The process of making an offer once you have found your property.
What is the difference between
list price, sales price and appraised value?
The list price is the advertised or asking price that the seller would really like to get. However, most sellers realize that buyers generally offer lower than the asking price. How much lower the seller will accept really depends on the seller's personal circumstances and motivation, the current market conditions and how long the property has been on the market. Your Realtor is the best judge of whether or not the list price is a fair one and will always check comparable sales prices in the area and will always be aware of current market conditions. The final sales price or contract price is the amount of money the buyer ends up paying for a property. The appraisal value is a certified appraiser's estimate of the worth of a property and is based on recent comparable sales, the condition of the property and various other factors.
Is a low offer a good idea?
While your low offer in a normal market might be rejected immediately, in a buyer's market a motivated seller will either accept or make a counteroffer. Full-price offers or above are more likely to be accepted by the seller. But there are other considerations involved:
* Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive as an offer without that condition.
* Is the offer made on the house as is, or does the buyer want the seller to make some repairs or lower the price instead?
* Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
What contingencies should be put in an offer?
Most offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract, or for not following contractual deadlines. The purchase contract must include the sellers responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.
What is included when a home is sold?
It depends. Fixtures, any kind of personal property that is permanently attached to a house (such as drapery rods, built-in bookcases, tacked-down carpeting or a furnace) automatically stay with the house unless specified otherwise in the sales contract. But anything that is not nailed down is negotiable. This most often involves appliances that are not built in (washer, dryer, refrigerator, for example). In our Disney area market where many properties are used as short term vacation rentals, most of those properties come fully furnished and equipped with everything. However, if you are financing your purchase, you should bear in mind that furnishings are classed as personal property and lenders will not include the value of personal property when considering their loan, or the appraisal of the property. As such, you should consider the furnishings of such properties as a bonus, left there for the convenience of all parties.
Whose obligation is it to disclose pertinent information about a
In Florida, sellers are required to disclose all known facts materially affecting the value or desirability of the property which are not readily observable to the buyer.
Do I need an attorney when I buy a property?
Unlike many other states or countries, in Florida it is not customary to use an attorney to complete a real estate transaction. Realtors are trained and licensed to use the standard real estate forms and contracts that are used in almost every transaction in the purchase and sale of Florida real estate. Closings are usually handled by closing agents or title companies, who handle all of the documentation for both sides, much more efficiently and inexpensively than most other places. Of course, anyone is free to hire an attorney if they wish, but generally that delays the process and is not necessary. In cases of divorce, or extreme wealth, or unusual circumstances, some buyers feel more comfortable spending the additional money to hire an attorney to check through documents, but that is a personal choice and not usually required.
What is the actual process?
After you have found the property you like, you then complete and sign a Contract For Sale and Purchase together with a "Good Faith Deposit", usually around $1,000 to $5,000. Your Realtor then submits your written offer, along with proof of funds (if paying cash) or a mortgage preapproval letter, which most sellers require for determining the strength of the offer. The seller will either accept the offer, or make a counteroffer, which can then be either accepted or rejected by the buyer. Once price and terms have been agreed upon by both parties, the offer becomes a binding contract. The seller then takes the property off the market, stopping any other offers and eliminating the British term known as "gazumping".
In some cases a second deposit may be required a few days later and can vary between a couple of thousand dollars and 10% of the purchase price. All deposits are put into an escrow account that cannot be touched by anyone and are applied to the balance. This can also be handled by giving one larger deposit initially, instead of the two separate deposits. By offering one initial deposit of say, $10,000 or $15,000, this makes your offer stronger and more "seller friendly" and more likely to be accepted by the seller.
If any of these contractual contingencies cannot be met within the contractual timelines, through no fault of the buyer, then the contract becomes voidable and the deposit should be returned to the buyer. If the conditions can be met, but the buyer is unwilling to proceed with the purchase, then the deposit will be forfeited. This is to compensate the seller for having taken the property off the market during this time.
The lender will require an appraisal of the property and sometimes also a survey. The lender will not lend money on a property that is overpriced, so this gives you, the buyer, added protection. Once all conditions have been met, your Realtor will remain on top of the progress, staying in contact with all parties to make sure everything is on track for closing, the date of which is set at the time of writing the initial contract. If at any time circumstances dictate the necessity of extending the closing date, your Realtor will be involved in making sure that your contract remains current and active, as a protection for you. If a mortgage is involved, closing is usually set for about four to eight weeks after the contract date. Cash purchases can be done within a few days.
You will also need to have secured a homeowner's insurance policy on the property before closing. The cost of this will vary by location, type and use of the property, but usually averages around $1,500 per year.
Closing will take place at the office of the closing agent named in the contract, usually chosen by the seller. All documents will be signed by both seller and buyer and buyer hands over the closing balance. These days most closing agents will not accept cashier's checks because of the amount of fraud that has occurred with this form of payment, so it is more common for the buyer to have to wire funds to the closing agent's escrow account prior to closing.
Most closings for international and out of state buyers and sellers are done via "mail away", so there is no need to be present for the actual closing. In this case, documents are usually sent by the closing agent to the buyer via Fed Ex or UPS, then the buyer has to sign and have the documents notarized, prior to sending them back in the prepaid Fed Ex or UPS envelopes. Closing funds will also have to be wired in plenty of time for closing to take place at the scheduled time. The vast majority of the hundreds of international closings that our clients have ever done have been done this way, so there is no need for concern.
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