|
|
 |
| December 2007 |
Volume
18 No. 12 |
|
| Resale inspections can speed home sale By Dian Hymer
 Negotiating
a purchase agreement is just one step among many in the home-sale process.
Before the transaction closes, buyers usually have the property inspected to
check for defects. If inspection issues crop up, the contract can be subject to
renegotiation, which can derail the transaction altogether.
Real estate law and practice vary from one area to the next. Sometimes the
buyers complete their inspections before they enter into contract to buy a home.
But regardless of how homes are sold in your area, it's generally thought to be
a good idea for sellers to conduct presale inspections before they put their
home on the market.
Some sellers do pre-inspections to make sure that they completely disclose
defects that may affect the value of the property. Others inspect so defects
that might detract a buyer can be repaired before the property goes on the
market.
Even if repairs aren't made before marketing, presale inspection reports can
help you by making any bad news about the property known to a prospective buyer
before he makes an offer. You can lose precious marketing time if you take your
home off the market for a buyer who then backs out after he sees a home
inspection report.
HOME SELLER TIP: In addition to obtaining presale inspections, consider
contacting reputable contractors to provide repair estimates for significant
defects that are noted in your inspection. Inexperienced home buyers often have
no idea how much it will cost to replace a roof or remove asbestos from the
heating system. Fear of the unknown is intimidating. A reasonable repair
estimate may assuage the buyer's concern.
Also consider that a buyer whose experience with home maintenance is limited is
more likely to estimate on the high side to be safe. Often actual repair costs
are less than a buyer might imagine. Asbestos abatement is a good example.
Finding a contractor who will give you a realistic opinion of the condition of
your property can be an issue. Many contractors would rather replace than
repair. You want contractors who will do the job correctly for a reasonable
price. Ask your real estate agent and acquaintances who recently had a good
experience with a contractor for recommendations.
Unless you have the expertise to know if an estimate is reasonable, you should
plan on getting more than one estimate. Estimates vary widely depending on
variables like the contractor's workload. Recently, a homeowner who was
preparing his home for sale was told that his tile roof needed replacing. The
first bid he received was for more than $75,000. The second estimate was for
$20,500. Both estimates were from reputable, licensed roofers.
If the estimates you receive vary significantly, as in the example above, think
about having the work done before you put your home on the market by the
contractor who issued the more reasonable bid. This way you are in charge of how
much you spend on the repair. Just make sure that the contractor will warrant
his work for the buyers.
In a hot seller's market, sellers can often sell "as is" regarding property
defects. In a buyer's market, like we are currently experiencing in most parts
of country today, you could find it difficult to sell your home if there is a
lot of deferred maintenance.
It is a good idea to have as much repair work as possible done before you market
your home. This will put you in a much better negotiating position. Your home
will also appeal to more buyers, which should result in a timelier sale for a
higher price.
THE CLOSING: Sellers who are unwilling or unable to complete repair work before
they sell should be prepared to discount their list price accordingly.
Copyright © 2007 Inman News - Dian Hymer
Back to the top
|
|
| Don't charge up a storm before buying home By Ilyce R. Glink
Credit card debt can derail loan approval at last minute
Sometimes home buyers think they'll be able to get away with making a large
purchase just after they've been approved for a mortgage.
But charging up a ton of debt on your credit card before you've closed on your
new home isn't a smart move. In fact, all that debt could sink your mortgage
application and kill your real estate deal.
When home buyers go to get approved for a mortgage, the lender takes a snapshot
of their financial life. The lender pulls a copy of the borrower's credit
history and credit score, and then looks at bank account statements and tax
returns.
If the lender approves the borrower for a loan, the lender will expect his or
her financial picture to remain roughly the same up until after the loan closes.
What many borrowers don't realize is that the lender may take another financial
snapshot of their lives just before the closing. The second pull of your credit
history and credit score could come any time within a week or two of your
scheduled closing date.
The lender is just checking to make sure nothing has gone wrong or changed with
your credit. What the lender doesn't want to see is a huge run-up of credit
card debt or other loans in the days before the loan closes. The lender will
generally also require the borrower to sign a statement at closing affirming
that there has been no change in the borrower's financial ability to repay the
loan and the borrower's employment status remains the same.
And yet, many times borrowers will get approved for their mortgage and then run
out and buy a new car.
If you buy a Corvette two weeks before closing and you get a loan to pay for the
car, or even if you lease it, that information will immediately get posted to
your credit history and your mortgage lender will see it. The lender will also
know how much you're going to pay each month for that loan, and that car
payment will have a direct impact on whether the lender feels you'll be able to
afford your new home loan.
Sometimes home buyers make a list of all the list of things that need to be
bought for the new property, such as appliances, window treatments, furniture,
carpeting or other items. Do these items need to be bought before you've closed
on the property and moved in? Most of the time, the answer is "no." But, it's
easier to buy these things and have the movers move them, and so your credit
cards can easily take a beating in the month leading up to the closing.
How much debt are we talking about? Often, home buyers spend up to $10,000
buying new stuff for their new home. For many buyers, that's enough to throw
your debt-to-income ratios out of whack.
When you start changing your debt ratios, lenders get nervous. You don't want
your debt-to-income level to be seriously out of whack a few days before the
closing. Suddenly, to the lender, it will look as though you've lost your
financial mind.
The consequences can be fairly severe: If your debt ratios change by too much,
the lender may decide that you don't fall within the prescribed limits for your
particular loan. The loan could then be canceled, leaving you without financing
in the days before your closing. You'll have to start shopping around to find a
new mortgage lender who can close in a short period of time. If you can't
close, you may default on your contract with the buyer. And since you've
probably already arranged to move out of your current residence, you could wind
up without a place to live.
A less drastic scenario is that the interest rate, fees or payment terms of your
loan may change. Your added debt might change your credit score, and your lender
may no longer be willing to loan you the money at the rate promised, but,
rather, at a higher rate. This could leave you with higher initial or monthly
costs in the short term. But you might also have a long-term problem, especially
if you can't find replacement financing or you can't afford the new
interest-rate charges.
The solution to these issues is to stop spending, at least between the time you
apply for your mortgage and you close on the property. Once you've closed on
your new home, you can start buying stuff.
But if you're able to wait a bit before you buy the big stuff, you should.
Buying a home is costly enough. But homes have ongoing maintenance issues and
need repairs from time to time. If you start spending like mad and don't put
any cash aside for needed repairs, you may discover that your new home is
unaffordable.
If, however, you can make do with your old furniture for a while, bank the
savings and avoid increasing your credit card debt, you'll find it easier and
more rewarding to be a homeowner.
Copyright © 2007 Inman News - Ilyce R. Glink
Back to the top
|
|
|
 Equal Housing Opportunity
|
|
©
2006, 2007 eProspecting (a division of Dominion Enterprises), RE/MAX ACCORD, Research & Economics Department.
All Rights Reserved.
Consultation with an accountant and/or attorney is recommended before entering into any financial transaction. All rights reserved. Agents and company personnel may copy; others may not reproduce materials herein without written permission of RE/MAX
ACCORD.
|
|
