1. How much is the buyer borrowing?
If the buyer is buying cash, it is a great situation for any seller. However, the chance of this happening is very slim. If the buyer is borrowing 90%, sellers will have problems they wouldn’t have if the borrowers were borrowing 80% and using a bank.
If someone is borrowing more than 80% it becomes a problem for sellers because credit is at risk. When credit is at risk, lenders are more stringent and will look at the property value critically as far as condition. This means you will hear about sellers paying for closings costs or buyers credit for $5,000.00 or $10,000.00 to help the buyer get the loan. While this is legitimate, any buyer without the standard 20% down takes longer to close, has mortgage rejections more frequently, and experiences many problems with home inspections and appraisals. These all become seller’s problem, especially when you’re stuck making definite plans to move.
2. Sellers and Home Inspections
Most sellers want to shy away from making significant improvements into a house that can sell “As Is,” which means buyers are only getting what the sellers have. In other words, if the buyers want a new roof, they can feel free to put a new one on, but at their own expense. Home inspectors will often say the roof is at the end of its useful life or that the hot water heater, air conditioning, etc. is at the end of term. However, all sellers are responsible for at the closing is that these appliances work. For example, they must ensure the roof doesn’t leak or that the hot water heater works, but not that it will last another ten years. Therefore, sellers shouldn’t be intimidated by home inspections or pressured into thousands of dollars of buyers’ credits for repairs.
3. Advance Home Inspections
Ordering your own advance inspection, like the proverbial ‘stitch in time,’ can alert you to deferred maintenance items that might conk out just as you’re preparing a big showing. Think Murphy’s Law; the remarkable tendency for things to go wrong at the most inconvenient times. Even more likely, maintenance items that you have long accepted but which might sour a buyer will be spotlighted early. Curing them before your buyer insists upon it prevents receiving demands for overly extensive cures for simple problems.
In addition, Advance Home Inspections can make your listing more marketable. Learn more about the benefits of Advance Home Inspections.
4. “As Is” Cautions
“As Is” can produce more real estate litigation than any other clause in a contract, which is why we recommend to get the help of a local real estate lawyer if you want to sell a home in less than ideal condition. This is particularly relevant now as many sellers wish to sell homes at a reduced price after damage left by Hurricane Sandy.
You must keep in mind you are still responsible for ensuring that the house, the structure, and its operating systems (heat, electrical, plumbing, etc.) are in good operating condition at closing. New Jersey law doesn’t interpret “As Is” to mean buyers get stuck if major systems don’t work. Sellers have an obligation to disclose any hidden defect you know about.
5. Closing Date
This is put on at the beginning of a contract and is only a guess at when the closing will take place. The closing date is set by the borrower’s lender and not by the seller or buyer.
Escrow assures that the lender releases the home purchase funds at or about the same time that the deed is recorded to reflect new ownership. Escrow includes depositing, with a neutral third party, funds, documents and instructions necessary to complete the transfer.
7. Protecting Deals from Falling Through
Patrick Parker Realty agents are working with only your best interests in mind. We do not want your deal to fall through. Our commitment to you is to bring you through closing, make it happen and handle unforeseen problems. We protect sellers with time limits for getting the financing and to ensure sellers aren’t taken advantage of with home inspections. We are skilled at matching buyers to your listing, with this strong foundation we’ll get your deal closed, and get you your money as soon as possible.
You can continue to familiarize yourself with commonly used terms you’ll come across during your real estate transaction in our Mortgage Glossary.