Tag Archives: home selling

THE WEATHER TURNS COOL, BUT THESE ATLANTA NEIGHBORHOODS ARE HOT!

28 Wednesday Oct 2015

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Hot NeighborhoodsAtlanta has SO many great neighborhoods!  But here’s a quick take on what are some of our hottest (of the moment) neighborhoods and those that are HOT VALUE neighborhoods NOW, this Fall, 2015, in Atlanta.  Note the distinction.  When a neighborhood is “HOT” – i.e., very popular at the moment, oftentimes prices will rise rapidly as buyers bid against each other in their rush to move in.  A HOT VALUE neighborhood is one that is not yet “RED HOT” but which WILL be hot in the coming years, and so there are still bargains to be had.  Now, if you’re bidding in a HOT neighborhood and prices are rising, there is no need to fear overpaying as long as it’s a neighborhood that is likely to hold or increase in value in the coming years.  Usually a neighborhood is HOT either because of location, schools, or both; the location isn’t going to change and if the schools are good, residents always fight to KEEP them that way.

Don’t be concerned that I am leaving out your favorite HOT neighborhood – know that I’m not addressing CLASSICALLY HOT neighborhoods… I’m not addressing them in this particular blog post because they are always hot.  This would include Decatur zip 30030, Midtown, Va/Hi, Morningside, and many northern suburbs such as Alpharetta, Roswell, Johns Creek, and East Cobb in its great school districts.

And also know that there’s no way to address all the “hot” areas in one blog post – I’ll just touch on a few to whet your appetite, and I’ll cover different areas of town.

Let’s start in Ashford Park, just east of Peachtree Road – Ashford Park is HOT.  The elementary school is awesome and there’s lots of new construction.  While several years ago one could get a pretty decent home for $300,000 here, I just sold a teardown LOT for $500,000 with multiple offers in one day.

HOT VALUE near there is CHAMBLEE.  While Montgomery Elementary is not yet par with Ashford Park, it’s getting there, and the City of Chamblee is making great strides in developing retail areas.  THE ASSEMBLY huge mixed use development is going in where the old GM Plant used to be and that’s exciting.  Because it’s up and coming, there are still values to be had.

NOW, let’s go to the Beltline, which is of course driving values everywhere it touches.  We’ll start with Old Fourth Ward, O4W in local parlance, and its neighbors, Inman Park and Poncey Highland.  HOT because of the Beltline (and that’s a continuing theme – the Beltline has made many Atlanta neighborhoods “HOT” so it is important to know where the Beltline IS, where it will be, and where it’s going…. ).  Quick aside = the Beltline is a 22 mile bike/walk/run path being built in a huge Atlanta circle.  Only parts of it are complete, other parts are underway, and some sections may be years in the making. But the O4W portion is complete and with it O4W Park, Ponce City Market, Krog Street Market – the list of “cool” things that have come with it are legion.

HOT VALUE is south of there, in Reynoldstown, Edgewood, and East Atlanta.  There’s also Ormewood Park, nestled between Grant Park and E Atlanta on the Southside (Grant Park has been and continues to be a “hot” area).  The beltline goes right through this great neighborhood of old bungalows and great diversity.  There is section 8 housing a block from $700,000 homes.  There are still a lot of values to be had – I just sold a $250,000 adorable house one block from the Beltline.  The Beltline here is not yet finished, so prices haven’t risen SO high SO fast.

For more hot values, seek out Capitol View Manor, Mechanicsville, and Adair Park – neighborhoods to the west of the afore-mentioned neighborhoods.  These are nestled in west of I-75/85 and south of I-20, and the Beltline goes right beside and through them.

Let’s leave the Beltline for a minute and head down towards to the Airport to stop at The Manchester Arms in College Park for a meal.  Marvel at what College Park is becoming.  Because Woodward Academy is down there, some northern suburb dwellers have built weekday homes for one spouse and the kids to live in before they go back to the northern burbs for the weekend.  PORSCHE moving into the airport has meant even more wealth moving into the area.  College Park is hot; East Point just to the north of it is still a hot value neighborhood.

Back on the Beltline and moving North; HOT is BRANDON SCHOOL DISTRICT = you’ll pay a premium for great public schools in Atlanta, and Brandon is a good indicator of that.  One of my favorite neighborhoods is CHANNING VALLEY, where prices have risen 22% over PRE recession prices; it’s a small friendly diverse neighborhood in a great convenient spot.

HOT VALUE is West Midtown = Howell Station is an example.  It’s near BELLWOOD QUARRY, which saw thousands of zombies in the season premiere of Walking Dead.  Now that the zombies are gone, that park will be the crown jewel of the Beltline.  Because that area is still very industrial and the Atlanta Jail is nearby, prices are still low, but demand is rising.

And finally, up North to just outside the Perimeter.  Smyrna west of 285, just outside Vinings, the area nicknamed “Smynings” is hot but there are also still a lot of value priced properties.  With the new Braves Stadium going in, it’s becoming even more desirable as a place that will be close to the action and the new development; and yet far enough west that residents can still get places without running too much into Braves traffic.

Again, these are just a FEW of the “hot” areas that I am seeing.  Please email me YOUR favorites so that I can feature them in a future blogpost!

 Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.

Chicken Little Goes to Closing

06 Thursday Aug 2015

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The sky is falling! To hear lenders and closing attorneys tell it, the world as we know it comes to an end on October 3rd. That’s the day new regulations come into effect that govern the mortgage lending and closing process. Whether or not there’s mass bedlam, there are certainly changes that buyers and sellers of property should be aware of and prepared for, so this article will summarize them.

To understand how things are changing, it is important to know how the world works now. Today, sometimes the loan and closing statement will change the day of closing or even while parties are sitting at the closing table. Starting in October, that cannot and will not be possible anymore, at least as to every mortgage application received October 3, 2015 or later. The new rules require that a new document, the Loan Estimate, must be provided to the borrower within three days after loan application, and another new document, the Closing Disclosure, must be provided to the borrower at least three business days prior to closing. These apply to any mortgage loans with no exceptions. If there are changes to the deal, a new disclosure must be provided and the three-day waiting period starts all over. While previously the settlement statement was provided by the closing attorney and often at the last minute, with the new regulations the lenders themselves will likely be providing the statement directly to the borrower and they must confirm and document receipt by the consumer.

You can see how this can potentially cause big problems. “Stacked closings” are common now, in which the seller of one property uses those proceeds to purchase a new property in the next hour from a seller who may the following hour be buying a new property of their own. These back-to-back closings dependent upon one another for consummation are already tenuous at times. Imagine what the new three-day waiting requirement may do! So in practical effect and application, we Realtors must advise our clients of the following:

  • Delays are much more likely, particularly in the early days of implementation of the new regulations.
  • A seller will want to negotiate possession some number of days AFTER closing. While this has always been the case for a seller still living in the property they are selling, now it becomes even more crucial.
  • A buyer will want to commit to a lender as soon as possible in order to attempt to limit any delays. A buyer will want to be sure they choose a lender fully conversant with the new regulations and a lender who has a system in place to comply.
  • While some lenders can get a loan through underwriting and closed quickly, every loan is going to take longer with these new requirements, particularly at first. A cushion of 45 days between contract and close is advisable.
  • From a Realtor’s standpoint, any and all provisions of the contract should be tied up as early as possible. In particular, if there are monetary concessions during the due diligence period, those should be provided to the lender as soon and as early as possible. Even changes in the Realtor’s commission are part of the disclosure process and should be wrapped up as early in the process as possible.
  • While lenders are the primary front line, closing attorneys must also be in line with the new regulations. It is advisable to look for a closing attorney who does residential real estate closings regularly, has systems in place, and preferably is ALTA (American Land Title Association) best practices certified.

The new disclosures are designed to help consumers better understand the terms and costs of their mortgage loan; however, in one aspect the new disclosures are more confusing. The new rule prohibits lenders from disclosing a reduction that is commonly offered by the title insurance companies when a lender’s title policy and the borrower’s title policy are issued at the same time. Instead, there’s one lump sum disclosed; at closing the cost will actually be *less*. While that might result in a pleasant surprise for some at closing, those borrowers who are watching closely will likely be more confused about what, exactly, the title insurance is actually going to cost them at closing.

The home sale and purchase process can be confusing enough. If you are planning to make a move this year, be sure you plan for these new regulations and have trusted advisors guiding you through the process.

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.

Let’s Sell Your Home this Spring

25 Wednesday Feb 2015

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We have had one of our busiest winters ever in the Atlanta real estate market.  With prices rising, many sellers realized that they again had equity in their homes and were ABLE to sell.  So those who had waited through the depressed housing years (since 2008) were suddenly in a position to be able to move.  Buyers were eager to purchase before home prices rose even more.   As a result, we had record home sales.  Demand in many areas of Atlanta exceed inventory, so some sellers who didn’t want to turn down  a great offer for their home even moved into a rental when they couldn’t find the “right” place to move into.  So there’s much pent up demand for homes to purchase this Spring.

If you are thinking of selling your home, there’s no time like the present.  The sooner the better, for many sellers wait until the Spring to sell – and as the season proceeds, you’ll have more and more competition.  We have a lot of “shadow inventory” poised to hit the market in late Spring and Summer; you’d like to avoid as much of that extra competition as you can.

Even with the buyer demand high, no one wants to overpay for a home so pricing is KEY.  We see competing offers for some homes, but those that are priced too high are receiving no offers at all and actually eventually net LESS.  The longer a home sits on the market, the less it is worth in the eyes of a buyer.  We can work with you to determine the ideal initial list price to bring you the highest return.

To prepare for listing, remember that first impressions are key.  A buyer will often decide from the street that they love or dislike a particular home; in fact, they will often tell us to “keep driving” if they don’t like the curb appeal.  So trim your trees and bushes and pressure wash your driveway, front walk, house, and deck or patio.  Clean and even repaint your front door and make sure the key works easily.  Have a nice, fresh welcome mat.  Buyers will linger with us at the front door while we open the lockbox for access, and they have extra time to notice these details.

Do your Spring cleaning NOW if you haven’t already.  And declutter, declutter, declutter.  Go through all your furniture, decorative items, and closets with a ruthless eye.  We have stagers and declutterers who help us prepare your home for sale – but start with the initial sweep immediately.  The savvy seller will remove half of all items in a closet and have nothing on the floor, for instance.  It sounds drastic, but it works.  Pack up everything you want to keep and take it to a storage unit or call in a company that will deliver a storage pod and then take it offsite for you.

Repaint to freshen up where needed; if you have any carpeting, get it cleaned.  If you know that a home inspector is going to find anything that needs to be fixed – go ahead and fix it now.  We have great contractor references if you need them.  It makes more sense to do the repairs first – a buyer may end up asking you to spend $300 on a repair you can do now for $100.

CALL US NOW if you are thinking of selling your home.  We can help you through the preparations and price your home correctly to sell at top dollar – it’s what we do!  And we’d love to hear from you.

 

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.

PREPARING YOUR HOME FOR SALE

31 Wednesday Jul 2013

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House For Sale

So you’ve decided that you want to sell your home.  The first question is WHEN should you sell?  The prime months for selling vary year-to-year, but in good years and bad, generally the “peak” times are from March 1st through Memorial Day and from mid-August until the week before Thanksgiving (conversely, the “slow” periods are typically the summer & winter vacation months, and the holiday lull extends through February).

But also remember that there are ALWAYS buyers out there.  Even in our “slow” months there are buyers ~ and there’s less inventory.  So although it may seem counterintuitive, if your home comes on the market in a “slow” month it may actually help your chances of selling.  In times of limited inventory, the listing is king!

Regardless of your target date for putting the house on the market, your preparation for selling should begin months before.  It is never too early to contact an agent and start getting your home prepared.  Your agent or your agent’s stager will give you a list of things to do to get your home ready, and the earlier you start on them the better.

And please do not be insulted by the list of things your agent or stager tells you to do in order to sell.  All of us start to overlook the little quirks that a home develops and the clutter that accumulates once you live in a place for a while.  To sell your home at top dollar, you want your home in great condition and looking its best.  That means putting aside a little pride and listening to what the professionals ask you to do.  It really does pay off!

If you want to get started NOW, here are some general guidelines we give clients:

GENERAL STAGING GUIDELINES:

1. Gather packing supplies; boxes and tape or plastic bins.  Also gather boxes and bags for those items you want to donate to charity.

2. Take everything off the floor of every closet and find another place for it if you can – ideally, nothing is on the floor of any closet.

3. Pack up half of what is in every closet.  Half of your clothes, half of everything else – make sure every closet looks SPACIOUS and incredibly neat.

4. Clear as much stuff off every horizontal surface as you can.

5. In one place, have any staging “extras” that you may have – extra pictures, vases, pillows, towels, etc.  Your agent or stager may be able to use them in getting your home ready..

6. Make sure all lights work and no lightbulbs are out.

7. Fix anything you know needs to be fixed; that icemaker that stopped working, the siding boards that need to be replaced, and the faucet that is dripping.

8. Take down all of your personal pictures, then just put back out one or two on each floor (minimal personal pictures, but enough to personalize and let the buyer know that you are a “real” person).

Those should get you started.  And who knows, after you clear some clutter and fix up things you may decide you want to stay.  If not, it is time to call in your Realtor.

HIRING AN AGENT

24 Wednesday Jul 2013

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So you have decided that it is time to sell your home and move on to a smaller home, a larger home, or just greener pastures.  How do you find an agent?  You might ask your friends and colleagues who they recommend; you might decide to hire the “neighborhood expert”; or you might already know a great agent you would like to use.

If you are not certain who you want to use, it is time to call in several agents, meet with them and have them look at your home, and then decide who you are most comfortable with.  There are many factors to consider and questions to ask:

  • Is the Realtor a FULL TIME agent?  You do not want to hire anyone who only does real estate part time – they cannot give your home the attention it deserves.
  • Is the Realtor with a reputable company, and are they well connected/well liked among other Realtors?
  • Does the Realtor have an assistant to help with marketing efforts so that if the Realtor is very busy someone is still marketing your home full time?

Hire who you are most comfortable with, not necessarily the agent who gives you the highest suggested list price.  Some agents will give you an inflated price to entice you to list with them.  Overpricing your home can be deadly, since the longer a home sits on the market the less desirable it is to buyers and the less you will ultimately get for the home.  Go for the agent who is the most knowledgeable and realistic about your home’s value over the one who gives you a high price just to get you to sign the agreement.

Ask what services the agent offers as part of the listing – among the things a great agent may offer are professional photography, staging services, full color professional brochures, agent caravans, and videography.  Let the agent know what you expect from them – some sellers like to be contacted by the agent as much as possible, while others just want a phone call when an offer comes in.  Let your agent know what works best for you.

And as the listing moves forward, let the agent know whenever you are unhappy about anything and give them the opportunity to rectify it.  Most of us will bend over backwards to make a seller happy, and to sell the home.

Frankly, My Dear… Antebellum is Making a Comeback

23 Wednesday Jan 2013

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510 Londonberry FRONT

Atlanta will forever be associated with Margaret Mitchell and the famous novel Gone With The Wind – her tale of the Civil War South and the genteel characters who endured the war and its aftermath. Tara, Scarlett O’Hara’s fictional  home, never existed, and most real homes like it that did exist are themselves “gone with the wind”.  The quintessential architectural style of the period, and of Tara, is the Antebellum home – Antebellum means “before war” in Latin, and the term now applies to the style of certain homes built in the period prior to the Civil War which remain distinctly southern. The style is also known as Greek Revival or Classical Revival.  Not many remain in Atlanta and environs – there’s Bulloch and Barrington Halls in Roswell, but not many other examples.

But the Southern elegance and charm of the period do live on in select homes here.  Take, for example, this gorgeous Southern home on Londonberry Road, in the ritziest part of Atlanta. Scarlett would have died to live here. First, befitting a southern estate, it has a commanding presence from the street and a grand entrance featuring stairs up to a rocking chair front porch. Like many Antebellum homes, it features large Corinthian columns and a symmetrical façade.

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The home was designed by Mitch Ginn, an architect from Newnan, Georgia, for the original owner who specifically requested this style of home. Mr. Ginn and his firm have designed many homes in different styles – but some of their most memorable have been antebellum like this one. According to Mr. Ginn, “We design 150 to 200 homes a year, but the Greek Revival and Classical Revival styles are unfortunately few and far between. Popular styles today with future homeowners include Craftsman, Bungalow, and homes with English or French cottage influences. I guess I could say I look forward to a Greek Revival “revival”. “

Like many architects, Ginn enjoys recreating classic styles from the past: “I have always loved the timeless beauty and grandeur of the classical architectural styles. They are dictated by historic architectural structure and proportions. I am also a romantic sucker for the “image” of the Old South.”

The home Ginn designed on Londonberry parlays that image into the modern day. The lot was perfect for a sweeping driveway – and it made the most sense, given the lot, to place the swimming pool to the front and side of the home.  That showcases it as part of the “estate,  and allows a wonderful view of the pool area from the front porch. A meandering creek also wanders far below the home and to the back of the property, adding to the interest of the landscape.

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The interior of the home on Londonberry continues the grand southern feel with a sweeping stairwell (can’t you just imagine Scarlett making her grand entrance) and two story foyer. There’s also a screened porch overlooking the back grounds – the perfect place for some iced tea or a mint julep, don’t you think?

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And of course, the style makes way in some respects for the demands of the modern day homeowner – for instance, the kitchen is open to the breakfast and family areas, a must-have for many modern buyers. In addition, there’s a master suite on the main floor with a large master bath. The doors to the master bath and the lighting fixtures are all of grand southern design.

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As a new generation of homebuyers grows into their “dream” homes, the grandeur of the Antebellum style has a new appeal. It does come with a price tag – the home on Londonberry is currently listed for sale for $1,785,000.

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Notes on Negotiating

26 Thursday Apr 2012

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What does your Realtor do for you? Well, many things, but a lot of what we do is negotiate contracts – either on behalf of the buyer or of the seller in the purchase or sale of a home.  I have taught classes on negotiation skills.  Because I am also an attorney (a former litigator) I have a lot of experience negotiating deals.

But recently I took a class from a professional mediator about negotiating.  Jennifer Keaton owns One Mediation, a mediation firm based here inAtlanta, and she made some great points about negotiation that are well taken, a great reminder, and applicable to any type of negotiations, including real estate.

First, every contact with the other side conveys information – so pay attention to every contact.  Most importantly, you do not have to mean or rude to “win”.  After all, haven’t you heard that you get more flies with honey than with vinegar?  Particularly in real estate, often a more emotional negotiation, this is important.  Being professional and polite does not mean you cannot be tough and represent your client well.  In fact, make sure your agent is one who is respected and liked by other agents.  Agents want to work with other agents who “play fair”, and that will serve you well when coming to agreement.  Also, say you do not come to agreement on a given negotiation.  Timing matters – a seller may get more motivated, a buyer may find a greater source of funds – in other words, the deal may work, just not right now.  If you have kept a congenial relationship, the other side may just come back, offering more.

Another important point is that knowledge is power.  With information, your arguments actually hold weight – without the hard facts, you have no ground to stand on.  When an agent is representing a buyer, that agent should marshall the LOWEST comparables and be able to discuss them with intelligence to convince the seller, hopefully, to accept less than they would otherwise.  Similarly, an agent representing the seller shouldmarshallthe HIGHEST comparables available to help convince the buyer that they are getting a great deal (which every buyer wants and expects).

Also: be creative.  Every negotiation is not all about money.  What else can your client offer that is of value to the other side?  Perhaps a seller will take less for the home if you close quickly.  Or if they need more time, if you will close later.  Your agent needs to ask questions and pay attention to the nuances of the other side’s needs and wants; that can certainly help ease the parties to agreement.

Finally, stick to your plan and stay the course.  Do not walk away without offering your “walk away” offer.  But if you give a “take it or leave it walk away” offer, make sure that is exactly what it is.  If it is not, you lose credibility.

In this market, great negotiation skills mean more than ever.  Make sure your agent has them!

Obtaining a Mortgage: 3 Steps to Improve Your Credit Score

19 Thursday Apr 2012

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Right after the mortgage meltdown, it was very difficult to obtain a mortgage.  It is still not especially easy, and I find that some buyers have credit scores that either prohibit them from getting a mortgage or make it difficult to get a good rate.

The first step to improving your credit score is to get a current copy of your credit report. There are three nationwide consumer credit reporting companies that provide reliable credit reports. Those companies are: Equifax- www.investigate.equifax.com, Experian – www.experian.com and TransUnion – www.transunion.com.  At AnnualCreditReport.com you can get a copy of your credit report from one of these companies absolutely free. To report false information that appears on your report you may contact the nationwide consumer credit reporting company that provided the credit report. The time it will take to correct your report depends on the specific error contained in your report, but no matter the length of time, getting your credit information corrected is your best and only option because your credit is at stake.

The second step to improving your credit score is to take control of your monthly debt. Your credit score reflects what you owed at the time of your last billing cycle and the amount of credit that you have available. People with the highest credit scores only use 10% of their total available credit each month. To maintain good credit you must keep your monthly debt under 25% and not utilize more than 25% of your available credit each month.

The third step to improving your credit score is to remember that “credit” cards don’t always benefit your credit. Paying off the balance on your credit card every month will not always improve your credit score. At the end of each billing cycle the full amount that you owe on that card is posted on your credit score, even if you paid your monthly charge. Once you have paid off the full balance on a credit card, do not cancel it. Canceling a credit card will lower your credit score, even if you have paid it off. Mortgage companies suggest that if you plan to purchase a home, you should not make any purchases with your credit card 3 to 6 months before you plan to secure financing for your new home. Instead, use cash or debit to pay for purchases during those months so you can enhance your credit worthiness.

Overall, your credit score is only a small part of your complete financial standing, but it is one of the most important because it proves your responsibility for paying off your debt. Don’t miss out on the historically low mortgage interest rates that are being offered. There’s no requirement for you to have outstanding income and a high down payment if you have good credit. Improving your credit score will give you an opportunity to take advantage of a low interest rate. Follow these 3 easy steps to improving your credit score and be on your way to owning a new home!

Buying a Short Sale can be a Tall Order

09 Friday Mar 2012

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A short sale is usually anything but short.  Sort of like the attorney’s “legal brief” which is never brief, a short sale is very rarely “short”.  The term refers to the situation when the seller OWES more on the property than the property is worth, and is attempting to persuade the lender to take less than is owed on the property in full satisfaction of the loan.  You have probably heard the term “underwater” – a short sale seller is underwater on the house (has borrowed more against it than is supported by its current market value) and is trying to sell the home without having to cough up the difference at closing. 

A short sale can take MONTHS and MONTHS (although I HAVE had one approved in two weeks – that is very unusual).  The lender generally doesn’t WANT to take less than is owed, as you might imagine.  Therefore it’s somewhat of a fight, and if/when there are multiple lenders and lienholders (as there often are) it is often next to impossible to get them all to agree.  We agents sometimes say that it’s the THIRD short sale buyer who actually gets the house, meaning that most buyers who make an offer on a short sale get tired of waiting for the approval and just go on and buy something else.  Of course, the short sale may or may not EVER happen.  The seller may just stay and pay – or it may end up as a foreclosure.

Even when the short sale lender or lenders approve the short sale, they will sometimes reserve the right to disapprove the short sale at any time before closing – which poses another problem; it could fall through at the last minute.  In fact, you can be sitting at the closing table when the word comes that the lender has decided to withdraw approval and foreclose instead.

Other potential snafus are that the seller usually wants a release from any and all liability with respect to the loan, while the short sale lender(s) will often require that the seller sign a personal note back to the lender for the remainder owed.  Another problem I have seen is when the seller does not realize that they may be TAXED on the forgiveness of debt (why the seller’s agent did not bring up this issue to the seller prior to getting a contract is beyond me, but it happens).  The IRS considers forgiveness of debt taxable income, and the seller will be responsible for paying that tax.  A side note – if you are the seller, please consult your accountant on this one – because if it is your personal residence you are selling, the forgiveness may be excludable, much as GAIN from the sale is excludable if you have lived in the house as your main residence for two of the past five years.

In other words, short sales are a PAIN, but you CAN get a great deal.  It’s best to look for PREAPPROVED short sales where only one lender is involved.  Pre-approved means the lender has already agreed to accept a short pay-off, and these deals are much more likely to go through.  In any event, I usually counsel buyers to go ahead and make an offer on a short sale if that is the property that they really like, but the to KEEP LOOKING.  You can always terminate your short sale offer if you find something better in the interim. 

We agents are all ready for the day when regular sales again outnumber foreclosures and short sales, but I am also glad to see those sales moving through the system.  The quicker we turn over the troubled properties to buyers who can handle the payments, the faster the housing market will recover.

MY HOUSE IS UNDER CONTRACT – WHAT HAPPENS NOW?

22 Wednesday Feb 2012

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CONGRATULATIONS!  You have a contract on your home.  You have a willing and able buyer and you have come to terms on the sale of the home.  What happens between now and closing?

Unless the buyer is purchasing “as is” (usually not the case) the buyer has a “DUE DILIGENCE PERIOD” – typically somewhere between 7 and 14 days.  During that time the buyer can terminate the contract for any reason or no reason at all.  The buyer can simply send a notice of termination and the deal is over – you are left with an unsold house and a search for the next buyer.

But do not worry – it does not often happen like that.  Instead, the buyer will have an INSPECTION – by a certified home inspector.  The inspector’s job is to find anything and everything that is wrong with the place, so don’t be surprised or offended.  Also, the standard inspection report is about 30 pages long – so don’t panic about that either.  It contains a lot of OTHER information in addition to any “problems” the inspector has found with your home.

After the inspection, the buyer will provide the inspection report to you and ask you to fix items that the inspector says need to be fixed.  They might ask for EVERYTHING, so be prepared for that – but more often the buyer will pick what is most important to THEM.  You can either agree to fix these items, or you can negotiate a dollar amount to compensate for the things you don’t want to fix.  You don’t have to agree to do ANYTHING, but it’s best to be as reasonable as you can – because again, during this period, the buyer is able to TERMINATE the contract for any reason or no reason at all. 

Once the due diligence period ends, the buyer cannot back out of the contract (except under a different, applicable contingency – financing or appraisal, for instance).  If they back out prior to closing and no other contingency gets them out of the contract, they lose their earnest money.  You, the Seller, can then claim that earnest money OR you can sue for damages.  But rest assured – a vast majority of the time buyers do NOT back out once the due diligence expires.

There may also be the aforementioned FINANCING and/or APPRAISAL contingency associated with the contract.  The financing contingency gives the buyer an OUT from the contract if they are unable to obtain financing.  The period can be anywhere from 7 days to 30 days.  As a seller, you have likely insisted on a prequalification letter from a lender – so you know the buyer at least HAS talked to a lender – and have negotiated as short a period as possible. 

The appraisal contingency is sometimes a longer contingency.  Sellers attempt to negotiate as short a period as possible, of course, but the problem is that many lenders are ordering multiple appraisals – sometimes even the day prior to closing.  So imagine the buyer’s dilemma.  They think that the property has appraised and there’s no problem – and then the lender orders ANOTHER appraisal and it comes in low.  As a seller, all we can do is keep in contact with the buyer’s agent and make sure that at least the first appraisal is ordered in a timely manner.  There’s no way to know in advance if the lender is going to order multiple appraisals.  It is not the norm, but it can and does happen.

Say the property does NOT appraise for the contract price – it appraises for less.  In that instance, if we are still within the appraisal contingency period, the buyer can (and will) ask the seller to sell the property for the lower price.  If the seller refuses, the buyer can walk from the contract.  But if the seller AGREES to sell for the lower price, the buyer is bound (unless another contingency applies).  One sticky issue here can be when the seller has agreed to pay for some of the buyer’s closing costs.  Say the contract is for $100,000, seller paying $5,000 of the buyer’s closing costs, and the appraisal comes in at $95,000.  Well, that’s what the buyer is REALLY paying, right?  Because they are effectively getting $5,000 back.  STILL, the buyer has the right to insist that the seller lower the purchase price AND keep the closing costs in.

What happens NOW?!?!  All contingency periods are up.  We are waiting for closing.  Time to have all your utilities disconnected as of the day of closing, except for water.  It is common to leave water on for three days after closing.  The reason for this is that the buyer must present a closing statement to get water service – and, of course, they won’t have the statement until the day of closing.   In addition to scheduling the disconnection of utilities, do not forget to put in a change of address with the postal service – www.usps.gov – and notify your credit card companies, magazine subscriptions, and the like of your new address.

What can you leave in the place?  Best to leave nothing except what was agreed to in the contract (with the exception of any manuals for left appliances or the neighborhood directory).  If you want to leave anything else, or think the buyer might want you to, get your agent to get the okay from the buyer.  A typical issue here is that you cannot leave old paint cans unless the buyer says it is okay, for instance.  (Paint is not always easy to dispose of).  Then, hire someone to do one last, final, deep cleaning.  All that is required under the contract (unless there is a special stipulation) is that the home be left “broom clean” – floors and carpets swept, horizontal surfaces wiped down, ovens and fireplaces cleaned, etc.  But you don’t want to have an issue the day of closing over dirt; simpler to pay someone to do one last sweep.

Then, to closing it is!  Your job at that point is to bring all keys and remotes to the closing table.  Most of the documents will be signed by the buyer – you will have only a few.  You can give the buyer a forwarding address and/or email if you so choose – but that is by no means required.  You can always ask them to contact your agent if mail arrives for you after closing.  If you have gain from the transaction, you will be given a check at the closing table or you can have it wired directly to an account (this can be arranged ahead of time).

And you are done!!  CONGRATULATIONS!!!  You have sold your home in a difficult market!