Leave The Selling To Us
While the home seller is actively getting the house ready to show,
the listing broker is actively spreading the word that the property
is available. Generally speaking, the listing is promoted to two
groups: the real estate community and the buying public.
Many home sellers are surprised to learn that approximately
56% of all buyers come from referrals between brokers and
their vast network of contacts. Approximately 17% of buyers
come from inquiries stimulated by “for sale” signs in yards. The remaining 27% of buyers
come from a combination of the real estate company’s reputation
and image, open houses, and advertising or other promotional efforts.
Obviously, the most productive source of buyers is working closely
with other brokers, and this is where your listing broker begins.
Top
Signing On The Dotted Line
A buyer makes an offer by submitting a written and signed offer to
purchase, which will become the sales contract when ratified by
everyone’s signature. Once the seller and buyer sign the
paper, they are bound by the contract conditions.
The “presentation of a contract” begins when the selling
broker registers the offer with the broker’s own office and
notifies the listing broker of the offer. The listing broker then
arranges a presentation appointment with the home seller, and with
the selling broker in some areas. (The buyer doesn’t attend
the presentation.)
Either the selling broker or the listing broker presents the
terms of the offer, depending on local customs. The listing
broker acts as the home seller’s advisor. Part of the
presentation is determining that the buyer is qualified financially
to make the purchase. (Should either the seller or buyer be
out of town, the contract is presented via telephone and confirmed
later by FAX.)
Top
Processing The Case, Etc.
The listing or selling broker (depending on local custom) oversees
a contract through to closing and helps to place the financing,
process the case, arrange various inspections and review financing
and “points”.
At this stage, all contingencies will be satisfied and removed. The
buyer will select a settlement and/or a title company, and the listing
or selling broker will notify those firms and provide the vital information.
A number of professionals come into the home selling process during
this period, including a home inspector (if requested by the buyer),
well and septic inspectors, termite inspector, appraiser and attorneys.
A mortgage approval can be made at application in many cases subject
to verification of the information provided. However, on the chance
that the financing falls through, the seller should keep the property
in showable condition.
Top
Buyer’s
Final Inspection
The purpose of the walk-through inspection prior to settlement is
to determine if conditions in the contract are satisfied. The time
for the buyer to inspect and note defects for correction by the
seller is during the contract negotiation and prior to signing
the sales agreement. Repair or replacement items should be noted
in the contract. Most resale homes are sold in “as is” condition,
however, mechanical, electrical, and plumbing items should be in
working condition.
It is up to the buyer to perform the inspection, not the seller who
may or may not be present. The buyer should be accompanied by the
selling broker and/or the listing broker. The home seller should
be sure utilities are on so that equipment can be operated.
Top
Signing Papers And Transferring
Keys
The big day is here! Tonight you can pop open the champagne, but
today there will be a lot of paper signing and a poignant passing
of the keys (don’t forget the garage keys, and the electric
garage opener, too).
At the settlement will be an attorney or title company representative,
the buyer, listing and selling brokers, and all owners. The home
seller should bring all warranties on equipment (or leave them in
the house) and any instructions on equipment maintenance or operation.
The attorney will have searched the title, and obtained old and new
lender instructions. First, all unresolved walk-through deficiencies
are resolved.
With the buyer, the attorney explains the deed of trust, deed
of trust note, and settlement sheets. The buyer signs all three,
and pays the balance of the down payment and buyer’s
closing costs.
With the seller, the attorney explains the deed and settlement
sheets and gets the home seller’s signature on them.
The seller pays appropriate closing costs.
Top
Different Mortgage Strategies
When it comes to paying for a home, buyers today have an almost unlimited
number of financing options.
Here’s a run-down on the main types of financing. Interest
rates are intended for illustration only. Ask your Long & Foster
Sales Associate or loan officer from Prosperity Mortgage Company,
a Long & Foster affiliated company, for current market rates.
Top
Words To The Wise
Below is a handy guide of terms that sellers need to know.
Agent
A person acting on behalf of another, called the principal.
Agreement of Sale
Known by various names, such as “contract of purchase”, “purchase
agreement”, “sales agreement”, or “binder”,
according to location or jurisdiction. A contract in which a seller
agrees to sell and a buyer agrees to buy, under certain specific
terms and conditions spelled out in writing and signed by both parties.
Annual Percentage Rate (APR)
Includes quoted interest rate on the loan plus all additional service
and finance charges associated with the loan. Includes all costs
of financing; those paid at the time of closing and those paid over
the term of the loan. The APR is usually slightly higher than the
note rate.
Appraisal
An expert judgment or estimate of the quality or value of real estate
as of a given date.
Assessed Value
The valuation placed upon property by a public tax assessor as the
basis for taxes.
Bill of Sale
An instrument which transfers title to personal property (chattels);
a “Deed” transfers real property.
Certificate of Title
A document signed by a title examiner or attorney, stating that the
seller has a good marketable and insurable title.
Closing Statement (Settlement)
The computation of financial adjustments between buyer and
seller as of the day of closing a sale to determine the net
amount of money which buyer must pay to seller to complete
purchase of the real estate and seller’s net proceeds. Also, “settlement sheets”, “HUD-1”.
Commission
Payment to a real estate broker for services performed.
Convey
To deed or transfer title of property from one person to another.
Deed
A formal written instrument by which title to real property is transferred
from one owner to another. Also, “conveyance”.
Deed of Trust
Like a mortgage, a security instrument whereby real property is given
as security for a debt. However, in a deed of trust there are three
parties to the instrument: the borrower, the trustee, and the lender
(or beneficiary).
Earnest Money
The money given to the seller by the potential buyer (usually
held in escrow) upon the signing of the agreement of sale to
show that buyer is serious about buying the house. Also, “deposit”.
Equity
The interest or value which owner has in real estate over and
above the debts against it. (Sales Price – Mortgage Balance
= Equity.)
Escrow
Funds, property, or other things of value left in trust to a third
party. The escrow may be released upon the fulfillment of certain
conditions or by agreement of the parties.
Fixture
What was formerly personal property which is now permanently attached
to real property and goes with the property when it is sold.
Hazard Insurance
Protects against damages caused to property by fire, windstorms,
and other common hazards.
Listing Contract
Between a homeowner (as principal) and a licensed real estate
broker (as agent) by which the broker is employed to market
the real estate within a given time for which service the owner
agrees to pay a commission. Also, “listing agreement”.
Market Value
The highest price which a buyer, ready, willing and able but
not compelled to buy, would pay, and the lowest price a seller,
ready, willing and able but not compelled to sell, would accept.
Basis for “listing
price”, or “asking price”.
Market Price
The actual amount for which a piece of property is sold. Also, “sales
price”, “purchase price”.
Mortgage
A lien or claim against real property given by the buyer to the lender
as security for money borrowed.
Mortgage Note
A written agreement to repay a loan. The agreement is secured
by a mortgage, serves as proof of an indebtedness, and states
the manner in which it shall be paid. Also, “deed of trust note”.
P.l.T.I.
Principal, interest, taxes, and insurance. Most residential
mortgage payments include the above and are therefore referred
to as P.I.T.I. Also, “carrying charges”.
Points
Sometimes called “discount points”, a point is
one percent of the amount of the mortgage loan.
Prepayment Penalty
Penalty for the payment of a mortgage note or deed of trust note
before it actually becomes due.
Principal
This word has several meanings:
(A) to denote the most important;
(B) a capital sum lent on interest;
(C) one who appoints an agent to act on their behalf;
(D) either party to a contract.
Property Management
The operation of real property, including the leasing of space, collection
of rents, selection of tenants, and the repair and renovation of
the buildings and grounds.
Prorate
To allocate between seller and buyer their proportionate share of
an obligation paid or due. For example, a prorate of real property
taxes, fire insurance, or condominium fee.
Sales Associate
A person with a real estate license and associated with a specific
real estate broker.
Survey
A map or plat made by a licensed surveyor showing the results of
measuring the land with its elevations, improvements, boundaries,
and its relationship to surrounding tracts of land. A survey is often
required by the lender to assure a building is actually sited on
the land according to its legal description.
Title
As generally used, a document that indicates rights of ownership
and possession of a particular property.
Title Abstract
A summary of the public records relating to the title to a particular
piece of land. An attorney or title company reviews an abstract or
title to determine whether there are any title defects.
Title Insurance
Protects lenders and homeowners against loss of their interest in
property due to legal defects in title.
Title Search or Examination
A check of the title records, generally at the local courthouse,
to make sure the buyer is purchasing a house from the legal owner
and there are no liens, overdue special assessments, or other claims.
Transfer Tax
State tax, local tax (where applicable), and tax stamps (in some
areas) required by law when title passes from one owner to another.
Ask your Long & Foster Sales Associate for a copy of the “Understanding
the Role of the Real Estate Agent” (LF1192, for use in the
state of Maryland only);”A REALTORS® Role” (LF1193,
for use in the state of Virginia only); or “The Agency Disclosure
Brochure” (LF1195, for use in the District of Columbia only).
Top
|
