| Negotiating
There are literally hundreds of points that you can negotiate in a real estate transaction, and it is important to feel confident about negotiating with potential sellers, or there may be a danger that a seller will talk you into agreeing to terms in a contract that are not in your best interest. There are many potential points that can protect and enhance your purchase, including financing and home inspection contingencies. Most purchase contracts, even if they are standard documents, contain boilerplate language that may not fit your situation and may in fact be unfavorable to you. Your Coldwell Banker Barbara Sue Seal Properties agent will explain the language, so that you can make an educated decision in order to make the best possible purchase decision. Contingencies
There are two types of contingencies found in most transactions-a financing contingency, which makes the purchase conditional on the buyers' ability to obtain a loan from a lender, and an inspection contingency, which allows the buyers to have professionals inspect the property to determine potential property issues prior to entering a binding contract to purchase. You could forfeit your Earnest Money deposit under certain circumstances, such as by terminating a purchase without legal reasons provided for in the contract. In order to protect your position, your Coldwell Banker Barbara Sue Seal Properties sales associates will make certain that the purchase contract contains provisions which protect your purchase interests including a clear and marketable title, having the seller agree to maintain the property in its present condition until closing and making any agreed-upon repairs to the property. Furnishings
Deciding what stays and what goes is usually up for negotiation. If sellers want to take fixed items out of a house, they must specify so in the sales agreement. Appliances that are not built in such as washer, dryer, refrigerator, portable dishwasher, portable microwave, and freestanding stove are all negotiable, as is anything else not permanently attached to the property. Comparative Market Analysis
Also called a CMA, a Comparative Market Analysis is an estimate of market value performed by a real estate agent or broker. A comparative market analysis takes into account aspects of the home you're looking at, including size, features, and annual costs associated with each home, as well as any repairs and improvements on the home. You may also receive a list of recently sold, comparable homes in the neighborhood, and a list of comparable homes currently for sale. For a free Market Analysis, contact Roianne, no obligation or fee. Earnest Money Deposit
This is a deposit paid by the prospective buyer of real property as evidence of the good faith intention to complete the transaction. The amount earmarked for earnest money usually does not exceed five percent of the purchase price and it serves as a source of payment of damages to the seller if the buyer defaults. The amount and the form of earnest money may also play into the negotiation strategy your Coldwell Banker Barbara Sue Seal Properties agent employs. Once the offer is mutually accepted, the earnest money is held in trust by either the selling broker or the escrow company. Earnest money is credited toward the buyer's purchase price at closing. If closing fails to occur, the defaulting party may lose any claim they have to the earnest money deposit. Contract Preparation
The Contract of Sale otherwise known as the Purchase and Sale Agreement is a legal document which binds the buyer to a set purchase price and binds the seller to convey the title. The contract also services as the initial directions to the escrow company to begin processing the transaction. When your agent prepares your Purchase and Sale Agreement, make sure you are perfectly clear about the following details: Who is paying the various expenses of the sale, including closing costs?
Sellers customarily pay for the real estate commission, standard title insurance, one-half of the escrow fee and their portion of the year's taxes and assessments. Buyers customarily pay for one half of the escrow fees, their portion of the year's taxes and assessments and their loan fees. Occasionally sellers and buyers decide to share the expenses of buying and selling. This must be negotiated during the purchase offer time and often depends on local real estate market conditions, other terms of the purchase contract, the seller's cash and timing considerations. Seller concessions, as they are known in real estate jargon, for at least part of the closing costs, are more common in a buyer's market than in a seller's market. These concessions typically occur during the offer- counteroffer-acceptance cycle. On rare occasion a seller will make further concessions during the closing time period. Any concession after the purchase contract is mutually agreed upon must be in writing and agreed to by all parties. Some lenders will allow a credit from the seller to the buyer for the buyer's nonrecurring closing costs. But they usually won't allow a credit that reduces the amount of the buyer's down payment, or that includes any of the buyer's recurring closing costs, which include such expenses as fire insurance premiums, interest on the buyer's new loan, property mortgage insurance and property taxes. Lenders' policies vary on how large a credit for nonrecurring costs they'll allow. What is the actual closing date?
The closing date is the date in which the net proceeds are available to the seller and the title has been recorded. It is set in the original purchase agreement by agreement between the buyer and seller. It is always nice to set a closing date that leaves you enough time to prepare to move in, and which doesn't cost you unnecessary money. The date of closing can affect your closing costs (make sure to ask your lender for a good faith estimate). What is the date of occupancy?
Many times the seller will request to remain in the property after closing, in part to assure that closing actually occurs without the seller having moved from the property. If that is the case, the seller actually becomes the tenant of the buyer after closing, so proper documentation is needed. Home Warranty Home warranties are becoming more of a standard in home buying and home selling transactions. The home seller may have already purchased a home warranty. If not, you should consider buying a policy yourself at closing. The Coldwell Banker Best Buyer Home Protection Plan (an AON Home Warranty) will cover the cost for repairs or replacement to most mechanical systems or most major built-in appliances for one year from the date of closing. A professional building inspection will bring to light problems or repairs that are recommended to be made on the home. In the event that the inspection recommends one or more major repairs, the buyer and seller enter into re-negotiations on how the repairs are to be addressed. Your Coldwell Banker Barbara Sue Seal agent is skilled at helping you achieve your goals during this stressful phase Appraisal An appraisal is an opinion of a property's monetary value usually completed at the request of the lender and for the lender's benefit. Appraisers consider numerous factors such as square footage, construction quality, design, floor plan, amenities, energy efficiency, lot size, topography, view and landscaping. Other issues taken into account are neighborhood quality and a property's proximity to transportation, shopping and schools. Title / Escrow The final stage of a closing occurs with the transfer of title from one party to another. The commitment for title insurance is normally ordered at the listing stage and the policy of title insurance is sent to the buyer by escrow after closing has occurred. Escrow Escrow is the third party which transfers the money and documents (including title and deed) from the buying and selling parties. The escrow company prepares documents, draws up the closing statements, obtains necessary signatures, records documents and receives and disburses funds. Insurance
Now that you've found a home to purchase, you want to protect your investment with insurance. Most buyers get a comprehensive homeowner's insurance policy, which provides coverage for fire damage, water damage, personal possessions, personal liability, vandalism, theft, and loss of use of the house. If you are financing your home purchase, your lender will require you to buy at least basic hazard insurance which will pay to rebuild your home even if the cost to rebuild exceeds your policy limit. Older homes and other types of property may not be eligible for this type of insurance, so it's best to talk to your representative fully about insurance options. You can also opt to purchase cash value coverage or straight replacement cost coverage which is less expensive, but only covers the costs to rebuild your house if it's destroyed. After the Closing
Once you've bought your home, make sure to keep your papers in order and know your rights as a homebuyer. Tax Breaks
Of course, one of the best parts about buying a home is the tax break you receive from the government. What's Deductible? - Interest on your mortgage
- Property Taxes (but water or sewer assessment may not be)
- Some Closing Costs (including home inspections, appraisals or loan application fees)
- Loan points (deductible in the year that you pay them; in a refinance, the points are written off in increments over the term of the loan)
What Is Not Deductible? - Home improvement Expenses
- Homeowner and Co-op dues
- Insurance Expenses
For free publications from the Internal Revenue Service, call 1-800-TAX-FORM and ask for the following publications: - 521 "Moving Expenses"
- 534 "Depreciation"
- 541 "Tax Information on Partnerships"
- 551 "Basis of Assets"
- 555 "Federal Tax Information on Community Property"
- 590 "Individual Retirement Arrangements"
- 908 "Bankruptcy and Other Debt Cancellation"
- 936 "Home Mortgage Interest Deduction"
Make a File
File all closing and settlement papers, including escrow papers, title report and your purchase and sale agreement. Also file your loan documents, inspection reports and insurance information. There are many potential points that can protect and enhance your purchase, including financing and home inspection contingencies. Most purchase contracts, even if they are standard documents, contain boilerplate language that may not fit your situation and may in fact be unfavorable to you. Your Coldwell Banker Barbara Sue Seal Properties agent will explain the language, so that you can make an educated decision in order to make the best possible purchase decision. |