408 W. Main St. Fredericksburg, TX 830.997.9591
M thru F
Sellers - The Sale
• Negotiating the Deal
• Seller Financing
• Home Inspection
When a buyer is ready to make you an offer they will contact you or your agent to let you know. Buyers should present their offer formally with a contract to purchase and sale. These documents can be obtained from the buyers or sellers agent, lawyer, or notary. If you are going to use their services to review the contract, and later transfer the property title to the successful buyer, they will happily supply you with some blank copies for free. It is also advisable to review one to become familiar with a typical real estate purchase and sale contract.
Most home buyers and home sellers want to arrive at a win-win agreement, but that's not to say either side would regret getting a bigger "win" than the other. Successful negotiating is more than a matter of luck or natural talent. It also encompasses the learned ability to use certain skills and techniques to bring about those coveted win-win results.
If a seller helps to finance a real estate transaction by taking back a second note or even financing the entire purchase if the seller owns the home free and clear it is called seller financing. Usually sellers do this when a buyer has difficulty qualifying for a conventional loan or meeting the purchase price.
Seller financing differs from a traditional loan because the seller does not give the buyer cash to complete the purchase, as does a lender. 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. If you are a seller considering such an arrangement, it is critical to thoroughly evaluate the creditworthiness of the buyer first. You should consult with legal counsel and your accountant regarding the potential consequences of this type of arrangement. 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. For more information, contact the Internal Revenue Service for a copy of its Publication 537, "Installment Sales." Order by calling (800) TAX-FORM.
Seller financing offers tax breaks for sellers and alternative financing for buyers who can't qualify for conventional loans. If you are a seller, the risks you face are the same as those 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? You 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 need to be met. Again, it is wise to consult a lawyer when putting together this kind of transaction.
The interest rate on an owner-carried loan is negotiable. Ask your agent to check with a lender or mortgage broker to determine the current rate on institutional first (or second) loans. Seller financing typically costs less than conventional financing because sellers don't charge loan fees (points). Interest rates on an owner-carried loan will also be influenced by current Treasury bill and certificate of deposit rates. Sellers usually aren't willing to carry a loan for a lower return than they would earn if their money was invested elsewhere.
Your home is in escrow, and the buyer has scheduled a home inspection. A home inspection is a thorough visual examination of the home and property. The process usually takes two to three hours, during which time the house is examined from the ground up. The inspection includes observation and, when appropriate, operation of the plumbing, heating, air conditioning, electrical, and appliance systems, as well as structural components: roof, foundation, basement, exterior and interior walls, chimney, doors, and windows.
It's important to remember that a home inspection does not detect every conceivable flaw. It is an inspection of those areas and items that can be seen. Home inspectors cannot see through foundations, floors or walls, and cannot inspect areas or items that are inaccessible.
A pre-sale inspection enables you to attend to problems before the house is put on the market, it also removes any questions about the condition of your home for you and a potential home buyer. Buyers are positively influenced by a professionally produced home inspection report, which improves the speed, price, and likelihood of a sale.
Some home sellers elect not to correct every defect reflected in the inspection report. Instead, they acknowledge the defects to buyers and explain that the asking price has been adjusted to reflect the estimated cost of repairs. Such candor tends to shorten negotiation time because buyers have fewer objections that could thwart a sale. In addition to facilitating the sale of a home, an inspection helps the homeowner comply with full-disclosure real estate laws, governed by state laws. By focusing on the condition of your property, you are less likely to overlook a defect or material fact for which you later could be held liable.
Qualified inspection companies will provide a sample report to substantiate that they abide by industry standards. One of the key standards is that ethical inspectors neither perform repairs nor refer clients to repair companies (thus avoiding a conflict of interest). Obviously, inspectors who make repairs on homes they inspect are more likely to "find" defects.
Once you have arranged for a home inspection, plan to accompany the inspector for the entire procedure. You have the right to be there, and leading home inspection companies will encourage your presence. It helps you to better understand the findings in the report, and will reduce post-closing hassles. Don't forget your list of questions and items of concern. A thorough home inspection covers more than 1,000 items, everything from the foundation to roof and takes two to three hours depending on the size of the property. The report should reflect the condition of about 400 items.
Final Step - Closing and Beyond
|More information: Texas Hill Country • Fredericksburg • Harper • Stonewall • Doss • Johnson City • Llano • Mason • Luckenbach|