home without the help of a brokerage firm and that is called a For Sale By Owner (FSBO) listing. You as an owner make the decision of accepting or rejecting an offer from a buyer represented by a real estate professional. Many times, before the buyers real estate representative will present an offer to the FSBO owner, they ask the FSBO owner to sign a commission payment agreement that guarantees the broker a commission at the time of closing. This in many states is also called an OPEN LISTING.
There are many types of listing agreements that can be used in the sale of residential real estate.
Another form of contract is the EXCLUSIVE AGENCY LISTING. The huge difference between this and the EXCLUSIVE RIGHT TO SELL is that when the agent or cooperating agents brings a buyer to the transaction the seller would have to pay for the commission. When the seller brings the buyer to the transaction the seller does not owe the agents a commission at time of closing. Many real estate professionals are reluctant to work on EXCLUSIVE AGENCY LISTINGS due to the lack of control.
An EXCLUSIVE RIGHT TO SELL listing is used close 95% of the time when it comes to listing residential real estate for sale. With this type of listing contract, no matter who brings a willing and able buyer to the transaction, the agent will earn a commission. In most markets when the buyer is brought by a cooperating agent the commission is split equally between the cooperating brokers. The length of time a listing contract runs is negotiable. It can be as short as 30 days and as long as 6 months. It just depends on your local market.
Another form of listing is the NET LISINTG. In many states the net listing might not be legal. Many times with the NET LISTING, the seller tells the real estate professional what their net price is for the home and the agent adds their commission to the net price later when they have a buyer. There might be a conflict when this situation when the agent has an offer that is much higher net than what the seller requested. In this case the seller might feel cheated. On the other hand, when the net is much lower than the seller anticipated the agent might not earn a commission and is reluctant to present the offer. In my state, Indiana, in order for a NET LISTING to be legal, the maximum amount of commission must be stated in the listing contract and has to be disclosed up front and agreed to by the seller.
When you have any questions feel free to contact the Settles Team.
PLANNING TO START TO INVEST IN REAL ESTATE?
Getting started in Real Estate acquisition could be a scary and daunting undertaking. When you break it down into small action steps the elephant in the room can get smaller and smaller.
Before considering any Real Estate acquisition, especially for investment purposes, consider first building your real estate advisory investment team. On our Settles Team website we have some great information listed for experienced or first time Real Estate investors.
After you have your advisory team in place you need to make some crucial decisions.
For example:
- How to pay for the investment?
- Are you planning on holding or turning the investments?
- When you hold the investments who will manage them?
- How to take title of the property.
There are many more questions you should consider before looking and buying any investment property.
You need to take real estate investing serious and you should consider it as a full time job and not a hobby. Make a business plan with goals, action steps, and an exit strategy.
When you are planning to get into Real Estate acquisition for investment purposes contact the Settles Team. We will be happy to help.
WHAT ARE THE REAL ESTATE FEES FOR SELLERS IN A REAL ESTATE TRANSACTION?
Depending on what type of financing, the loan amount, and the loan length a buyer seeks for the property they are purchasing, the real estate fees for sellers might vary.
Some of the costs a buyer might accrue are
- the down payment
- homeownerâs insurance
- home inspection
- flood insurance if the property is in a flood zone
- home ownerâs association fees when applicable
Some loans, such as an FHA, VA, or USDA actually require a seller to cover all or some of the closing costs and fees. Some buyers will ask the seller to help them pay for some of the closing costs/fees.
Many of the costs/fees are third party vendor fees like
- appraisal fees
- closing fee for the title company
- title search fee
- flood determination fee
- courier fee
- survey fee
- Termite/radon/lead base paint inspection
- Title insurance ( lenders policy)
- title insurance ( owners policy)
- buyerâs attorneys fee (not all states)
- sellers attorney fees (not all states)
- lenders attorney fees (not all states)
The fee amount varies by state, loan amount, and type of loan. You should contact your local title rep, closing attorney, or mortgage provider for a more comprehensive list within your state. Some states might have additional costs/fees a seller or buyer are required to pay before they close a transaction.
BUYERâS URBAN BUYING TREND IS NOT SLOWING DOWN
With the downtrend of the market many buyers, first time and seasoned buyers, are rethinking the location of where they will buy their home. Many families moved to the suburbs for various reasons and left the urban lifestyle behind.
The tide is changing and more and more buyers are moving from the suburbs back into the urban areas. There are many reasons why the change in migration. Looking at the buyers, who are currently moving back and planning on becoming urbanites, the reasons are very different but also similar at the same time.
Some of them are looking for the connectivity and closeness of work, home and play. They can just keep the car parked and maybe either walk or take the bicycle to work. Others might just look for the entertainment and closeness to shopping and friends.
I hear many of them talk about the travel time that is spent traveling from their suburban home to their work. Most of the time they would like to spend this driving time with friends or family rather than sitting in the car. Looking at the overall trend the migration from the suburbs to the urban areas will have a steady flow. Suburban lifestyle is not dead by far but the face of the areas will take on a different look.
WHAT IS A QUALIFIED MORTGAGE (QM)?
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which became federal law on July 21, 2010 used the term âqualified mortgageâ (QM) first. You need to envision the QM loan like a funnel were everything needs to filter though and this funnel was given certain government guide lines it needs to meet. Some of this information came from the Qualified Mortgage website and I encourage every buyer to read up on the information.
The type of loan that comes out of the bottom of the funnel is a Qualified Mortgage (QM) that meets certain government standards:
- Borrowers Debt-To-Income (DTI) ratios are not to be HIGHER than 43% based on monthly gross income.
- Loan terms cannot be longer than 30 years.
- Borrowers lending points and fees cannot exceed 3% of the total amount borrowed.
- Cannot be a negative amortization loan.
- Cannot be an interest only loan.
- Cannot have a balloon payment.
Now that you and your mortgage have passed the federal QM rules, you now you need to be able to pass your lenders rules before they lend you the money. This is where I found some borrowers are confused.
Some of their rules might include:
- Acceptable credit rating
- Acceptable time on the job
- Proof of income
- Proof of expenses
It is also possible that the borrowers Debt-To-Income (DTI) ratio is LESS than the 43% required by the Feds but at the same time the lender may be using a DTI as little as 35%. This would cause you to not get approved for the loan. Yes, many lenders now use tighter rules than the federal QM guidelines to assure they will not have to foreclose on borrowers because they cannot pay for their mortgage.
When you have further questions feel free to contact us. We are not mortgage advisers but we have connections with some great advisers we seek for advice when we have questions ourselves.
âKNOW BEFORE YOU OWEâ MORTGAGE FORMS
Just as we are getting familiar with the implemented 3 page Settlement Statement, formerly called the HUD-1 form, we will have another change to the new 5 page Closing Statement that must to be in place by August 15, 2015. The other form that will change is the Loan Estimate which will replace the old Good Faith Estimate. When you compare the two (3 page Settlement Statement and new 5 page Closing Statement) you will see some significant changes.
Some of the changes you will immediately notice:
- The 5 page Closing Statement has to be in the borrowerâs hands three business days before closing.
- At the closing table the 5 page closing statement replaces the 3 page Settlement Statement HUD-1
- Another change is the name from Settlement Statement to Closing Statement.
- The Settlement Statement was broken down in line numbers from 100 to 1400
- The Closing Statement is broken down in sections from A to J and in addition you will see the loan terms, Projected Payments, Cost at closing, loan cost, and any other cost you will face at the time of closing.
The reason for the changes to the Closing Statement is to help borrowers understand all the options that are available to them. They can then choose the deal thatâs best for them and later at the closing table they can avoid costly surprises.
The Loan Estimate needs to be in the borrowers within three business days after they submit a loan application. This estimate provides a summary of the key loan terms like loan amount, interest rate, monthly principal, and interest. It also gives you the estimated loan and closing costs. All the lenders have to use the same form after August 15th 2015 and this will make it much simpler for the borrower to shop and compare different mortgages.
HOMEOWNERS THAT ARE FACING FORECLOSURE MIGHT HAVE EQUITY IN THEIR HOME
In some areas, where home prices have risen enough, may offer homeowners who were once upside down with their loans alternative options rather than going through foreclosure. Many homeowners who are going through foreclosure might not realize that they now have positive equity and could either refinance their loan or sell the home without having to go through a short sale.
This would be great news for many home owners who were once upside down but is now no longer the case. The interest rate is still low and the home should be easy to sell. This would also help potential buyers because the inventory of homes for sale is low even though we should be at that heart of a great selling season.
When you think you are in an area where the home prices have risen and your homes value has risen with the local market, and you suspect you are no longer upside down with your loan, you should contact first your mortgage servicer and find out if there are now other options for you. You should also contact a local real estate professional or appraiser to let them run an evaluation on your home.
When the evaluations by your agent or appraiser show that the market value of your home is higher than your current total loan amount you owe, you might be able to put your home on the market without having to do a short sale. This would open the market to more interested buyers  other than the investors who are looking for a deal.
The closing date can be set based on the buyerâs qualification when the purchase price is higher than your outstanding mortgage balance. You as the seller would no longer have to ask the lender for final approval to close the transaction. You just close it as a regular transaction.
Can I sell my home right now or should I wait a little longer?
In several corners of the US, the housing market has started to pick up but in the majority of the US you can feel the anticipation in the air of sellers who are ready to make the move to put their home on the market. However, they may be holding off because they donât know where to turn for answers to their questions.
We all know different areas have been hit by the downtrend in home sales somewhat harder than others and the home prices have been low. There are many areas who have not seen a home sale in over 6 months. This makes things a bit interesting for everyone wanting to sell.
When you have made the decision that it is time to put your home on the market, or maybe you were put in a situation forcing you to sell, the first thing I recommend is to interview several real estate agents to help you in the process.
During the interview you should try to learn about the qualifications of the agent. If those qualifications are suitable try building a relationship with the agent. Keep in mind that the relationship with this agent could last a long time through the selling process and you are building the relationship with the agent, not the company they work for. I have personally seen homes that received an offer after 4 days of being put on the market, but did not close for another 5 to 6 months. There have been homes on the market for 6 to 8 months but closed in less than 2 weeks.
You can tell what the sales market is like in your neighborhood by watching how many sales signs there are and how long they are posted in front of the homes. Homes that have signs posted in their yard for longer periods of time may indicate that the market is not good at the present time and you may need to wait to put the house on the market. Yes, the interest rates are still low and there are buyers out there who want to buy. But sometimes you need to bide your time and wait just a little longer, unless of course your situation does not allow you to wait.
If you need to sell due to your circumstances, it is especially important to have a solid relationship with the agent you work with. Keep in mind that there are some agents that are better a buying and others that are better at selling. The one you used to buy your home might not be the right one to help you sell it. This is not always the case but you need monitor this when using the same agent. During the interview you need to find out the agents experience with a slow market as well as their experience with lenders and short sales. This is useful in case you receive an offer that is less than the amount needed to cover your mortgage.