Well, the unbelievable happened. A lender had an appraisal done a few weeks ago on a property that my client was buying, and the appraisal came in higher than the sales price. It does happen! If you have an appraiser who is familiar with the area, you have a much better change of getting an accurate appraisal. And my client got some additional built-in equity.
I have spoken to a handful of general contractors in the South Bay since the beginning of the year, and it seems like business is picking up. They all have jobs lined up over the next several weeks for major remodels. Some clients have gutted recently purchased property. Others are staying put in their current residences and giving their homes a face lift.
If you are thinking of updating your home to prepare to sell, remember that you won’t get a 100% return on your remodeling costs. Exterior renovations still seem to go the furthest. Curb appeal and first impressions are crucial when selling your home.
When you make an offer, it’s not always just about the sales price. There are plenty of terms that the seller will take into consideration when selecting a buyer. Here are some terms that can make or break a deal. First, the size of the down payment needs to be considered. Is this buyer going to have a hard time getting a loan? The ideal buyer is an all cash buyer. The seller does not have to worry about the bank giving loan approval. If there is a loan, the smaller it is the better. Conventional financing is much easier to secure than a jumbo loan. Second, is the buyer well qualified? This goes hand in hand with the down payment. If the buyer has substantial assets, and a low debt to income ratio, then there is a better chance to secure the necessary financing. Or if there is a hitch in the loan, it may be possible for the buyer to come up with more money. Third, the buyer’s contingencies and the length of the contingency period are crucial items to consider in an offer. The more contingencies in the contract, the more opportunities the buyer has to cancel. So a more attractive offer is one that does not have as many contingencies or the contingency period has been shortened. Fourth, if the buyer asks for any seller concessions, it weakens the offer. The more the buyer asks for, the less likely the seller will want to accept the offer. And if the concessions have a dollar sign in front of them, it will only serve to reduce the offer price in the eyes of the seller. Last, how long is the escrow period? Each seller will have a preference for a long or short escrow, but normally the shorter the escrow the better. Again, a long escrow just leaves more opportunity for the deal to fall through.Of course, markets are not created equal. Depending if we are in a buyer’s or seller’s market will help determine how negotiable a seller will be. But when a seller is comparing one offer to another, these are definitely some of the points of comparison.I’ve heard some buyers complain that they offered a sales price that was ultimately higher than the final price at which the property sold. Keep in mind that a lot of things go on during an escrow period. It’s always possible that a buyer made a highly competitive offer, but then negotiated the price down based on the home inspection or the appraisal. Or the winning offer may have had other terms that the seller found attractive and just as important as price.
As of July 2011, all homes in California with fossil fuel burning appliances (i.e. gas stoves, gas fireplaces) or attached garages will be required to have a carbon monoxide monitor. Most likely a portable monitor will suffice, and they should be relatively inexpensive. I won’t be surprised if this ends up becoming a compliance issue when buying or selling a home just like it is for smoke detectors and the bracing of water heaters.
When the buyer or seller is not following the stipulations of the contract, you can issue them a Notice to Perform. Once this Notice is given, they will have a certain amount of time to make the required action or you can cancel the contract. The new Residential Purchase Agreement defaults this period to 2 days. So for instance, if the buyer has not removed their contingencies, the seller can issue the Notice to Perform. If two days after the notice has been delievered, the buyer still hasn’t removed their contingencies in writing, then the Seller can cancel the contract and return the buyer’s deposit. Keep in mind, that within this contract, Time is of the Essence. If the seller waited 5 days after the two day waiting period (or one week after they issued the Notice to Perform), they would have to issue a new Notice to Perform to the buyer if they wanted to cancel. In effect, the Notice to Perform has an expiration due to the “Time is of the Essence” clause in the contract.