The Truth About Real Estate

When you prepare written information to give to prospective buyers you should include a disclaimer telling buyers to be sure to check the facts that you have offered, square footage, schools, etc.. Why do this? Just in case you have measured incorrectly, schools change, this won’t prevent someone from bringing legal action after the sale but it may help you if they do.

Some states now have mandatory property disclosures that sellers have to fill out and give to the public when the house is being sold. To check on the forms for your state call the Real Estate Commission in your state government and ask for a blank form if needed.

If your house was built prior to 1978 there is a federal law requiring a lead base paint disclosure be given and signed by all parties. I have included a blank form and the booklet that is to be given to the buyer. This form does not have to given to everyone that looks at your home but it is to be part of the sales contract and must be signed by all parties. It also gives the buyer a 10 day period to pay for and have a lead base inspection and test done if they want one. The sales contract will be contingent upon the buyers acceptance of the inspection. You need to address in the sales contract who will pay for any repairs/removal that may be found necessary or if neither party will pay then the contract will be voided.

Should information change that would change disclosure information then you should fill out a new disclosure to include the new information. You do not want problems after the closing. It is always best to disclose all information that is necessary.

Home warranties can help your existing home compete with newer homes.

They help reassure the buyer that if there are major repairs within the first year they will be covered.

The premium for the first year’s warranty will be paid at closing from your funds from the sale of the home. If you don’t sell then you don’t pay for the coverage.

Each warranty company has their own set of forms, cost and coverage. Most warranty companies will allow the buyer to extend the first year warranty by paying an additional yearly premium.

This is an optional item. Sometimes the seller of a home will pay for it, sometimes they won’t. Either party can pay for the warranty at closing. If a buyer pays for it will be an additional cost on top of what your lender will tell you. (i.e.; The lender says buyer’s cost to close will be $700. and on the written good faith statement you don’t see a line that is filled in for a home warranty then you need to add the cost of the warranty to the $700.).

When the inspection is prepared if there are problems that a buyer want to be fixed prior to closing they should notify the seller in writing along with a copy of the report. If more than one item then they should rate the way they wish these to be addressed.

It's a one-time cost usually based on the price of the property. It's usually paid for by the sellers. But in some areas in is considered a buyers cost. It is best to put in the sales contract which party is paying for the coverage and if there will a simultaneous issue of a owner’s policy. The first policy covers the mortgage company.

There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.

Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.

Earnest money can be held by whoever the parties agree to - if a real estate co. is involved then most of the time they will hold the earnest money until closing, closing attorneys will hold earnest money. Whichever, the buyer’s earnest money check/cash/money order/cashiers check will be deposited into the companies escrow account. At closing the earnest money will be credited towards the buyer’s cost to close.

If you are purchasing another home you might want to have a clause that the sale is contingent upon the purchase of your new home and the purchase contract to the new home is contingent upon you selling your existing home. This will help prevent you from owning two homes or being homeless.

Possession date when will you move out of the home, prior to closing, on the date of closing by the time of closing, or a few days after closing, this needs to be agreed upon.

What items stay with the home what items do not stay.

Termite inspection who pays for the inspection and should there be live termites what happens and who pays.Showings are a very important part of the sales process. Each time a prospective buyer views your property they are comparing it to all the other houses they’ve seen.

Showings You can help with this; the following are suggestions that will help make sure your property is ready to show.

1. Turn on lights - the more the better.

2. Open curtains - make sure windows and window sills/frames are clean.

3. Put away personal items in bathrooms.

4. Put up fresh towels in bathrooms.

5. Make sure bathtub/showers are clean and dry.

6. If the weather is nice and warm open windows for awhile prior to showing appointment. Close and lock before you leave.

7. If you have hired a real estate agent leave the property (unless you have been asked to stay when the appointment was set).

8. Make sure pets are either away from the property or they are contained away from the prospective buyers/agents. You never know what a pet will do with people they don’t know. And you never know when a person is very afraid of animals. You want each showing to be a positive experience.

9. Clean any area a pet may use. The new odor reducing sprays work great.

10. Do NOT leave candles burning.

11. Leave off security alarms, during showings - it’s nice for the alarm not to be tripped on accident.

12. 30 minutes before showing, heat oven to 200, then turn off oven, place a small amount of cinnamon or other sweet smelling spice on a sheet of aluminum fold and place in oven. Remember make sure oven has preheated and then been turned off. This will make the property smell just like home.

13. Make sure dishes in dishwasher are clean. Don’t leave dirty dishes in sinks.

14. Place property information sheets on kitchen cabinet or other visible area.

15. Pick up toys, games, etc.. Make sure each room has a clean pathway to closets, windows, etc..

OTHER SUGGESTIONS

LANDSCAPING - Cut grass; fertilize; water; keep yard clean

Remove all weeds from flower beds/around house/fence

Clean sidewalks

Plant flowers - weather permitting

EXTERIOR OF HOME

Clean windows/screens/sills/frames

Paint trim if needed

Paint door threshold

Replace or paint front door - if needed

Clean welcome mat or purchase new one

INTERIOR OF HOME

Professionally clean or replace carpet/Wax or clean other flooring

Clean out closets/organize closets

Clean grout/tile/re-caulk tubs

Paint walls - if needed

Replace burned out light bulbs

Dust every surface of home

Wash kitchen cabinets/organize inside cabinets

Clean window tracks

Fix any broken fixtures/check all plumbing - repair any leaks

Store all items that you don’t use on an everyday basis

Store all expensive/sentimental items away from view

THINGS TO TAKE TO CLOSING

keys to all locks

garage door openers

warranty paperwork

termite letter

all repair bills that are to be paid out of closing or bills marked paid

original title insurance policy, if you have it

list of utility companies, home owner’s association contact information, other services the new owners will need to contact

Buyers closing cost, pre-paids, down payment - when does the seller have to pay

I know you’re probably saying I’m not going to pay someone else’s costs. But if you have a asking price and you’re willing to negotiate with a buyer on a lower price then think of it this way; don’t lower the price but pay part of the buyer’s cost. Either way you’re not getting the full asking price.

You can place a cap on the amount you’ll pay for the buyer. Talk to the buyer’s loan officer prior to writing a sales contract they can tell you how much help is needed.

There are certain types of loans a buyer may obtain that require a seller to pay certain costs for the buyer. And you may not know about these until closing. Ask the loan officer; I’m not agreeing to pay closing cost for the buyer. Are there any loan fees, special requirements that the buyer’s can’t pay on their own behalf. That I will have to pay?

Also there are loans where the seller can pay all the cost and the buyers have very little money out of pocket.

Remember the more people who can qualify to buy your home the better.

Sometimes the cost the seller is ask to pay can be added to the cost of the house. The house does have to appraise for the sales price. So you probably can’t add another $10,000. if you’re already asking market value.

When someone calls about your home don’t give out information about your work times, that you live alone, are in poor health, that kids are home alone, the home is vacant, you’re dog isn’t mean.

If someone wants to look at the home ask for their first and last name, if they will be the only person to look, if there are additional people get their names too, ask if the live nearby, and a call back number and ask if this is their home number, cell or work. Tell them you will need to check your showing schedule and call them back within 10 minutes. Then hang up wait 2 -5 minutes and call them back to confirm the showing time.

While chatting with a prospective buyer ask about the type of financing they’re going to be getting and from what bank. This will let you know if they’ve gotten pre-qualified or pre-approved.

Ask about what price range they’re looking at. Try to do this prior to telling them the price of your home. This way if they say they’re only approved to an amount less them your home then you can cut down on the showings and traffic thru your home to people that can’t buy it. If you tell them the price before you know what they can purchase they may feel they have to set an appointment to view the home. And then they may not show up and you’ve wasted your time.

Remember you have to protect yourself. Have someone else be present with you for showings and open houses. Keep a cordless or cell phone with you, just in case you need help.

Ask how many people will be coming to view the home and get all the names. Find out what type of car they’ll be driving. This way you’ll know it’s them when they drive up. When they knock look out first to check that there is a car like the information they gave you. If not don’t open the door without asking for ID. Keep screen doors locked so you can open inside door and still have a little bit of a security.

Set an exact time for them to arrive. If they try to set a range don’t do more than 15 - 30 minutes. Tell them you have other appointments. This will allow you to know when to expect them.

Prior to any offer you should decide what items are most important to you, put these items in writing and in the order they are most important; price, closing date, moving date, items that stay or go, amount of repairs - total repairs and by each inspection and/or appraisal.

Some items will be more important to you than to the buyer.

This will give you a clear mind of how to stay focused on what’s really important to you. When you are negotiating it is important to remember that each side should be working towards the same goal - getting the home sold to a new owner, so you can move.

Try to stay calm. remember the buyer is trying to get a “good deal” and are not trying to take advantage of you personally.

Always counter back if you can’t accept the offer. At least give the other side the chance to say yes to your best offer.

Remember look at all items on the sales contract. make sure it’s easy to understand.Pre-qualifying vs. pre-approval Prior to accepting an offer you should talk to the buyer’s loan officer. Get the loan officer’s name and numbers from the buyer. Ask the loan officer if the buyers are pre-qualified or pre-approved for a loan.

Pre-qualified means the buyers have talked to the loan officer either by phone, email, fax or in person but the paperwork and credit report have not been started. Pre-qualifying means the loan officer has told them that based on the information the buyer supplied they can purchase x amount and that could change once the paperwork and credit report is started.

Pre-approval means the buyers have filled out the loan application their credit report has been pulled and approved. If nothing changes before closing they are approved for the loan. Sometimes there will be conditinal approval, if this is so, then whatever the conditions are will have to be done prior to close.

I suggest that couples do the sheet separately and then compare their wishes. Then make a list to use while looking at homes and to share with their Realtor. This way everyone is working together to make the best choice for your new home.

Remember there are NO Perfect homes. Not even brand new homes are perfect. But there is a home that is Perfect for you and your family.

Features that I must have and can’t live without;

____________________________________________________________________________________________________________________________________________________________

Features that I hate and can’t live with;

____________________________________________________________________________________________________________________________________________________________

Features that I would love to have but could add later;

____________________________________________________________________________________________________________________________________________________________

When you write a sales contract you will probably be asked to pay earnest money and told that it will be held in an escrow account until closing. Then if you’re getting a loan to purchase a home the loan officer is going to tell you about an escrow account on your mortgage. These are NOT the same escrow accounts.

The earnest money escrow account will be with either a real estate company that is involved with the sale of the home or the closing attorney that will prepare the final documents to transfer the title of the property (also known as closing the deal/loan/transaction).

When you get to closing whatever amount you paid for earnest money will show up as a credit towards your cost to buy the home. If you don’t buy the home after writing a contract and paying earnest money, the earnest money will be disbursed according to the written sales contract between you and the seller.

Make sure you understand what happens if you don’t purchase the home, i.e.: if your loan doesn’t get approved, if the house doesn’t apprise high enough, the home doesn’t pass an inspection, etc... You gets the money, when and why need to be in the sales contract.

The escrow account with your mortgage company is there so they can collect 1/12 of the yearly taxes and annual home owners insurance policy and any mortgage insurance each month and then the mortgage company will pay these bills from the escrow account whenever they are due.

If some states the sellers of a home have to provide a written property disclosure to a buyer prior to a written sales contract. The buyer has to agree to accept the property after they have read the disclosure.

If there are things that the seller discloses that need to be repaired and you as the buyer want them fixed prior to close the time to do this is during the contract negotiations, after this it’s too late, unless the same problem is noted during one of the inspections and the seller has agreed to fix problems that are found during the inspection(s), appraisal, survey.

Some states now give the buyer the opportunity if they want it to have a home inspection done, at the buyer’s expense. Most of the time you have 10 days from the date of contract acceptance to have the home inspection done. When you get the report you must then notify the seller if there are major problems that you want repaired, if the seller has agreed to make the repairs before closing then that’s it. If the seller agreed to pay for repairs up to a maximum amount in the sales contract then you may have to decide which repairs are most important to you. This should be included in the sales contract.

If you are getting a loan the bank will want an appraisal to verify that the property is worth the purchase amount. The appraisal can also call for repairs that are different than the home inspection but most of the time if the appraiser does find problems a good home inspector has already found them. The appraiser isn’t there in most cases to find problems only to verify value of the home. However, there are a few loans that do require the appraisal note problems, ask your loan officer about this.

A survey shows the property boundaries. There are mortgage surveys that are on paper only. You get a copy of the plat map that is filed at the courthouse. It will show how the lot looks, where the house and any other improvements are on the property and if there are any items that are on or over the property line. Then there is the staked survey. This is where someone goes out to the property and places stakes around the property. This is recommended by most fencing companies. The cost of either will be considered a buyer’s cost. Some banks will require a survey ask your loan officer. Then if it’s something that is a major concern of yours then you might want to make any sales contract contingent upon you approving the survey prior to close.

Most banks will require that the home be free of live and active termites and any damage be repaired prior to close. The sales contract should include information on who pays for the termite inspection and letter for closing, treatment and repairs if needed.

There are other concerns that you might want to consider having an inspections done for, mold, radon and lead paint.

Keep in mind no house is perfect not even new homes. Home inspections and appraisals are not about decoration. They are about the condition of the property. Most will not note that the carpet/appliances/paint etc. are an outdate color. Again these professionals are looking at the condition and if the systems work.

Most sellers will limit the amount on money to be spent on repairs prior to close.

Do you want to know who will be doing any repairs? (i.e.; will the seller have the ability to do the repairs themselves or have a friend/relative do them or will the repairs be done by a outside company?). If it’s not written in the sales contract it will be seller’s choice.

Some may not agree to do any repairs. Then you have to decide if this is the correct home for you and be prepared to do the necessary repairs to close and work on the others afterwards.

Depending on the type of loan you are getting ask your loan officer if the bank will require repairs to be done prior to close. Ask your loan officer about this.

After you sign the final documents you are the owner of the home if something breaks 2 hours after the closing you own the home.

That’s why home warranties are good to prevent you from having major repair expense during the first year. Most of the warranty companies cover the major working components of the home. Each one has their own way to deal with a repair work order and they do have a deductible.

If you have ask for things to be repaired that might change the paint color, carpet/vinyl type, you might want to state in the sales contract that you have the right to approve colors prior to the change.

The sales contract should also address what happens if the repairs aren’t made or it the seller makes major changes after contract acceptance or they don’t repair items that quit working after the sales contract is signed and inspections are done but before closing.

Think about a clause that states that the seller agrees to keep the home in the same condition or better until closing.

This is required to be in the form of a cashiers check or wired to the closing attorney’s. Most of the time it is made payable to them as well. The closing attorney will collect all the monies due and then will pay them to the appropriate parties.

You need to choose an insurance company and give the insurance agent the closing attorney’s name and phone number. They may ask you questions about the property - you should know most of the answers, if not either call the seller or if you’ve chosen to use a real estate agent call them. Your insurance agent should call the closing attorney directly and make arrangements to get the necessary documents to them.

Some sellers may not agree to pay any cost for you. Some sellers may not be able to pay any costs for you. They may not have enough equity to pay additional cost. If this is the case ask the loan officer if your costs can be added into the mortgage amount.

Make sure you compare lenders. Ask each one to prepare a Good Faith Statement and a Truth In Lending document. Then compare each companies numbers. Ask about interest rates, closing cost, term (how many years), can the seller help with your costs, down-payment amount.

If you don’t understand something ASK you can’t too many questions. ASK until you understand.

Every 30 days change your heat/air conditioner filter, replace batteries in smoke alarms every 6 months.

In the summer months keep vents under house open and in the winter time close them. If you have two levels remember hot air rises so if during the summer you close air vents downstairs and open them all the way upstairs and reverse that in the winter months it will help a little bit with the comfort in your home.

Be sure to walk around your home from time to time looking for any problems, small problems are easier to fix but small problems will become larger problems if not taken care of. After storms check roof and outside for damage.

Anytime you add something to your home make sure your insurance agent knows about it, so it will be covered by your homeowners policy.

Call codes, zoning, planning, permits of the local government if there is any question about the condition or work done on the home.

ASK questions and then ASK more questions. Make sure you understand what you’re buying or selling.

When you’re serious about a home before writing an sale contract, turn on the faucets, flush the toilets, look under the sinks, turn on lights, fans, stove burns, oven, etc... and then if there are problems you want the seller to fix you’ll know to put them in the contract. Even if you are getting a home inspection.

Leta Johnson

 real estate expertise since 1983