Buyer FAQ’s

  1. How is buying a short sale or foreclosure different from a normal property?
    1. Short Sales: This happens when an owner is under water on their mortgage. The bank agrees to accept less that what is owed on the house to avoid the foreclosure process. These properties are often distressed, which can make them ineligible for standard financing. Offers require a 3rd party approval and these transactions tend to take a very long time to close, often 3-6 months while waiting for the mortgage holder to approve the transaction. You can end up getting a house under market value, but many people get frustrated with the process and decide to look elsewhere.
    2. Foreclosures are actually easier to purchase than short sales as the bank already owns the property and most of legal processes are completed. These properties may have been sitting vacant and unsecured for many years, are often (but not always) severely distressed, generally ineligible for traditional financing, and usually sold as-is. There is limited information available and testing of the mechanical systems is often at your own expense. Foreclosures are often sold to cash investors as this allows for a faster closing and avoids bank delays such as appraisals and lender required repairs.

 

  1. Should I put in a low offer?
    1. In a competitive market, putting in a “low offer” on a property you are truly interested simply to ‘test the waters’ or elicit a counter from the sellers can often cost you more in the end. This strategy can sometimes be effective on a property that has been on the market for a long period of time. Work with your agent to develop a reasonable and justifiable offer as related to the market value of the property. An offer that is agreeable to you but is also high enough to pique the interest of the seller will put you in a stronger negotiating position moving forward.

 

  1. What happens with multiple offers?
    1. Multiple offers are very common in our market. In this situation, we will work with you to prepare your strongest and most competitive offer right away as you generally have only one opportunity. You will likely have a date and time for offer presentations, and should know how many offers you are competing with. In most cases, be prepared to offer at least list price or as much above list price as you are comfortable going. Even though price seems to be supremely important, there are many other components to an offer that can often make you the seller’s best option.

 

  1. Why is my agent telling me houses are sold while I am still seeing them available online?
    1. Once an offer is accepted on a home, showings are generally discontinued. The property typically remains visible online and listed as Active until contracts are formally approved, home inspection issues are resolved, and deposits are collected.

 

  1. What do I need to make an offer?
    1. You’ll need to submit a copy of your preapproval with your offer. If you are paying cash, you can print out an account statement as proof of funds, or have your bank provide a statement on letterhead indicating that funds are available for the purchase. Offers are submitted using the actual purchase contract – verbal offers and letters of intent are not appropriate; so, reserve at least 30 mins to go through the contract and the addendums thoroughly.

 

  1. When will I get a response to my offer and can we give the seller a time limit?
    1. Once your offer is submitted, the listing agent is obligated to present it to the seller. In many cases of competitive properties, the seller may wish to set a deadline and hear all offers at a certain time together. Once your offer is presented, we can usually expect a response within 24 hours. Setting a time limit on an offer is generally not necessary in most cases but can be done; however, it is often unenforceable.

 

  1. When do I have to put money down on a house?
    1. You will submit a deposit (to be held in escrow until closing) after a deal has been reached, the attorneys have approved, and any home inspection issues have been resolved. This is generally a week or so after your offer has been accepted.

 

  1. What opportunities do I have to get out of a deal and what are the timelines?
    1. Your offer typically has three general contingencies: The attorney approval (within 3 days of offer acceptance), your home inspection (within 3-7 days of attorney approval), and your financing commitment (generally, about 30 – 45 days following offer acceptance. If your attorney disapproves the contract, your inspection is unsatisfactory, or your financing is not approved, you should be able to cancel the transaction without penalty.

 

  1. What is the purpose of a home inspection?
    1. The home inspection offers you the opportunity to get a thorough look at the house and a professional opinion regarding its condition so that you can move forward comfortably. The inspector with take you through the house, show you where everything is and how everything works, and identify any items that should be immediately addressed or monitored in the future. Health and safety issues are the primary concerns. Should issues be found, you can cancel your contract, request that the seller complete reasonable/appropriate repairs to important items you weren’t aware of when your offer was made, or negotiate a credit to address to items yourself after closing.

 

  1. Can I submit a contingent offer?
    1. In a competitive market, getting a seller to accept a contingent offer can be a challenge. Your strongest position will be able to submit an offer than is not contingent on selling another property. However, a good contingent offer may be accepted if the seller is willing. In this case, the seller will continue to market and show the home and will be able to accept other non-contingent If this happens, you will typically have 24-72 hours to remove your contingency (if possible) and move forward with the purchase.

 

  1. What do I do between the home inspection and closing?
    1. You will be waiting for your mortgage commitment letter. Once it comes, there will be a list of conditions to address in order to close. You will work through those with your lender. This is also the right time to shop for homeowner’s insurance and get a policy in place for your projected closing date. DO NOT spend any large amounts of money (car, new furniture, building materials, etc…) without checking with your lender to make sure they won’t affect your loan.

 

  1. What is 203k or rehab financing?
    1. This is a loan program that can allow you to finance certain repairs or updates (new roof, foundation repair, kitchen remodel) into your mortgage. They can be helpful if you are trying to buy a property that has a repair issue or is a “fixer-upper” and is ineligible for conventional or FHA financing. Contractors will write an estimate for your job, complete it after closing, and then receive payment from the bank. These are not always the easiest loan programs to deal with and not always the most beneficial options for consumers depending on the situation. Ask your lender for more details.

 

  1. When will I close?
    1. We will write a target closing date on your offer which is generally about 60 days from when the offer is written (sooner if paying cash instead of financing). The projected closing date on your offer is only a target and will almost surely change. Several factors may effect a closing date including bank processing delays, not submitting required documentation in a timely manner for review, attorney delays and schedules, legal issues, federally mandated waiting periods, and many other unexpected issues that may arise. Ultimately, the attorneys will set the closing date and execute your closing.

 

  1. Can I bring a personal check to closing?
    1. No, you will need certified funds to close. If you do not have a local bank, you may need to arrange a wire transfer to your attorney’s account. Prepare for this early if you will be moving from out of town and do not have a local bank.

 

  1. Can I move in before closing on a house? (Early Occupancy)
    1. Generally, no. In some cases, you may be able to move in before closing; but, it is extremely rare! With unique circumstances, an early occupancy agreement can be developed between the parties and executed by the attorneys. Most attorneys advise their clients no to allow early occupancy as problems are not uncommon, so early occupancy is not something to plan for or expect. If an agreement is reached, you will probably end up paying the seller per diem rent until you close on the house. In the opposite case, if a seller needs to stay in the house after closing, a rent agreement may be made to accommodate this request if all parties agree.

 

  1. I have money in other accounts that I want to use for closing, what do I do?
    1. This is a seemingly innocent issue that can cause major hang-ups before closing. If you are moving money from another account (401k, spouse or family member’s account), making a deposit of cash that had been stashed under the mattress, etc… check with your lender before doing so. Any deposit that is not payroll driven or does not have a gift letter attached can delay your closing if the bank requires documentation that may be difficult to obtain.

 

  1. Can we go back to the house to show family, measure for furniture, etc…?
    1. According to contract, the sellers have no obligation to allow you into the house between your inspection and your final walk through. In emergency situations, you may be allowed access if necessary. But, in most cases, you will have to wait until the final walk through to go back in.