SELLERS
What is the average time from contract to closing on a loan?
Allow 30-45 days, although some lending institutions vary. Time variations are due to factors such as the type of loan, local credit references, work references, etc. The buyer may check with different mortgage companies to find one that meets their time requirements.
Who arranges for the appraisals and inspections?
The buyer and their mortgage company coordinate this.
What inspections are required by the lender and who normally pays for them?
Termite inspection, survey and appraisal are normally required by the lender and are normally charged to the buyer. The buyer can hire a home inspector at their discretion.
Who will contact me when it is time for the appraisal or inspections?
The buyer, buyer's agent or the lender. You will need to coordinate a time for allowing access to the property.
What is the usual amount of earnest money that should be requested from the buyer?
This amount is negotiable. Many use the formula "1% of the contract sales price." (Example: On a sale of $100,000, $1000.00 would be 1%). You should also request a loan commitment letter from the buyer's lender showing loan pre-approval.
Is it always necessary to have a contract on a real estate transaction?
Yes. Neither a title company nor a lender will process a transaction without a contract. Statute of Frauds requires any real estate transaction be in writing to be enforceable.
How long will it be before I know if my buyer's loan has been approved?
The financing addendum to the contract allows for a specified time provision. Generally 30 days is allowed in the sales contract for loan approval. Keep in mind this varies between lenders. The buyer or the mortgage company will contact the seller.
Is a title policy always required?
No there are times when a title policy may not be required although they are always advisable. An owner's title policy insures that the owners have received a good and marketable title, free from title defects in the chain of ownership. The title policy may also protect the owner against such things as liens, judgments, assessments, or easements. Considering the investment at risk, the purchase of a title policy is a minimal expense to protect the owner's rights to title.
Once the contract has been executed what am I as a seller responsible to do?
Follow the conditions agreed to in the contract such as: allow access for the appraiser and inspectors, make necessary repairs agreed to in the contract and adhere to any special provisions listed.
What are my expenses as a seller?
Seller expenses will vary according to the type of mortgage, what the buyer/seller have negotiated and other variables such as taxes, etc. Please contact the title company for a GFE (Good Faith Estimate) of typical expenses.
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BUYERS
Can't we do this on our own? Do we really need to use a REALTOR®?
Yes, you can. There are, however, a number of costly mistakes that can be made. REALTORS® are familiar with the entire transaction process, act as valued advisors and can save you not only time but also money.
Why is pre-qualification for a loan so important?
From a buyers perspective it helps aid the search in finding the right home to fit your specific needs. Sellers tend to take offers with letters of commitment as a much more serious buyer offer.
Do I pay commissions when using a Buyer's Agent to find my home?
The commission for the sale of a listed home is paid by the sellers broker. Non listed homes (FSBO's) and some builders do not guarantee to pay commissions. To eliminate confusion it is always best to work through your agent.
How is a REALTOR® different from a real estate licensee?
The main thing that distinguishes a REALTOR® from someone who is merely licensed by the state is the REALTOR® code of Ethics, established by the National Association of REALTORS®, which requires REALTORS® to put their clients' interest first at all times.
Do I have to sign a contract with a REALTOR®?
Wait until you are certain that you have chosen a REALTOR® that you are comfortable with. Once you have decided on the buyer's / listing agent, then you should have a written agreement before proceeding.
What are the standard ways of finding out how much a home is worth?
Comparative market analysis (CMA) is an informal estimate of value based on comparable sales in the neighborhood. Appraisals are a weighed opinion of home values by a certified appraiser based numerous factors.
Who pays closing costs?
Closing costs are paid by either buyer and/or seller based on negotiations. They can include fees for services, taxes, title fees, repairs, etc.
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TITLE
What is title insurance?
A title insurance policy is a contract by which a title company agrees, subject to the terms of the policy, to indemnify (compensate or reimburse) the insured (owner, mortgagee or other interested holder) against any losses sustained as a result of defects in the title other than those exceptions listed in the policy.
What is a defective title?
Title to a negotiable instrument obtained by fraud, or Title to a real property which lacks some of the elements necessary to transfer good title.
How much does title insurance cost?
The basic premium rates for title insurance are promulgated by the State of Texas and vary according to the amount of liability (generally the sales price of the property).
The title company can give you these costs over the phone as well as the closing costs.
What is a closing agent?
The closing agent or closer is the person at the title company who conducts the proceedings and explains the documents. In Texas it is common for the buyer and the seller to close at two separate times.
What is a sales contract?
A sales contract is the blueprint for the completion of a real estate transaction. The contract should be complete and should provide for all possibilities to avoid misunderstandings. Before going ahead with the exchange, the parties involved should assure themselves that the various conditions of the contract have been met.
What is a HUD 1 statement?
The HUD 1 or closing statement acts a balance sheet to the transaction. It will show all credits and debits to the parties involved in the transaction. All parties will want to inspect the closing statement (HUD1) to make sure all monies are distributed accordingly. When both parties are satisfied that everything is in order the exchange is made and pertinent documents are recorded.
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