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Q. |
What are closing costs? |
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A. |
Closing costs are the fees for services, taxes
or special interest charges that surround the
purchase of a home. They include upfront loan
points, title insurance, escrow or closing day
charges, document fees, prepaid interest and
property taxes. Unless, these charges are rolled
into the loan, they must be paid when the home is
closed. |
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Q. |
Who pays the closing costs? |
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A. |
Closing costs are either paid by the home seller
or home buyer. It often depends on local custom and
what the buyer or seller negotiates. |
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Q. |
Why do I need a title report? |
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A. |
As much as you as a buyer may want to believe
that the home you have found is perfect, a clear
title report ensures there are no liens placed
against the prior owners or any documents that will
restrict your use of the property. A preliminary
title report provides you with an opportunity to
review any impediment that would prevent clear title
from passing to you. When reading a preliminary
report, it is important to check the extent of your
ownership rights or interest. The most common form
of interest is "fee simple" or "fee," which is the
highest type of interest an owner can have in land.
Liens, restrictions and interests of others excluded
from title coverage will be listed numerically as
exceptions in the report. You also may have to
consider interests of any third parties, such as
easements granted by prior owners that limit use of
the property. Some buyers attempt to clear these
unwanted items prior to purchase. A list of standard
exceptions and exclusions not covered by the title
insurance policy may be attached. This section
includes items the buyer may want to investigate
further, such as any laws governing building and
zoning. |
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Q. |
What is the best time to sell your house? |
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A. |
In addition to supply and demand, and other
economic factors, the time of year you choose to
sell can make a difference both in the amount of
time it takes to sell your home and in the ultimate
selling price. Weather conditions are less of a
consideration in more temperate climates, but most
of the time, the real estate market picks up as
early as February, with the strongest selling season
usually lasting through May and June. With the onset
of summer, the market slows. July is often the
slowest month for real estate sales due to a strong
spring market putting possible upward pressure on
interest rates. Also, many prospective home buyers
and their agents take vacations during mid-summer.
Following the summer slowdown, real estate sales
activity tends to pick up for a second, although
less vigorous, fall market, which usually lasts into
November when the market slows again as buyers and
sellers turn their attention to the holidays.
Sellers often wonder whether or not they should take
their homes off the market for the holidays.
Generally speaking, you'll have the best results if
your house is available to show to prospective
buyers continuously until it sells. |
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Q. |
What is seller financing? |
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A. |
Homeowners who are anxious to sell often
consider seller financing, which may include taking
back a second note or even financing the entire
purchase if the seller owns the home free and clear.
Seller financing differs from a traditional loan
because the seller does not give the buyer cash to
complete the purchase. Instead, it involves
extending a credit against the purchase price of the
home while the buyer executes a promissory note and
trust deed in the seller's favor. These special
circumstances must be acceptable to the lender who
makes the first mortgage on the property. The
necessary paperwork is prepared by the title or
escrow company after the terms are worked out
between the buyer and seller. It is critical to
thoroughly evaluate the creditworthiness of the
buyer first. Fear of default makes many sellers
reluctant to take back a second. But seller
financing can bring a higher price plus complete the
sale sooner in some situations. |
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Q. |
What are the benefits of seller financing? |
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A. |
Seller financing offers benefits to both buyers
and sellers including tax breaks for the seller as
well as offering an alternative when conventional
loans can't be found. The risks involved are the
same risks facing any lender. Is the borrower a good
credit risk? Will the property hold enough value
over time to allow for the repayment of all loans
made against it? Sellers should run a full credit
check on the borrower, require hazard insurance on
the property and include a due-on-sale clause. There
also are financing, disclosure and repayment-term
requirements that should be met. |
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Q. |
What are the two most important factors when
selling a home? |
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A. |
Even in a down market, real estate experts say
price and condition are the two most important
factors in selling a home. So, the first step is to
lower the price. Also, go through the house and see
if there are cosmetic defects that you missed and
can be repaired. Home sellers should make sure that
the home is getting the exposure it deserves through
open houses, broker open houses, advertising, good
signage and a listing on the local multiple listing
service. If the seller is using a real estate agent
and the property isn't getting proper exposure, find
another agent. |
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Q. |
What repairs should the seller make? |
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A. |
Most sellers like to make all minor repairs
before going on the market in order to seek a higher
sales price. In addition, nearly all purchase
contracts include a buyer contingency "inspection
clause," which allows a buyer to back out if
numerous defects are found. Once the problems are
noted, buyers can attempt to negotiate repairs or a
lower price. |
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Q. |
Do I have to consider contingencies? |
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A. |
If you are a seller in a seller's market, in
which there is more demand than supply, you probably
won't have to entertain too many contingencies. But
if you are selling in a buyer's market, when buyers
are few, prepare to be very flexible. Granting
contingencies also depends upon what kind of price
you want to get and on the condition of your
property, most experts agree. Remember,
contingencies are written into the contract and are
negotiable during the negotiation phase only. |
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