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A HOUSE DIVIDED: The Family Home in a Divorce

27 Friday Sep 2013

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“When we divorced we split the house 50/50 – she got the inside and I got the outside.”

 “Have you seen the new “Divorcing Barbie” doll? She comes with Ken’s house.”

House Divided

             Joking aside, the family home is sometimes the greatest asset to divide in a divorce – so let’s look at how to handle this crucial asset.

It is advisable to call a Realtor early on, when you’re analyzing what assets you have and don’t have.  I often get called in to look at the home and give an assessment of its value in today’s market.  It makes sense to call a Realtor at this point – we typically are more familiar with the neighborhood and have been in the homes that are for sale and have sold, and are accustomed to pricing properties for sale.

There are online tools you can use as well – zillow.com, for instance, which gives you a “zestimate” of what your home is worth, or trulia.com.  However, these services have obviously not been inside your home or the other homes – so they are very general and cannot necessarily be relied upon.  Tax records are also notoriously unreliable.

A crucial consideration at this point may be whether or not the couple is “underwater”; that is, whether you owe more on the property than the property is worth.   If so, to sell the home you would have to bring money to the table.  In other words, in some instances it may not be possible to sell the home.

Also consider early on whether or not you want to fight to keep the home.  Can you afford the monthly carrying costs?  It might not be worth fighting for if it’s something you cannot keep up.

If one party does end up staying in and keeping the home, however, that party may be buying the other party out.  In that instance, professional appraisals are probably in order – each side getting their own appraisal and then perhaps a third appraisal if the two vary widely.  Know that appraisals are an ART as well as a science – while appraisers are bound by the Uniform Appraisal Guidelines and professional dictates, there is some subjectivity in the process.  When you hire an appraiser, you might wish to share with them the comparable sales that you think are most applicable and why they should be used.  Most appraisers are happy to consider the information, although of course they are not bound to use it.

But say the decision is that the home needs to be SOLD.  It’s great if you can both agree on a Realtor.  That actually happens much more often than you might think.  Maybe you both liked the Realtor who sold you the home.  Or know a Realtor jointly who you respect.  Another tactic is to interview three Realtors and see if there’s a clear front runner who you can agree upon.  If not, one way this is sometimes handled is that one party will choose the Realtor for a specified period of time and the other party will choose for the next period – be it 3 months or 6 months.

Several considerations arise here.  Keep in mind that there are various expenses involved in getting the home ready for sale and keeping it maintained while it is on the market.  How those expenses are handled should be decided upon in advance.  You might also want to decide in advance how much the list price will be decreased and when – and what offers should be acceptable (i.e., you can agree that any offer within five percent of list price must be accepted, that sort of thing).

Then there are some very practical showing considerations.  An example will illustrate this point.  We had one client where the wife left with all the nice furniture.  We were left showing a home with very little furniture and a “divorce feel.”  Try to agree to keep enough nice things in the home to make it show well.  Like it or not, buyers are swayed by these things.  Most buyers choose emotionally and THEN justify the purchase logically.  If they walk in and the home feels forlorn and empty, they will not feel great about the home – or may think the seller is in desperate circumstances and thus make a lower offer.  It pays off to have the home nice for showings.  If nothing else, the parties can agree to borrow or rent furniture or to have the home staged for showings.

The home must also be AVAILABLE for showings.  This becomes an issue when the person staying in the home doesn’t necessarily want the home to sell.  Perhaps the other party is paying the bills, and so once the home sells the occupying party loses that support AND must move to a lesser home.

When an offer comes in, keep in mind that your net is less the Broker’s commissions, the mortgage payoff(s) and any repairs that will be necessitated during the inspection period.  Your Realtor can help you figure your net from a given offer.  Again, it is sometimes helpful here to have agreed what amount and type of offer should be acceptable.

A note here if one party stays in the home.  Be aware of title issues.  When you sell the home, a title search is performed.  If there are any liens against the property, these must be paid off before closing.  Even if you do not sell the home, if you are the one keeping the home you want to have a title search before all is finalized.  That way you can be sure the departing spouse didn’t borrow money against the house or otherwise create liens that you will be responsible for when you sell the house and which effect its value.

The final issue – housing options once you leave the family home.  This is for you and your Realtor to decide, but just a few things to keep in mind: do you need to stay in the same school district for the kids?  Do you need to stay close to the other spouse for the children’s sake?  Even the priciest zip codes have affordable options that your Realtor can help you find.  And keep in mind that emotionally you may want to stay in a familiar area; the one you’ve lived in or an area with friends and family near.

MULTIPLE OFFER SITUATIONS

26 Monday Aug 2013

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Sellers Market

Our Atlanta real estate market is currently a strong “seller’s market”. We define a seller’s (vs. buyer’s) market in terms of available inventory.  If there is six months or less of housing inventory on the market, it’s a seller’s market – more than six months of inventory is a buyer’s market.

When we say “six months” worth of inventory, that means that if nothing new were to come on the market (hypothetically, of course), it would take six months to sell everything that it currently listed.  This is calculated this way

  • We compute the total number of active listings on the market last month in the area under consideration;
  •  Then compute the total number of sold homes for the that month;
  •  Then divide the number of current active listings by the number of total sales for the month, which gives you the months of inventory which remain.

Using this formula, the Atlanta Metro area has less than five months of active listings (in some areas, less than three).  So listings are often going under contract within the first day or two they are available, with multiple offers.  A seller who gets multiple offers may pick the best one and respond to it OR may decide to contact all bidders and request their “highest and best” bid and go with the bid the seller finds most advantageous to them.

If you are a buyer trying to “win” in a multiple offer situation, it goes without saying that you should place your HIGHEST offer – the most amount of money that you are willing to pay for the property.  The seller will usually go with the highest bid, but not always.  There are other factors important to the seller: how likely a buyer is to get to the closing table, for instance (so a buyer with cash is “king” – because loans can fall through, of course).  This is why the seller asks not only for your “highest” offer, but for your “highest and BEST” offer.  Let’s look as some of the factors that will help your offer be the “best” offer.

First, if you can avoid asking the seller to pay closing costs, I would recommend that.  A seller will perceive a buyer who is asking for closing costs as not as strong a buyer.  A strong buyer has enough cash on hand to pay their own closing costs and can avoid rolling those closing costs into the loan by asking the seller to pay for them.  (What the seller cares about is the seller’s “net” – contract price minus closing costs paid.  By asking the seller to pay closing costs you are offering them “less” than the contract price and perhaps indicating that you are not as strong  a buyer).

Another seller consideration is how difficult the seller perceives that the buyer is going to be during the contract to close process.  A buyer who asks for too much in the opening bid may be perceived as a scared buyer who is more likely to terminate the contract during the due diligence period.  Or one who is likely to ask for excessive seller concessions during due diligence.

Here are some other pointers if you are the buyer placing a bid against other offers:

  • Make your offer a CLEAN AS POSSIBLE; meaning avoid stipulations.  Keep those stipulations you do include as simple as possible.
  • For instance, we will sometimes insert a stipulation asking for a professional cleaning of the property from the seller prior to transfer of possession.  If there are multiple bids, LEAVE THAT OUT.  That stipulation is sometimes taken the wrong way by sellers who think that they are indicating that the property is less than clean, and that may be the thing that prevents you from getting the property.  You can pay for your own move in cleaning if the seller doesn’t (and many, if not most, sellers will have the property professionally cleaned without you asking for it)– but don’t risk losing the property by asking for this when there are other offers.
  • The same thing goes for other items you might otherwise ask for: a survey, condo documents, etc.  You can pay  for a survey yourself and still *ask* for the condo documents (or have your agent get them) during the due diligence period. Asking for them in the initial offer may, all other things being equal, cause a seller to choose another offer that is simpler for the seller.
  • You may be competing against other offers that DO NOT HAVE a financing or appraisal contingency.  If you need financing, you must have those contingencies (unless you have enough cash to cover if the property ends up not appraising for full contract price and are willing to take that chance). But keep this in mind – know that some buyers will pay cash without a loan OR appraisal contingency for a hot property.  So you may be beat out not on price but by a buyer in that position.
  • So if you must have a loan and appraisal contingency, make them as clean and enticing as possible.  Here are some guidelines: indicate in the contingency how much money you are putting down – more is better to the seller, of course.  If you are putting fifty percent down,  you are a stronger buyer than someone putting twenty percent down, for instance.  Keep the loan and financing contingencies as tight as possible – 21 to 25 days is the norm, but go shorter if you can in order to present your offer in the best light.
  • HAVE A PREAPPROVAL LETTER (or proof of funds if you are paying cash).  Most sellers won’t even consider an offer with a prequal or proof of funds.  It is best if that preapproval letter is from a recognized lender who regularly does mortgage loans so that the seller is reasonably certain that the lender will not botch the deal.
  • You may also be competing against an “AS IS” offer; that is, one in which the buyer says that they will purchase the property without asking for any repairs.  (In an “as is” contract, the buyer still has a right to inspections, but has agreed not to ask the seller for any repairs). Therefore, if you do want a due diligence period, keep that period as short a possible (typical is 7 to 10 days – in multiple offer situations, I definitely recommend not going over 10 days).

Finally, it sometimes helps to use a “personal touch”.  Tell the seller something about yourself.  We call this a “buyer’s letter” and I will often write them for clients in situations where I think it would be helpful.  Tell them what you like about the home and give them information so that they know you’ll be a good neighbor.  Not all, but many sellers care very much about what type of person is purchasing their home and what type of neighbor that person will be for the friends that they are leaving behind.

Put your best foot forward when there are multiple offers – remember that you are competing not only on price; and good luck!  If your bid is NOT the winning bid, consider asking the seller to hold on to it as a “back up offer” in case the winning offer falls through.

DECIDING TO SELL YOUR HOME

04 Tuesday Jun 2013

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House For Sale

The first step in selling your home is, of course, deciding whether it is TIME to sell.  Have you outgrown your current home?  Is it too large and do you want to downsize?  Are you ready to move up to a nicer home or down to a smaller one?  Ready to change neighborhoods, schools, or towns?

If you have a choice in whether or not to sell your home (i.e., if it’s not a job transfer or other life change dictating the move) let’s discuss some of the factors you’ll want to consider.

If you are UP sizing to a more expensive home then a good time to move is when the market is LOW.  You’ll get less for your current home, but will get a better deal on the home you’re purchasing.  Conversely, if you are downsizing then you may consider it better to move when the market is HIGH so you can maximize the return on your current home.  Know that whether the market is “high” or “low” often depends upon the price range you are considering and the area of town.  Best to consult a real estate professional to discuss your specific situation in order to plan what is right for you.

Even if committed to moving, many potential sellers want to find out if there is a home they want to move TO before they put their current home on the market.  Not a bad idea.  But unless you can purchase a new home without selling your current home, do not get too invested in finding the “perfect” home before you sell your current home.  Your goal should be to see if there are houses (more than one) you would like to move to so that you are comfortable putting your home on the market.  But chances are that if you fall in love with one particular home, THAT home will be sold by the time you get your home on the market, get it under contract, and are ready to write an offer.  So on the exploratory search the goal should be to determine whether there is likely to be a home you will be happy moving into when your home sells.

In other words, it is somewhat of a leap of faith.  You put your home on the market trusting that you will find the “right” home to move into when the time comes.  Of course, you have some control over this process since if you price your current home correctly it should sell quickly.  But know that few if any sellers will agree to a “sale of property” contingency if your home is not at least under contract.

Here is how that works: if you must sell your current home to purchase a new one, then you submit an offer for that new home with a contingency stating that your purchase of the new home is contingent on the sale of your current home.  From the perspective of the seller who you are making that contingent offer to, it would be quite risky to agree to that contingency if your current home is just “on the market” and not yet under contract.  There’s no guarantee that your home will sell quickly – and the seller is taking their home off the market if they get under contract with you.

So consider the market, the neighborhood, and your personal circumstances.  This may be the perfect time for you to move.  Generally, prices are rising but interest rates are still low.

YARN BOMBING in EAST ATLANTA

22 Friday Mar 2013

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There have been explosions in East Atlanta you haven’t heard a peep about – very SOFT explosions, given, but colorful nonetheless.

The new trend there is YARN BOMBING bicycles. Just go to the corner of Flat Shoals and Metropolitan and you’ll see what I mean. Some are full on bombings, others feature just a little yarn shrapnel here and there.

Yarn bombing is the term given to a type of visual but nonpermanent graffiti accomplished with – you guessed it – yarn. On a recent beautiful day I ate lunch at the Flatiron with a client following her inspection and personally observed the unique “art”. The trend reportedly started in the Netherlands, spread to Texas, and from there – all over, including East Atlanta. I haven’t seen it anywhere else in Atlanta yet, have you?

In other cities, the trend has included knit cozies encircling light poles, columns, and even trees. Today in East Atlanta – bicycles. Perhaps next, CNN Center?

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“The Art of the Highrise”

18 Monday Mar 2013

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THE GALLERY
2795 Peachtree Road

In my visits to Buckhead highrises, I am charmed by the way Buckhead buildings work to distinguish themselves from one another. We have so many highrises, but most of them are very different from one another in ways that are carefully planned by the architects, designers, and marketers for each property.

This week we take a look at The Gallery – which rises above Garden Hills on Peachtree right across from St. Phillips church and near Fellini’s Pizza. It’s a newer tower wedged in front of the older building known as The Carlyle. The Gallery was built in 2007, right before the severe market downturn – the building has done quite well given that unfortunate timing!

The motivation for the name was originally that the condo building would host many original and unique works of art. Now the art is primarily confined to the lobby, clubroom and foyer areas (and of course the art gallery, also in the lobby), but with its soaring lines, glass exterior and triangulated balconies, the building itself is a work of art, designed by favored Atlanta architects Smallwood Reynolds Stewart and Associates and William T. Baker.

There are 200 homes here on 27 floors, nine homes to most floors. Most of those homes are two bedroom homes, although there are one and three bedroom floorplans as well. The top two floors are penthouse units – four per floor, and floors 24 and 25 are larger units with eight per floor.

The HOA dues are about 32 cents a square foot and include internet access. The fourth floor has the pool, fitness room, clubhouse, tennis court and movie room – and there are two community outdoor living rooms, both with fireplaces. There’s a dog walk area, but no wine cellar (which seems to be the amenity “du jour” these days, but I suppose the Gallery could always add a wine cellar if there’s a market for it).

There are quite a few Buckhead downsizers here and it is generally a social bunch, with happy hours at the club room the first Friday of every month.

In the past year and a half, two bedroom, two and half bath units have sold from $350,000 to $540,000. There are currently seven units on the market from a one bedroom, two bath listed at $365,000 to a three bedroom, three bath unit listed at $795,000. Call me if you have any interest in exploring The Gallery!

Mary Anne Walser
Keller Williams Realty of Buckhead
#1 Individual Agent in 2012!
maryannesellshomes@gmail.com
404-277-2537

NEIGHBORHOOD REAL ESTATE REPORTS

04 Monday Mar 2013

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What’s going on with real estate in YOUR neighborhood?

I recently did a market report for the Mount Paran/Northside neighborhood – set forth below. I’m happy to do one for YOUR neighborhood or for your specific home if you’re interested. Just contact me at mwalser@kw.com.

The Atlanta real estate market in general is busting wide open.  Finally!  We are seeing properties which are well priced and in good condition move within days with multiple offers.  We have a lack of inventory, and lots of buyers.  We believe that the market will continue to improve.

But what does it look like specifically for OUR neighborhood, Mount Paran Northside?  Generally, our inventory is low, homes are moving faster (but primarily only if they are well priced and show well) and prices are rising.

I took the precise boundaries of the association for my search, and here is a snapshot of our current real estate picture:

Right now there are 41 properties actively listed on the market in Mt Paran-Northside ranging in price from $579,000 to $7,995,000.  There are twelve homes that are under contract.  The list prices for those homes ranged from $499,999 to $2,395,000.  Since the first of this year, three homes have sold – at $845,000 (on market for 95 days, sold for 99% of original list price), $1,650,000 (173 days on market, sold for 94% of original list price) and $2,060,000 (on market for 120 days, sold for 84% of original list price).

So, how does this compare to last year?  In all of last year, from 1/1/2012 through the end of December, 49 properties were sold, for an average of about four properties per month.  With fifteen homes either sold or under contract after the first two months of 2013, we are off to a good start!

Now let’s take a look at trends in MPNS since 2007.  It seems that we reached the bottom of our sales price slump in 2010 – things looked up in 2011 and hit lows again in 2012 – but we are clearly on an upward trend.  These graphs are a summary of ALL properties sold within our community boundaries from 2007 – present day.

SOARING AT THE SOVEREIGN

21 Thursday Feb 2013

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SOARING AT THE SOVEREIGN

Ah, Buckhead! The hustle and bustle, the bars and restaurants, the buildings old, new and yet-to-be-builts. Who of us has not dreamed of one day living in the shiny towers that overlook our most affluent and vibrant city center? If you’re in the market for a shiny highrise, or a more sedate townhome, we are putting together a rundown of some of them for your consideration. This will take several weeks (we have a lot of them!) so if your favorite isn’t featured this week, stay tuned!

This week, SOVEREIGN – at 3344 Peachtree Road, built in 2008. The condominiums occupy the 28th through the 50th floors.

This is my personal favorite of the shiny new highrises. I love the exterior architecture – the “slice” of building that cuts through and the curves that add interest. The building was designed by the Atlanta architectural firm Smallwood Reynolds Stewart Stewart & Associates.
Smallwood Reynolds also designed other iconic Atlanta condo buildings:
Buckhead Grand (just around the corner from Sovereign), The Brookwood (the Midtown side of Buckhead), The Aberdeen (in Vinings), Aqua (in Midtown) and The Atlantic (rentals at Atlantic Station that will likely one day be converted to condos).

But of those buildings, I think Sovereign is their best work, and they have won many awards for the design. And Sovereign does things right inside as well – the condos are roomy and have the best outdoor spaces I have seen in a condo highrise. They are like an outdoor living room; much larger than in other buildings. The outdoor terraces are cut INTO the building (rather than extending out) and are quite big, so here you can have an outdoor fireplace and even a grill on your terrace, where in other buildings you cannot due to city codes. I also like that the kitchens are all very open.

The floorplans vary – there are seventeen in all, but the kitchens all open to the main living space and there is always a separate dining room.

There are only 82 homes in this elegant and upscale building. At 665 feet tall, it is the tallest residential building anywhere in Georgia (and the 9th tallest building, counting commercial buildings, in Atlanta). The décor is classic modern. The building is also an OFFICE building, but the offices are completely separate, and the condos have their own elevators. What the condos and offices DO share is the Buckhead Club – a private club featuring meeting, dining and fitness facilities. If you live in the Sovereign, the fitness facilities are yours to use 24/7 as part of your HOA. To use the Buckhead Club, you have to buy a membership to the tune of about $1500/year.

But while your HOA does not cover membership in the Buckhead Club, it does cover several private clubrooms (including one where each resident has their own mini wine locker) that you can use. There is also a saltwater pool, 24 hour security, catering kitchen and a guest room (like a hotel room – where your guest can stay for $125/night). The amenities are on the 28th and 29th floors.

Some considerations if you plan to live here – there are several of what may be “extras” at extra cost that are worth considering. Retractable blinds, for instance, to cover those floor to ceiling windows when you want to, and you’d probably like the blinds in the bedrooms to be blackout blinds. This will cost in the neighborhood of $15,000-$30,000 for an entire unit. Also, since the terraces are unique in being ABLE to grill or have a fireplace, it’s worth doing that – it’s like adding an extra room to your condo.

Sovereign is hard to miss because of its distinctive exterior architecture.
It is on Peachtree just south of Phipps and Lenox Malls, just North of Piedmont, and across Peachtree from the Atlanta Financial Center.

The Sovereign units are still being sold new, by the developer – and listings range in price from $890,000 to $2,475,000, and there have been reported sales up to $5,000,000. Homeowner’s association dues are approximately fifty-eight cents a square foot and the square footage ranges from 1500 to 10,000 square feet per unit.

THE APPRAISAL PROBLEM

11 Monday Feb 2013

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Appraisal BalanceYou have probably heard this by now, but the Atlanta market, in most areas, is rapidly becoming a SELLER’S market again! We have more buyers than we have good, well-priced inventory, and as a consequence listings that are in good condition and well-priced are going quickly, sometimes with multiple bids.

Sounds great for sellers, and it is – but there is also a catch.

Almost every final purchase contract contains an appraisal contingency. The appraisal contingency states that the property must appraise at or above the contract price. If the property does NOT appraise, the buyer presents the appraisal to the seller, and the seller has the opportunity to agree to pay at the reduced appraisal price. If the seller does not agree to that, the buyer may terminate.

Here is where we often get into a big problem. By definition, appraisals are backward looking. The appraiser looks at similar properties that have sold in the recent past within a certain geographic radius. Even when the market is rapidly improving, the appraiser is bound by the sales that took place in the past. So as you can see, prices cannot rebound suddenly and quickly; the appraisal process does not allow that. Prices must rise more slowly and steadily, as appraisals must build upon homes that have already sold. Good appraisers will also research other properties currently under contract and set to close, which is helpful; but cannot completely take into account a market where suddenly there are more buyers willing to pay more for houses.

To illustrate, good well-priced homes are selling with multiple bids within days of being put on the market (or even BEFORE we list them). The contract price is often higher than the home will appraise for, so buyers are even, in some instances, agreeing to pay extra cash to pay ABOVE appraised value. There is one listing where the buyer agreed to pay $75,000 OVER the appraised price; while that is more than most buyers would be willing to cover, there are others willing to pay more than the appraisal says the property is worth.

And it’s not just home sellers who need to take this into consideration. Any homeowner who has a need to determine the current value of the property should take heed of this dynamic.  For instance, divorces. What this means is that if you are the divorcing party accepting a “payout” you may want to either wait some period of time before you agree to appraise the house for  the payout, bargain for a higher payout that might otherwise be negotiated, or provide in the settlement that there will be another appraisal in a year, having the party keeping the house pay you half of the increase in value in the home at that time.

If you are curious what your home might be worth in this market, here are some of the pertinent factors.  If you contact a Realtor, while they are not appraisers, they can pull comparable properties for you and give you an idea of what your property might be worth in this market:

  • How many beds/baths?
  • What type construction (brick, frame, vinyl or stucco?)
  • What style (two story, ranch, split level?)
  • What year was the house built?
  • Any significant upgrades or renovations and if so, what year – and a short description of what was done.
  • Parking – is there a garage or carport?  Two car?
  • Square footage of the home and acreage of the lot.
  • Neighborhood and school districts.

Armed with this information, a Realtor can help you determine whether or not your home is in a high demand area and poised to receive top dollar in this improving market. Just keep in mind that you should also have a strategy for handling the appraisal if it comes in lower than your contract price.

How do you know when the PRICE IS RIGHT?

06 Wednesday Feb 2013

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House Price2

What’s the “right price” when you’re selling your home?  The longer your home sits on the market the less you’ll ultimately get for it, so you want to sell fast at top dollar; everyone does (and should).  How can we do that?  What’s the ultimate list price to accomplish your objective?  It’s a little trickier in the current environment, where we are low on housing inventory and it’s turning into a seller’s market.  It’s tempting to overprice.  But the key is to determine what price will draw those eager buyers and still get you top dollar for your home.  That’s where we step in.

First, remember that the list price should not be based on what you paid for the property, what you need to pay off the mortgage or what the price to rebuild the home would be today. What truly sets the right price is what a willing buyer is willing to pay RIGHT NOW and quickly, afraid that if they don’t buy it right away someone else will.  So the right list price takes into account a number of factors, including what other homes are out there that you’ll be competing with, and what’s sold recently in your neighborhood.

We do a comparable market analysis (CMA) for your property to help find this value. The CMA will compare your property to similar properties in your area that have sold in the past 6 months. This analysis takes in to consideration size, condition and improvements. Then we take a look at what is currently out there – the homes you are competing against.  Are you the best at the price you are asking?  That is what we are striving for.  You can see from the chart below that CONDITION is as much a factor as pricing.  You want to be the home that’s in the best condition at the lowest price – and that’s how you get “chosen” by a buyer.

Chart 1 - In market

In order to steal buyers’ attention from all the other listings you have to be better than the rest at the price you’ve chosen.  Listing your property as little as 10% above your determined market value will mean that that you will lose many potential buyers (according to the chart below, seventy percent!) who won’t even see your home because it’s overpriced.

Chart 2 - Triangle

The third and last step to price your property “right” is to take FULL advantage of the first 30 days that your property is on the market. Do not fall into the trap of “trying out” an above market price for a few days just to “see if it sells”. Many sellers make this mistake and end up selling below market value. Your listing attracts the most buyers when it first hits the market. All buyers are on the lookout for “Just Listed” properties every day. If your property is listed above market value from the start, it will be missed by all those potential buyers. After even the second week of listing, property showings begin to drop.  So if you don’t have ANY showings the first two weeks, you are clearly overpriced and should drop immediately – it is already almost too late!

Chart 3 - bar graph

If you are ready to sell fast and get a great deal on your property call me today.  I will provide you with a thorough CMA specialized for your unique property so we can determine the “right” price and sell fast.

WHAT HAPPENS AT CLOSING?

29 Tuesday Jan 2013

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Closing Table

You have found your dream house. Made an offer, came to terms, got through inspection.  Finalized the loan and have prepared to move. Once all that is done, there’s nothing left but the final – and crucial – hour. The closing.

So what happens at this mysterious event we call “THE CLOSING”?  Many buyers are intimidated by the closing, particularly since it takes place in a lawyer’s office and involves signing page after page of legal documents. Enough to give anyone a headache.

But really, truly, you as a buyer should take a deep breath, relax, and ENJOY the closing.  Enjoy the free soft drinks and chocolate provided by the closing attorney.  Quiz the sellers about the neighbors and nearby stores and what they will miss most about the house. Laugh with your Realtor about the homes you saw that were awful (“remember that bright orange kitchen in that one house?”). Shake hands with your lender.

You can RELAX, because at this point if your Realtor and lender have done their jobs, the hard work is all done.

The closing attorney works for the lender. As a practical matter, the lender’s interests are aligned with yours, as the buyer. The closing attorney, weeks prior to the closing, ordered a TITLE SEARCH. A title search is a canvassing of the relevant county records to make sure that the seller owns the property and that there are no “liens” or claims against the property. If there are any liens, the closing attorney’s job is to clear those liens so that you are getting title to property clear and free of anyone else’s claims against it.

You don’t have to worry about any of this – because as the representative of the lender, the closing attorney has already cleared title. Pursuant to the Georgia contract, the Seller must convey clear title.  So if you’re sitting at the closing attorney’s table, title is clear. (If it’s not, the closing attorney will let all parties know and the deal will not close as scheduled until title IS clear; but typically if there is a problem you will know well in advance of the scheduled closing).

The closing attorney will first present all parties with a CLOSING STATEMENT – also known as a HUD Settlement Statement, or simply “HUD STATEMENT”.  HUD stands for Housing and Urban Development – the federal agency which mandates the form.  This and the note are the two most important documents in the closing – most if not all of the other forms are simply form documents that everyone must sign and which are the same in every closing. The HUD statement and the note are unique to you.

This is where your Realtor comes in – the Realtor represents YOU in the closing.  It’s our job to make sure the closing statement accurately reflects the financial deal between the parties.  It is a smart thing to provide your Realtor, also, with the Good Faith Estimate previously provided to you by your Lender.  The closing statement should reflect the charges in the GFE very closely (the margin of variance allowed is prescribed by law, and the closing attorney will go through with you any variance between the estimate and the actual statement).

We will check the other key document – the Note – to be sure it accurately reflects the amount of the loan, the term, the interest rate, and other terms of the loan.

There are many other pages of documents for you to sign – the Security Deed, the Truth in Lending Statement, a copy of your loan application. Most, again, are form documents – but the Truth in Lending Statement (or TIL) is worth some extra explanation here.

The TIL shows what you will pay in total over the life of the loan – adding principal and interest over the thirty years of a loan (or fifteen, if you have a fifteen year loan). It also shows a percentage – but this is very confusing.  It is NOT your interest rate. Throws buyers off all the time. It actually is your interest rate PLUS your closing costs, even if all or part of the closing costs are being paid by the Seller. Meant to be a helpful document, it’s really not. The most important thing for you to know about the TIL is that it’s not important – it’s simply for your information but must be signed. The Note and the HUD Statement govern – and they show your costs and your interest rate in a more easily understood manner.

Once you’ve signed all those documents, handed over the money you’re to bring to closing (which must be either wired or brought as certified funds), checks are cut, keys are handed over, and you own a new home!  It may seem a little anti-climatic at the time. But there’s always a big sense of relief and joy. Congratulations on your new home!