Top Ten Legal Mistakes Home Sellers Make-Part III

Verifying the buyer's finances.

The standard contract form used by California REALTORS says that the buyer must provide verification of their financing and/or funds to close within 7 days after the contract is entered into.

But why wait until then? The seller shouldn't have to find out a week later to find out the buyer may not have the upfront pre-approval, or that there may be some other doubts. The buyer's motivation should be such that he or she is ready to provide all that information with their offer to the seller, and in fact, the seller may have required their agent to request this in the MLS listing.  It only makes sense to find out as much as possible in the beginning, at least that one contingency can be out of the way. All too often, it turns out the buyer can't get a loan when it's time to fund. There are underwriting issues, or appraisal issues, that may come up that were unforeseen by the buyer, but sometimes not enough of the right questions were asked in the beginning. 

So why overlook the easy things up front, such as having your agent contact the buyer's lender for a direct conversation, and getting copies of statements (via the buyer) showing source of funds if it is not submitted with the offer? And, does the buyer currently own other property that he's not selling that could impact financing; or, is their source of closing funds in a liquid account? Seven days after a contract is entered into is not the time to learn about some uncertain source of buyer funds or fuzzy loan approval, the seller should want to know as much as possible beforehand.

These are just some of the reasons for verifying the buyer's finances up front. For more questions, please contact me or visit www.juliahuntsman.com.

What California Homesellers Sometimes Overlook: 10 Things, Part II

Because homesellers may feel eager to sell, they sometimes overlook what could turn out to be very important clues about an offer.
 
About the buyer deposit:

What if the buyer submits an offer for your California home at $250,000, which also happens to be your list price? You think you've got a good offer for your equity sale listing, right?  And you see the letter from their lender saying they're pre-approved and that they have funds to close. So what could be wrong?  It's this:  the amount on the deposit line in the offer is for $500.00. and their down payment shows 20% down and they are paying their own closing costs, so they are presenting themselves as strong buyers. So why aren't they putting down a good $5,000-$7,500 for their deposit so they show you they really want your house? First-time buyers with an FHA buyer assistance program might not be able to do more than $500.00 deposit and be highly motivated, but a investor or other buyer with more assets would be ideally putting down 2%-3% deposit because they have the monetary ability to show their motivation.

Important to remember:  The buyer's deposit is fully refundable to the buyer within the buyer's contingency terms of the standard California of Association of Realtors form contract, but if the buyer defaults later on and walks away, the seller will have little or no buyer deposit as liquidated damages to which he/she may otherwise be entitled.  If you, the seller, question the amount of deposit, remember, you can include a reasonable amount in your counteroffer to the buyer if you believe the buyer has the capability and you want the commitment.

For more help and real estate information, please go to http://www.juliahuntsman.com/Home-worth.html

What California Homesellers Sometimes Overlook: 10 Things, Part I

Regardless of when and where the homeseller could be selling in California, or whether there's a shortage of inventory or not, the transactional issues and facts are still tied to the contract between buyer and seller.

Here's a handy list for the Top Ten Legal Mistakes, with some added commentary by me.

What are the other contractual terms?
Sellers quite naturally want to sell at the highest possible market price, and have very good reasons for doing so. But selling price is not the only term in the contract-- for example, what if the buyer has a contingency to sell their own property, or what does it mean if the buyer is willing to remove their appraisal contingency but not their funding contingency? What if you agree to the liquidated damages clause? In a short sale, do you understand all the terms of the short sale addendum? And what do you need to consider with an all-cash buyer vs. a financed buyer?

What may happen with multiple offer situations?
In multiple offer situations, many buyers could be submitting offers but the seller is not obligated to any one buyer. The seller may respond to all buyers or choose one (but without discrimination). But what if additional offers are submitted in a regular sale after a signed contract exists with buyer no. 1? And what if you're a short sale seller, and a higher offer comes in after the first offer was submitted to the bank? (Hint: the short sale addendum states property may continue to be marketed after contract with the 1st buyer, and other offers may be presented to the bank.) Or, what if the buyer is submitting multiple offers on multiple properties, should they tell you that, or not, in their offer?  (Hint: Yes, they should disclose.) 

These are issues the seller should take time to review carefully and ask questions, preferably before a contract is signed--it saves on remorse later.

Every Day There is Another Story That Housing is Recovering, and Then It's Not: Read More

What is the real story on short sale numbers and borrower delinquencies? The story seems to vary on a daily basis.

But according to the Mortgage Bankers Association, which keeps track of these statistics, the delinquency/foreclosure rate was still 11.33% as of the end of the 1st quarter of 2012.  That's the lowest since 2008, but is still a lot of homeowners on a national basis.