Buying a home is one of the biggest milestones an individual or family would undertake in their lifetime. When a seller finds a buyer for their home, the ensuing deal is not a simple transaction. Many things could go wrong which could cost the seller time and/or money, and the home could slip away from the buyer as well. While some of these deal busting factors are beyond the control of either party, taking some preemptive steps could avoid mutual frustration and minimize the chances of killing the deal.
Work with a knowledgeable, local buyer’s agent.
Appraisals are the number one deal killers. Lenders are required to verify the true value of the house and they send an appraiser to determine if the house is worth the amount they are lending. Appraisers calculate the home’s value by comparing the prices of similar homes recently sold in the neighborhood. But due to the uncertain real estate market, appraisers that are not familiar with the location find it difficult to accurately figure out the home’s value because of foreclosures, short sales and constantly changing home values in the neighborhood. This could potentially scuttle the deal. The best way to prevent this is to find and work with a local buyer’s agent, one who’s very familiar with the neighborhood. They can provide comparable data to the appraisers and help them determine the home’s right value.
Read the home inspection report thoroughly
Another deal breaker that’s closely related to appraisals is home repairs demanded by the lender. The lender can demand that repairs of any issues identified in the appraisal report be performed. Before the real estate market collapsed this was not much of a problem. Lenders would typically let the sale go through by requiring the seller to escrow the repair amount and fix the problems after the sale. Lenders are much stricter these days and such liberties are a rarity. A proactive way of eliminating this stumbling block is to go through the home inspection report with a fine-toothed comb to see if there are any problems with the home.
Make sure your mortgage is preapproved
Get your financial house in order at least one year before shopping for a home. This includes obtaining credit scores and reports, saving up for the down payment and performing any other financial repairs. An import aspect of this step is to get preapproved for a mortgage and not just prequalified. Prequalification is merely a written statement by the lender about the buyer’s estimated borrowing ability, which can be obtained by simply making a phone call to a lender. Preapproval is a more formal process in which the buyer is required to submit their detailed financial information such as bank statements, employment verification, salary slips, tax returns and W2s. Although lenders can back out of it, a preapproval provides conditional approval of the mortgage.
The importance of title insurance
The home inspection report identifies tangible problems with the interior and exterior of the house. But what about dangers that could lurk in the background like unknown liens on the house? There could be an unsettled claim between the seller and a contractor that was hired in the past or a claim on the home by the seller’s creditors. Lack of appropriate permits can also put the brakes on a sale. Many homeowners are known for doing remodeling projects on their own and many fail to obtain necessary permits because of their costs. The sale may come to a grinding halt if the home inspector cannot prove if the remodeling job was done according to building and fire code. Since many of these problems can surface after the sale has gone through, it is imperative to purchase title insurance for the home.
Work with a knowledgeable, local buyer’s agent.
Appraisals are the number one deal killers. Lenders are required to verify the true value of the house and they send an appraiser to determine if the house is worth the amount they are lending. Appraisers calculate the home’s value by comparing the prices of similar homes recently sold in the neighborhood. But due to the uncertain real estate market, appraisers that are not familiar with the location find it difficult to accurately figure out the home’s value because of foreclosures, short sales and constantly changing home values in the neighborhood. This could potentially scuttle the deal. The best way to prevent this is to find and work with a local buyer’s agent, one who’s very familiar with the neighborhood. They can provide comparable data to the appraisers and help them determine the home’s right value.
Read the home inspection report thoroughly
Another deal breaker that’s closely related to appraisals is home repairs demanded by the lender. The lender can demand that repairs of any issues identified in the appraisal report be performed. Before the real estate market collapsed this was not much of a problem. Lenders would typically let the sale go through by requiring the seller to escrow the repair amount and fix the problems after the sale. Lenders are much stricter these days and such liberties are a rarity. A proactive way of eliminating this stumbling block is to go through the home inspection report with a fine-toothed comb to see if there are any problems with the home.
Make sure your mortgage is preapproved
Get your financial house in order at least one year before shopping for a home. This includes obtaining credit scores and reports, saving up for the down payment and performing any other financial repairs. An import aspect of this step is to get preapproved for a mortgage and not just prequalified. Prequalification is merely a written statement by the lender about the buyer’s estimated borrowing ability, which can be obtained by simply making a phone call to a lender. Preapproval is a more formal process in which the buyer is required to submit their detailed financial information such as bank statements, employment verification, salary slips, tax returns and W2s. Although lenders can back out of it, a preapproval provides conditional approval of the mortgage.
The importance of title insurance
The home inspection report identifies tangible problems with the interior and exterior of the house. But what about dangers that could lurk in the background like unknown liens on the house? There could be an unsettled claim between the seller and a contractor that was hired in the past or a claim on the home by the seller’s creditors. Lack of appropriate permits can also put the brakes on a sale. Many homeowners are known for doing remodeling projects on their own and many fail to obtain necessary permits because of their costs. The sale may come to a grinding halt if the home inspector cannot prove if the remodeling job was done according to building and fire code. Since many of these problems can surface after the sale has gone through, it is imperative to purchase title insurance for the home.
No comments:
Post a Comment