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F.A.Qs
Here is a collection of frequently asked questions that I have put together to help you in buying or selling a home. If you have any other questions, not listed here, feel free to call or send an e-mail.
Buyers
Can a home depreciate in value?
Generally, real property never depreciates in value, or more so, it is not very common for property to depreciate. This is why it's a great investment. Make sure you carefully consider location and community when choosing a home, it can effect the homes future value greatly.
If you are in a newly developed area, do some research on the construction of the surrounding areas being developed to determine if they may effect your homes value.
Is an older home as good a value as a new home?
This is really just a matter of preference, but both newer and older homes offer distinct advantages, depending upon your unique taste and lifestyle.
Older homes can generally cost less than new homes, however, there are many cases where new homes can also cost less then older homes. Most new homes will not have any backyard landscaping and some don''t include any front landscaping either. With an older home, the landscaping is normally already completed and could have 10''s of thousands of dollars in landscaping done, which is included in the purchase price.
Taxes on some older homes may also be lower. Some people are charmed by the elegance of an older home but shy away because they''re concerned about potential maintenance costs. Consider a home warranty to get the peace of mind you deserve. A good Home Warranty plan protects you against unexpected repairs on many home systems and appliances for a full year or more after you move in.
In a new house, you can pick your own color schemes, flooring, kitchen cabinets, appliances, custom wiring for TV''s, electrical, computers, phones and speakers, etc., as well as have more upgrade options. Modern features like media rooms, extra-large closets and extra-large bathrooms and tubs are also more attainable in ground-up construction. In a used home, you rely largely on the previous resident''s tastes and technological whims, unless you plan to farm thousands into a remodeling and rewiring.
New-home designers can use new building materials such as glazed Energy Star windows, thicker insulation and other technology that will lower future energy costs for the owner. Most states now have minimum energy-efficiency requirements for new construction. Kitchens and laundry areas in new homes are designed to house more efficient energy-saving appliances. Older homes, unless they have undergone an energy retrofit, usually cost much more per square foot to air-condition and heat.
Builders have to follow very strict guidelines in new-homes and additions, especially in the West and Northwest, where earthquake safety standards must be observed. In general, new homes are usually more fire-safe and better accommodating of new security and garage-door systems.
Older homes can be better judged for their quality and timeless beauty. New homes that now possess a smooth veneer might reveal the use of substandard building materials or shoddy workmanship over time.
As you can see there are advantages and dis-advantages to each, but it really comes down to what fits you and what you are looking for in a home.
is my home mortgage interest and discount points deductible?
The answer is yes. Your mortgage interes is deductible and also your discount points.The discount points have to be divided by the life of the loan.
For example, lets say you paid $2,000.0 in discount points in relation to your mortgage and the mortgage is amortized for 30 years. You must dived $2,000.00 by 30 and deduct the result($66.67) avery year until you sell or refinance. If you don't finsish deducting the whole $2,00.00 febore you sell or refinance, then you deduct the remaining balance on the year you sell or rifinance.
Q. Can I back out or cancel a contract at any time during escrow.
Generally yes, provided that you are still within the investigation period allowed in the purchase agreement (normally 14 days) or if you have found additional adverse material facts that will affect the property contrary to what was specified in the contract. Both parites must agree to the cancelation of the contract. Most of time, the monies incurred during this time are not refundible, specially if independent contractors are involved. e.i. appraisers, proffesional home inspectors, termite companies, septic services, civil ingineers, etc.
This is the reason I always recomend a reasonable investigation period period in the contract, and for the buyer to satisfy him/herself before spending any money in escrow that may not be refundible.
I the monies are not recovered as espected, an attorney is usally recomended to determine who is the liable party.
Q. Why is buyin better than renting?
During the time you are making mortgage payments on the home you are buying, the home continues to appreciate in value due to inflation. Part of the mortgage payment your making every month helps reduce the loan balance bringing your principal down gradually until you pay off the loan. In addition to this. the mortgage interest and the the property taxes that you are paying monthly included in your monthly payment are tax deductible on your schedule A of your 1040 tax return, giving you an additional source of funds in the form of a tax refund. So you get double benefits. You gain equity from your home increase in value, and you get to deduct mortgage interest and property taxes.
This does not happen when you rent because you don't own the home. The landlord get the increased equity and he gets to deduct the expenses.
Q.Why do I need to be prequalified.
Most sellers don^t want to entertain offers with buyers that are just looking around and are not very serious just yet. The other reason is because you real estate agent will be more efficient and promt to find the home that fits your financial needs, and matches your desired mortgage payments. You as the buyer will be more confortable knowing what you are going to pay monthly and what you can afford monthly based on your precualilfcations,
What are closing costs?
Closing costs are expenses incurred by buyers and sellers in transferring ownership of a property.
What does FSBO mean?
FSBO stands for For Sale By Owner. A for sale by owner property usually indicates that the property is being sold without a real estate agent.
What is a "One-Time Show" listing?
With this type of listing the homeowner signs an agreement with the agent. What this agreement declares is the homeowner will provide the agent with a commission for selling the property. This agreement also states the homeowner cannot negotiate with the buyer at a later time to avoid paying a commission. This type of listing is most often used by agent showing FSBO (for sale by owner).
What is a broker?
An agent who is authorized to open and run his/her own agency. All real estate offices have one principal broker.
What is a contingency?
A contingency is a provision included in a sales contract stating that certain events must occur or certain conditions must be met before the contract is valid.
What is a debt-to-income ratio?
A debt-to-income ratio is the percentage of a person's monthly earnings used to pay off all debt obligations.
What is a Multiple Listing Service (MLS)?
A multiple listing service is a computerized listing of the homes for sale in an area listed with a realtor. Agents are granted access to the MLS and can use it to find a house in a particular price range or area.
What is a REALTORŪ?
A REALTORŪ is an agent or agency that belongs to the local or state board of REALTORS and is affiliated with the "National Association of REALTORS" (NAR). They follow a strict code of ethics beyond state license laws and also sponsor the Multiple Listing System (MLS), which is used to list houses for sale.
REALTOR is a trademark of the National Association of Realtors.
What is an escrow officer?
An escrow officer is the person that walks you through the closing process. They are usually employed by the title company that you are working with. They are a neutral third-party, responsible for overseeing the escrow process. They typically perform the title searches, prepare final paperwork, witness the document signings as well as ensure that the transaction is executed properly and legally.
What is homeowners association (HOA)?
Homeowners association is a nonprofit association that manages the common areas of a condominium or "planned unit development" (PUD). Unit owners pay a fee to the association in order to maintain areas such as a pool or playground that are owned jointly.
What is the difference between being prequalified and preapproved for a loan?
If you're prequalified it means that you POTENTIALLY could get a loan for the amount stated to you, assuming that all of the information you provide to the bank is accurate and true. This is not as strong as a preapproval.
If you're preapproved, it means that you have undergone the extensive financial background check, which includes looking at your credit history, previous tax returns and verifying your employment - and the lender is willing to give you a loan, basically meaning you're approved!
You will usually be provided an accurate figure which shows the maximum amount that you are approved for. Most sellers prefer buyers that have been preapproved because they know that there will not be any problems with the purchase of their home.
What is title insurance?
Title insurance is insurance that protects the lender and buyer against any losses incurred from disputes over the title of a property.
What's the Difference between a "Listing Agent" and "Selling Agent"?
Listing Agents usually deal with sellers, and are the ones who will list a property for sale on the Multiple Listing Service.
Selling Agents (also Buyers Agents) mostly deal with the homebuyers, usually only listing just a few homes for sale. They will sell the homes (which have been placed in the MLS) via the listing agents.
The majority of agents will focus on one or the other. Some agents will also divide their time between sellers and buyers and are usually regarded as the best ones since they are dealing with both sides of the coin.
If you phone an agent from a magazine or newspaper ad, you are usually contacting the listing agent. These agents will place ads to show the seller that they are making an effort to sell their home. Also their advertising efforts can draw others who may decide to sell their homes.
why do I have to pay capital gain on my home?
Unfortunately, that is an IRS code. The silver lining on this code is that you only have to live 2 years in your home to be excempt from capital gain taxes. Other conditions apply but you may call my office regarding this capital gain expemtion.
Why is the appraisal fee required to be paid up front?
The appraiser is an independent agent contracted by the lender or by the buyer to appraise the porperty and gets paid for his services whether the loan gets approved or not, and whether escrow closes or not. If you are not willing to risk your appraisal money, make sure you have been approved 100% and make sure that you like your property 100% and that you have read all disclosures before spending additional money into escrow.
Why should I use a real estate agent?
A real estate agent is more than just a sales person. A real estate agent may act on your behalf, providing you with advice and guidance when buying or selling a home. Due to the constant changing of the market, the information available on listings is not always 100% accurate. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with a real estate agent.
If you are in the market to buy, it would be advisable to use a Buyer's Agent. They can make recommendations on what terms and prices to offer as well as negotiating a deal with your best interest in mind.
Why some escrows charge a cancelation fee?
Again escrow companies are independent corporation that act as a middle party to the transaction to ensure that the contract is carried out or completed as instructed in the contract and escrow instructions. If the buyer or seller defaults, the escrow collects a a cancellation fee for the services provided during the time the escrow was open. If you are not willing to take the risk, then you should not open escrow until you are 100% satisfied that your escrow is going to close. In the real world such guarranties are not assured because there may be many factors beyond tha parties control. for expample, borroer laid off, discovery of faulty construction of property, disclousers not submitted on time, delays of signatures from parties involved, etc.
Mortgage
Are lenders limited in the amount of escrow funds they can collect from borrowers?
The Real Estate Settlement Procedures Act (RESPA) sets standards for the calculation of the amount mortgage lenders require borrowers to deposit into the escrow account. RESPA limits the initial deposit into an escrow account to an amount equal to the sum sufficient to pay taxes, insurance premiums, and other charges on the mortgaged property for the first payment period, plus a cushion.
An escrow cushion is an amount of money held in the escrow account to prevent the account from being overdrawn when increases in disbursements occur.
On a monthly basis, mortgage lenders may not require borrowers to pay more than one-twelfth of the total amount of the estimated annual taxes, insurance premiums, and other charges, plus an amount necessary to maintain the allowable cushion.
Are my mrtgage payemnts deductible on my income tax return?
Yes. but only the interest portion and the property tax portion. the principal amount is not. Your lender normally sends you a yearly statement reflecting the interest and the property taxes.
Contrary to what most people believe, Thes are not refundable credits or refundable amount at the end of the year. these are deductible expenses that reduce your taxable income thus increasing your refund in proportion to the amounts withheld from your employer and or other credits.
Discount points are also deductible personal expenses that usually divided by the years of the loan life and deducted according to the amount allocated to each year. You may deduct the entire amount the year you refinance the home or the year that you sell the home.
Can I pay my own taxes and insurance?
When a loan is originated, the mortgage documents specify the escrow conditions. This has become a standard practice for all mortgages, including FHA, VA and conventional mortgages. Occasionally on conventional loans, FRFCU waives the collection of escrow requirement at closing if the member has a minimum 20% equity position in the property.
How can I avoid private mortgage insurance?
The easiest way to avoid PMI is by putting 20% down payment; however, PMI can also be avoided if you only have 5% or 10% for the down payment. The way to accomplish this is via a first and second mortgage combination commonly referred to as 80/10/10^s or 80/15/5^s.
These two methods combine a first mortgage lien for 80% of the home price with a second mortgage lien for either 10% or 15% of the home price leaving the remaining 5% or 10% as the down payment. Because the first lien is at the magical 80% loan=to-value, there is no PMI required, even though a second mortgage is being |piggybacked| onto the financing thus allowing for the lessor down payment.
While the second lien terms are not as attractive as first lien rates, the second mortgage is still home mortgage interest and thus deductible as such on your federal tax return where PMI is insurance and offers no deduction.
How is interest calculated on a mortgage loan?
Most mortgages originated today calculate interest in arrears, unlike consumer loans which calculate interest to the date of payment receipt. As an example, when borrowers pay their February mortgage payments, they are paying the January interest. This method of calculating interest is based on a 360 day year in which each month has 30 days.
How long does the loan process take?
The number of days from application to closing can vary from just a few days to 45 or more days, depending on a number of factors. Some of the factors include: loan type, whether an appraisal is needed, and title clearance. Time delays also occur if outside sources or the borrowers do not promptly provide documents to the lender.
How much time will it take to close my loan (sign the loan documents)?
Generally, the process takes as long or short as the borrower wishes. Explaining and signing the documents takes approximately 30 to 45 minutes. However, the borrower may choose to sign the documents and be on his/her way or ask a number of questions and spend more time. Closings may also vary from closing agent to closing agent.
Is there a minimum credit score?
This answer depends largely upon the type of mortgage you are trying to obtain. The most attractive and most common type of mortgage financing is FNMA & FHLMC also known as agency paper. To get an agency approval, the rumored acceptable credit score is 620. This can vary widely depending on other factors when underwriting the buyer (down payment, income, liquid assets...). To offer a range, consider the following: below 620 is poor, 620-650 marginal, 650-680 nothing special, 680-700 fairly good, 700-720 good, 720-750 very good, above 750 is excellent. Many loans are closed every day with credit scores less than 620. More than likely they are not on agency paper. Alternatives to agency paper are government loans (FHA & VA) and sub-prime money.
Must I use the mortgage company that my builder directs me to?
No. It is your mortgage and you may decide upon the lender. However, most volume builders are effectively |forcing| their buyers to use their in-house mortgage company by refusing to pay certain fees or even altering upgrade packages based upon them getting or loosing the mortgage. This |forced-use| game most often spells higher interest rates for the buyer compared to what is available in the open marketplace.
Should discount points be paid to lower (buy down) an interest rate?
This question is best answered after careful consideration of your own personal financial goals. Buying down the interest rate (paying points on the mortgage - one point is one percent of your mortgage amount) may not be in your best interest. Here are some reasons why:
Mortgage interest paid is tax deductible in most cases (seek the advice of an accountant or the IRS).
The funds are no longer available to invest, save or use (ie. purchase an IRA, pay off credit card debt at a higher rate, etc.)
Falling interest rates can be taken advantage of sooner if discount points are not paid to buy down the interest rate (the original interest rate was higher).
In the past, if a consumer bought down the interest rate and then refinanced (buying down the rate again), it is possible not enough time will have elapsed to recover the |buy down| amount through the reduced monthly payment. This also occurs if the consumer sells the home before recovering the |buy down| amount.
Not only does the amount paid in discount fees (buy down amount) need to be recovered, the |time value| of the money spent or its |present value| also needs to be recovered. Present value is the income you could have earned or the satisfaction you could have received through alternative use of your money. Remembe to consider the tax consequences of your ultimate decision.
Individuals should do what best fits their own personal situation and goals.
What are the benefits of doing a first and second lien conbination?
By doing a first and scond lien you will avoid private mortgage insurance, get a larger tax deduction, have a better equity position, and you will also be able to waive escrows if desired.
What benefits do I receive from private mortgage insurance?
Prior to the existence of private mortgage insurance, individuals typically could not purchase a home unless they had a downpayment of at least 20% of the purchase price. Private mortgage insurance benefits the mortgage lender directly by reducing the costs associated with borrower default. It also benefits consumers by lowering downpayments, thereby allowing more people to achieve home ownership.
What do I do if I receive a tax statement?
Many tax authorities will mail an informational copy of the real estate tax statement to the homeowner in addition to the Credit Union. However, there are some statements tax authorities do not forward to the credit union, and in special cases we will need your assistance in obtaining the bill. If you receive a statement for any of the following, please forward it to our office by mail or fax.
- delinquent real estate taxes
- supplemental or additional real estate taxes
- special assessments
- if the tax authority will not honor a bill request from another party.
What does Prepaid Interest mean?
Prepaid interest is typically paid at loan closing. It is the interest paid on a new loan from the day of closing through the end of the month. All future interest on a mortgage loan is then paid in arrears. For example, if your new loan closes on February 19th, prepaid interest would be paid at closing from February 19th through the end of the month of February. Interest would then be paid monthly with your first payment beginning April 1st which would pay March interest. Your payment on May 1st would pay April interest, etc.
What does the origination fee cover?
The origination fee is the fee some lenders charge to cover some of the costs of making the loan and is calculated by multiplying the total mortgage loan amount by the percentage shown. This fee is typically 1% or lower, but may also be influenced by market conditions or the type of loan being sought.
What is a gift letter?
A gift letter is when an individual gives you money for a down payment as a gift, that person must write you a gift letter so that it can be included in your loan documentation.
What is a lock in?
A lock in guarantees a certain interest rate for a certain period of time.
What is an ARM loan?
An ARM loan is an Adjustable Rate Mortgage. The interest rate on an ARM loan is adjusted periodically based on the terms of the mortgage documents. The interest rate is typically based on a common index published periodically, adjusted by a margin. The margin is an amount charged in addition to the index and typically does not change over the life of the loan.
What is an escrow account?
When borrowers make their monthly mortgage payments, they generally also pay one-twelfth of the anticipated annual amount needed to pay taxes and insurance premiums. These additional funds are deposited into an escrow account until the lender pays the taxes and insurance premiums as they come due. The borrower benefits for budgeting reasons because costs are spread through the year rather than as a lump sum. This method allows the lender greater control in avoiding tax delinquencies or lapses of hazard insurance coverage on the property. Mortgage documents often stipulate lenders that establish an escrow account.
What is my credit score and how is it calculated?
Your credit score is a one look number at your overall credit rating. The calculation formula for this score is somewhat of a mystery and a secret held by the credit reporting bureaus. We do know that the major variables to derive this score are: public records, late payments, how recent and the number of late payments, amount of credit open, balances on credit open compared to available credit, and inquiries into your credit history. Each of the three major credit bureaus (Experian, TransUnion, and Equifax) offer a credit score for each borrower. So for a married couple there are six credit scores.
What is PITI and what does it stand for?
PITI is the total monthly payment you make on a house-Principal, Interest, Taxes, and Insurance.
What is preapproval or prequalification?
These are similar terms thrown loosely around by many loan officers. They essentially mean that a mortgage professional has reviewed your qualification ability from a credit, income, debt obligations, and assets available for the purpose of getting a home mortgage.
What is underwriting?
Underwriting is the process of evaluating a loan to determine whether the loan is a good risk.
Why did my mortgage payment amount change?
There may be several reasons. Some mortgages, such as ARM loans, provide for periodic adjustments to your principal and interest payment amount. A second reason for a change may be due to an annual analysis of your escrow account. In compliance with the Real Estate Settlement Procedures Act (RESPA), you will receive an Annual Escrow Disclosure Statement, which shows the adjustment to your escrow payment based on current tax and insurance amounts.
Why does the title have to be cleared before I can get a mortgage?
When a lender makes a mortgage loan (other than a home equity loan), the lender typically requires a first lien position. This means there can be no other outstanding liens against the property that are superior to the new mortgage. Liens can result from a variety of sources, such as home equity loans or lines of credit, child support judgments, divorce settlements, delinquent taxes, and special assessments. Most realtors, mortgage companies, title companies, and escrow companies will assist the seller and/or borrower in clearing title. The ultimate responsibility, however, lies with the sellers of the property who are warranting clear title to the buyers. It is important the buyers receive clear title from the sellers so there are no future claims against their property ownership rights.
Why is the Annual Percentage Rate (APR) on the Truth in Lending Disclosure higher than the rate shown on my note, which is the rate I thought I chose?
All lenders are required by the Real Estate Settlement and Procedures Act (RESPA) to show the rate which will be charged on the note signed at closing, including the total cost to obtain the loan. This includes, but is not limited to, the total interest paid over the life of the loan, assuming the full term is carried out at the note rate, plus certain closing costs. Closing costs could include prepaid interest, Private Mortgage Insurance/FHA Mortgage Insurance Premium/ or VA Funding fee, whichever may be applicable, and various miscellaneous costs including, but not limited to, underwriting fee and tax service fee, may be charged. All of these "Finance Charges" are taken into consideration when calculating the APR to give a more accurate picture of the total cost of the loan.
Owners
Are all of my expenses on my rental home deductible?
Generally yes. starting with the mortgage interest, property taxes, mainenace, legal fees, advertising, even depreciation ( the invisible wear and tear of the dwelling) is deductible.
See more deductible expenses here
Renters
Do I have any benefits as a renter?
You save money initially because the rent payments are usually less than the mortgage payments on a house. However you will eventually miss out on the appreciation and the increase of equity of the house and on income tax refund benefits that you would normally qualify if you owned the home.
Sellers
Can I back out of my contract with one buyer and accept a new, higher offer from a second buyer?
It would be very unwise to try to back out of the contract because a purchase offer that's accepted is a legal contract that the buyer can seek legal remedies to enforce.
do I have to pay capital gain taxes on my main residence?
The answer is no. provided you meet the following criteria;
It must be your main residence. Vacation homes, rental homes and investment homes do not qualify.
You must have lived in you main home at least two years during the past five years. confusing?
Lets say you have owned a home for at least five years. If you lived in it at least two years out of the five years you owned it your capital gain is tax free. the two years don't have to be consecutives as long as they are within the five year period.
It gets a little more detailed but if you are confused please call my office.
Do I have to sell to the person with the highest offer?
No. If you prefer a lower-priced offer, perhaps with a better-qualified buyer and/or more attractive terms, you can accept that offer instead. Or you can give counteroffers to one or more of the buyers.
Beware, however, that if you turn down a full-priced offer, you may owe your agent a full commission even if you decide not to sell your home.
How should I price my home?
You must take into account the prevailing state of the real estate market and especially local market conditions. The real estate market continually changes, and market fluctuations affect property values. So it is critical to determine your listing price based on the most recent comparable sales in your neighborhood.
It would be a good idea to get a Home Value Request, or CMA, also known as Comparable Market Analysis.
Is my short sale transaction taxable?
In most cases it is., but only the amount that the bank discounts from the original debt. For example, if you owe $300,000 to the bank and you sell you house for $280,000, the bank will lose $20,000 and give you a 1099 form for the amount of $20,000 which according to the I.R.S. is taxable income to you.
If the property in question is your primary residence and you have lived in it at least two years or you were financially insolvent in the year of the short sale then the 1099 form that you receive from the mortgage company is not taxable. In most cases, you, the seller, home owner is financially insolvent. This is the reason you are doing the short sale and your short sale is non taxable.
See additional short sale gain consequences and calculations.
Is there a "best time" to put my house on the market?
Along with economic factors such as supply and demand, the time of year you choose to sell can impact both the length of time it takes to sell your home and its ultimate selling price.
Typically, the real estate market picks up around February, continues strong through late May and June, and tapers off during July and August. The summer is usually the busiest time for moving since school is out and buyers may be looking to get their children in school before the new school year. September through November generally marks a rally not as strong as late winter and spring, followed by a slowdown from Thanksgiving through and beyond the Christmas and New Year holiday period.
What are comparables or comps?
These are referred to as recently sold properties that are similar in size, location, and amenities to the home for sale. These properties help an appraiser determine the fair market value of a property.
What are disadvantages of pricing my home on the high end?
Well, several factors may come into play:
- You might help sell similar homes that are priced lower.
- Your home may be on the market longer.
- You could lose market interest and qualified buyers.
- You might create a negative impression of the property.
- You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs.
- You may have to accept less money.
- A potential buyer may face appraisal and financing problems resulting from the inflated price.
It is not recommended to sell your home any higher than the appraised value unless demand is high in your area. Ask you real estate agent which price would be right for your home. Also make sure you get a Home Value Request to assist in determining the best sales price for your home.
What does an appraisal mean?
A report made by a qualified person setting forth an opinion or estimate of value. The term also refers to the process by which this estimate is obtained.
In conventional mortgages and in the HUD-FHA Direct Endorsement Program, the lender receives a copy of the complete report, showing the basis for the appraiser's estimate.
In VA cases and in HUD applications processed by HUD, the lender receives only a statement of the estimate of value, without any detailed supporting data.
what is a 593c form?
The 593 c form is used by an escrow corporation that is reqired by the Franchise Tax Board in order to determine if the seller has to pay capital gain taxes.
It used to be that the escrow company had to collect 3.5% of the sales amount at the time of the closing of the escrow and forward this amount to the Franchise tax board.
You had to wait until you filed taxes in order to claim the overpaid tax amount.
Recently the collection procedure has changed to enable escrow to collect the designated Franchice tax board percentage of the captial gain amount only and not the whole sales amount.
What is a counteroffer?
A counteroffer is an offer made by one party that makes changes to the original or latest offer of the other party.
What is a short sale?
A short sale is when a lender or mortgage company approves a lower sales price than what is owed on the existing loan. This usually happens when there is real estate market down turn. Due to loss of equity the seller or home owner does not have funds or sales proceeds to complete the sale or is financial insolvent due to a financial hardship or other personal reason. The lender or mortgage company then may offer a sale in compromise or short sale in order to avoid foreclosure.
Why would the bank be willing to loose money in order to allow the owner to sell his property? you may ask. Banks are not in the business to hold and own real estate properties. They are in the business to make interest in the money they lend. Often times is more cost effective for the bank to complete a short sale than to go through the whole legal process of a foreclosure. see, additional short sale taxable concequences.
What is an "Exclusive Right to Sell" listing?
This type of listing is the most commonly used and is the most effective. With this type of listing the agent does the most work to sell your home they will usually advertise your home, place it into the MLS, market your home to other agents and even hold open houses for your home. Only with this type of listing does an agent expect to earn money back on their investments on selling your home.
What is an "Exclusive Agency Listing"?
An Exclusive Agency listing allows your agent to market your home and enter it into the MLS. The agent will receive a commission if your home sells through any real estate company or by another agent. He will NOT receive a commission if you, the seller, find a buyer on your own. Because a commission is not guaranteed, your agent may not be highly motivated to market your property. Thus, this type of listing is not common and should be avoided.
Who is responsible for making repairs, if any, as a result of home inspection reports conducted for the buyer?
Because the buyer orders one or more home inspections doesn't obligate the seller to make repairs or modifications as a result of those inspections. Typically, however, inspection reports are used to negotiate repairs of major problems, or environmental or safety hazards that may be noted. The purchase contract should provide guidance for these negotiations.
Why should I the seller want to do a short sale instead of foreclosure?
With a short sale you the seller avoids a foreclosure in his credit record. While late payments will still go to the debtor credit history they are not as bad as a foreclosure or repossed item in the debtor's credit history.
Most Rreal estate brokers are willing to assist you in a short sale transaction provided that the mortgage company or bank involved in the transactin approves the short sale and a sales commission to the Broker ussually a discounted commision.
Why should I use a real estate agent?
A real estate agent is more than just a sales person. A real estate agent may act on your behalf, providing you with advice and guidance when buying or selling a home. Due to the constant changing of the market, the information available on listings is not always 100% accurate. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with a real estate agent.
You don't need to use a commissioned real estate agent to sell your home, but you may want to consider the benefits of having a real estate agent versus not using a real estate agent.
In addition, many people would rather use an Agent due to the complexities of modern Real Estate transactions since they usually incorporate legal and financial attributes, which takes them well beyond more simple transactions, such as the sale of an automobile.
There are several advantages when using a real estate agent to sell your home, such as - your listing will be added to the Multiple Listing Service (MLS) so that large numbers of buyers will have access to the seller's property. In addition, your real estate agent absorbs all of the cost of advertising and marketing, and the screening that will be done of potential buyers by Agents. The Agent will also handle the details of negotiation.
Deciding whether to use an Agent or not depends on if you feel fully confident that you can handle all of the details, then you may well want to attempt selling your house on your own. If not, you most likely will want to use a real estate agent and leave the details to them.
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