Posted by admin on Feb 24, 2010 in Naples Homes Blog | 0 comments
When you have a signed contract to purchase real estate in Florida, you are going to need a settlement company or closing company. In Naples, Florida, the title company or attorney issuing the title insurance is usually chosen as the closing or settlement company. Most times the closing company will hold the buyer’s deposit and coordinate much of the activity that goes on during the escrow period. Other times, the buyer may have his real estate firm or attorney hold the escrow deposit. Also, a buyer and seller can have separate attorney representation through closing.
In Collier County a buyer usually chooses the title company because he typically pays for title insurance. An offer to purchase a property must include the title company where the buyer is placing his escrow deposit(s).
Keep in mind that the seller may also have a preference for escrow deposits and closing. This may be a point of negotiation in a counter-offer.
It has become customary in Naples, Florida that the buyer chooses the title insurance company and thus the settlement/closing company as well. Even so, everything in real estate is negotiable.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 3 comments
Buying a home does not occur in a vacuum, involving only you and the seller. There are all kinds of people and services involved behind the scenes to make it happen. Since some of these services affect both you and the seller, there will have to be an agreement on which companies you will use for them.
As a buyer, you should request the title insurance company, closing/settlement company and who will hold the escrow deposit(s) when you make the offer. If you are unfamiliar with these service providers, your Realtor can provide a list of recommendations from which you can choose.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 4 comments
How FHA and VA Financing Affects Your Offer
Home appraisal inspections on FHA and VA loans are a little more detailed than on conventional loans. Qualified appraisers are required to perform certain minimum inspections as well as evaluate the market value of the property. Although these inspections are not as detailed as a professional home inspection and should not be considered a substitute, sometimes repairs are required.
These are additional costs the seller would not be obligated to pay for someone obtaining conventional financing, so your offer should include a maximum figure for any repairs. Otherwise the seller is signing the equivalent of a blank check, and they will not want to do that.
At the same time, whatever figure you put in will most likely affect the seller’s willingness to negotiate on price. If you put $500 as an estimate, the seller may be $500 less negotiable on their price. If no repairs are required, you may have been able to get the house for $500 less than what you and the seller agreed on as the price. The solution is to add a clause to your offer that goes something like this:
“If required repairs cost less than the maximum amount allowed, the excess will be credited toward buyer’s closing costs.”*
*Always consult a real estate attorney before writing or adding any clauses to a contract or to interpret any legal meanings in a contract to purchase real estate.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 0 comments
How FHA and VA Financing Affects Your Offer
If you are obtaining a VA or FHA loan in order to finance your home purchase, you must include that information in your offer. This is because government loans place additional financial and performance obligations on the seller.
FHA and VA appraisals are also more strict and potentially costly to a seller than for a conventional loan. The inspection may reveal certain items the seller is required to repair or replace that would not be required in a standard real estate transaction.
Non-Allowable Fees
First, VA and FHA loans prohibit buyers from paying certain types of fees that are often charged by lenders, escrow companies, settlement agents and title companies. They are called “non-allowable” fees. The result is that the seller ends up paying them instead of you.
Since these are fees the seller would not pay on an offer with conventional financing, this information must be included in your offer. You should also realize that since the seller will be paying these additional fees, they may be a little less negotiable on the price.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 0 comments
How Financing Details Affect Your Offer
When making an offer to purchase real estate, financing contingencies should be carefully considered.
Your financing contingency should contain information on whether you are obtaining a fixed rate or an adjustable rate mortgage and what maximum rate is acceptable. Of course you may be able to get a loan at 8% but when the prevailing rate is 5% to %5.5.%, an 8% rate wold be unacceptable.
Also, pay careful attention to the financing contingency deadline. If you agree to get a firm commitment from the lender in 45 days and it’s coming up on day 43, you’d better ask your Realtor to get an extension on the loan commitment to avoid any contractual issues.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 0 comments
How Financing Details Affect Your Offer
If you are a fortunate real estate buyer making a cash offer to buy a home, there are certain things you should consider when making an offer vs those who finance.
First and foremost, you are offering one less contingency than those buyers who finance. If your offer is accepted, the only contingency you may have is for an inspection or perhaps an appraisal. You have less outs in a contract and that is worth it’s weight in gold to a seller.
Cash is King
True to the saying, cash can be king when it comes to making an offer. That doesn’t mean you are going to get the property for 20% or 30% more off the list price, but it does offer significant benefits to the seller since they will have a much greater chance of closing without a financing contingency – especially with today’s extremely strict lending requirements.
If a seller asks for proof of funds when making a cash offer, do not take it personally. Provide bank documentation with your offer that shows you have the funds available. Your bank can give you a proof of funds letter that equals the offer amount so that you don’t have to show the seller you have a heap of money in the bank. If the seller sees big dollar signs in your documentation, he may ask for more money in his counter-offer than he would of if he had just seen a bank letter stating the same amount as the offer.
In a declining or unstable real estate market, the best advice with cash offers is to include an appraisal contingency with your offer. You can always decide whether or not you actually want to go ahead with the appraisal, but at least you have the option for a specified period of time. If the appraisal comes back way below the contract price, you can renegotiate with the seller or cancel the contract in writing.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 2 comments
Another occasional request when making an offer to purchase real estate is to have the seller finance the whole transaction or “carry back” a second mortgage to help facilitate your purchase of their home.
In cases when the seller owns the home free and clear or does not need all the proceeds from their sale in order to purchase their next home, this is an option. The advantage to the buyer is that he doesn’t have to go through the traditional mortgage approval process.
If seller financing is part of your offer, you should include the appropriate addendum stating the basic terms you wish to pay on such a second mortgage. The actual seller financing documents must be drawn up by an attorney.
Seller financing can be a great sales tool that has benefits to the buyer and seller.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 0 comments
How Financing Details Affect Your Offer
There may be times when, as part of your offer, you request the seller to pay all or a portion of your closing costs, or provide some other financial incentive. One common request is asking the seller to pay a certain specified amount towards “closing costs and pre-paids.” Such incentives can be especially effective if a buyer is tight on money for covering closing costs or has to put more money down than he previously anticipated.
Whenever you ask for incentives such as these, you will probably find the seller less willing to negotiate on price. After all, what you are really asking for is to have the seller to give you some money to help you buy their house. The end result is the same. The home price may be higher but you must considered the money credited towards closing costs and pre-paids as discount off that price.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 2 comments
How Financing Details Affect Your Offer
Interest Rates
A financing contingency in your offer protects you if interest rates suddenly become volatile and rise quickly. By adding a maximum acceptable interest rate in your offer, you are protecting yourself from such an occurrence.
At the same time, the seller will probably want to see that you have some flexibility in the financing terms you are willing to accept. If interest rates are currently at around 6% and you indicate this is the highest rate you will accept, you would be able to cancel the contract without penalty if interest rates rose past that point. The seller would suffer because they have lost valuable marketing time and may have made their own plans based on successfully closing the transaction.
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Posted by admin on Feb 24, 2010 in Naples Homes Blog | 1 comment
Most buyers do not have enough cash available to buy a home, so they need to obtain a mortgage to finance the purchase.
When making an offer, it is vital to include a financing contingency that informs the seller about your financing plans. A seller will want to know that you can quickly obtain a mortgage and how much you are able to put down. That is one of the major reasons that financing details are included in your offer.
Down Payment
As part of your offer, you will need to disclose the size of your down payment. Once again, this allows the seller to evaluate your likelihood of obtaining a home loan. It is easier to get approved for a mortgage today when you put down at least 20% or more – for condos it is closer to 30% in most cases.
When a buyer puts down 20% or more, a seller will feel more confident that the transaction will close and be more willing to accept your offer.
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