Category Archives: From Contract to Closing

15 Things You Need to Know Before You Sell Your House

Actually, I came up with 22 things, but I’ll combine some for you. Selling a house can be a piece of cake or a bite out of a lemon, depending. On what? On these 15 things:

1. Is the title to your house clear? It most likely was when you bought it, but have there been any liens put on it since then? These have to be cleared up.

2. How much remains on your mortgage?  What remains gets subtracted from the proceeds.

3.  How much will your closing costs be? If your property is priced less than $200,000 you should figure 2.5% of the sale price, plus the amount you are paying the buyer’s Realtor. If the price is over $200,000, figure 2%.

4.  If you (or a previous owner) did repairs or upgrades to the property, did you (or they) get required permits? Did you get final inspections and a finaled permit?  If not, those will have to be taken care of before closing, and preferably before you put the house on the market.

5.  Where will you go after the sale?  It’s not a good idea to market the property before you have made definite arrangements for your future housing.

6.  Stuff! How much stuff will you take with you and what will you give away? How and when will you eliminate the rest?

7.  Do you plan to put the property on the local Realtor Association’s Multiple Listing Service? If so, how will you accomplish this and how much are you willing to pay for the service?

8. How about getting the listing featured on the other real estate listing sites? How much will you spend to market and advertise your property?

9.  What will be your process to determine your price? How will you know whether you set the correct price?

10.  State and federal laws require that you disclose any material facts that could affect the value of the property. How do you plan to do this?

11.  What is your plan to show the property? Will you be meeting total strangers and allowing them into your home? What if the buyer wants to see the property during the day? The evening? After dark?

12.  Do you know how to determine if a buyer actually has the funds or if the buyer can actually qualify for mortgage?

13. What if the buyer makes a verbal offer? What if the offer is a low ball offer?

14. Will you be comfortable knowing the buyer has professional representation (Realtor) while you are representing yourself?

15. Have you decided which title company or attorney will handle the closing?

If you have questions about any of these things, feel free to call or email me. 813-503-6145. marylou.galea@floridamoves.com

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“What is a short sale?”

Short Sale

 

If you are paying any attention at all to the real estate market these days, you keep hearing about “short sales”.  Media types speak about short sales (as they often do about other complicated subjects) as if everybody understands the term; but most people don’t, and if they don’t, it is very hard to understand why they are such a huge problem.  Read on.   

When an owner goes to sell a property that has a mortgage, that mortgage has to be paid off when the closing takes place.  The problem is, many people do not receive enough from the sale of the property to pay off the mortgage.  For example, if Jack and Jill bought a home in 2006 and paid $200,000 for it by borrowing $180,000 from YeeHaw Junction Federal, and then sold it in 2010, they are at great risk of having to sell short.         

I use descriptive names to describe the two flavors of short sales.  One is the “Unfortunate” short sale.  This is where the sale price is “short” of the amount needed to pay all the closing costs and the mortgage balance, BUT the seller has sufficient personal funds to pay the difference out of pocket.  This is referred to as “bringing money to the table”.  If you can be sure that the short sale is of the “Unfortunate” variety, you have nothing to fear, it will operate just like a normal, non-short, sale.  You should be able to close within 60 days of agreeing on a contract.        

The other flavor is the “Distress” short sale.  In this case, the seller has no possible way of making up the difference out of personal funds, so the mortgage holder has to agree to settle the mortgage for less than the amount that was actually owed.  The example we used for Jack and Jill would most probably be a “Distress” short sale. In Pinellas County, Florida, homes purchased for $200,000 in 2006 are going for around half that amount today, give or take, so the $100,000 paid by the buyer won’t come close to paying off the remainder of a $180,000 mortgage.  

(By the way, the terms “Unfortunate” and “Distress” to distinguish between types of short sales are not industry terms.  I chose them and use them to explain the type of short sale I am talking about, but if you go out and talk to your Realtor® and try to use those terms, you’ll likely have to explain them yourself!)           

Now if you are out looking for a house to buy, you have to know whether the properties you are looking for are “Distress” short sales or not.  This type of short sale, to be successful, requires that the Realtor® for the seller is either very skilled at this type of sale, or that the seller has engaged a third-party company that specializes in handling short sales.  (Be very careful that the seller doesn’t hook you into paying the fees that can be charged by the third-party processor.)  Even following both these precautions, a short sale of the “Distress” type can take anywhere from 3 to 12 months to close with most of them coming in at 3 to 6 months.  As far as a seller’s lender is concerned, if a buyer gives up midway through the process, the seller has to find a new buyer and start the process all over again.  We have seen cases where it took over 24 months to close a short sale because several buyers got bored with waiting and the process was restarted multiple times with multiple new buyers!        

Why does it take so long?  The sheer number of short sales has bogged down the financial institutions; the investigation as to whether the seller is really in a distress situation takes some time; the negotiation as to the final terms of the sale can hit a few snags; and whether or not there is a second mortgage on top of the first really complicates the whole process.  Each of these elements requires time and a huge amount of personal investment on the part of the seller’s Realtor®, even if they are using a third-party company.  Sometimes stuff just gets lost and has to be sent multiple times, contacts at the lender get sick or quit, or the management of the case by the lender requires multiple levels of supervisory involvement, each level of which can take weeks.          

If you want to buy a “Distress” short sale, you cannot be in a hurry to get into the property!  But if you can afford the time, a short sale can be a very good deal.