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7 Tips for Staging Your Home

By: G. M. Filisko

Make your home warm and inviting to boost your home’s value and speed up the sale process.

The first step to getting buyers to make an offer on your home is to impress them with its appearance so they begin to envision themselves living there. Here are seven tips for making your home look bigger, brighter, and more desirable.

1. Start with a clean slate
Before you can worry about where to place furniture and which wall hanging should go where, each room in your home must be spotless. Do a thorough cleaning right down to the nitpicky details like wiping down light switch covers. Deep clean and deodorize carpets and window coverings.

2. Stow away your clutter
It’s harder for buyers to picture themselves in your home when they’re looking at your family photos, collectibles, and knickknacks. Pack up all your personal decorations. However, don’t make spaces like mantles and coffee and end tables barren. Leave three items of varying heights on each surface, suggests Barb Schwarz of www.StagedHomes.com (http://www.StagedHomes.com) in Concord, Pa. For example, place a lamp, a small plant, and a book on an end table.

3. Scale back on your furniture
When a room is packed with furniture, it looks smaller, which will make buyers think your home is less valuable than it is. Make sure buyers appreciate the size of each room by removing one or two pieces of furniture. If you have an eat-in dining area, using a small table and chair set makes the area seem bigger.

4. Rethink your furniture placement
Highlight the flow of your rooms by arranging the furniture to guide buyers from one room to another. In each room, create a focal point on the farthest wall from the doorway and arrange the other pieces of furniture in a triangle around the focal point, advises Schwarz. In the bedroom, the bed should be the focal point. In the living room, it may be the fireplace, and your couch and sofa can form the triangle in front of it.

5. Add color to brighten your rooms
Brush on a fresh coat of warm, neutral-color paint in each room. Ask your real estate agent for help choosing the right shade. Then accessorize. Adding a vibrant afghan, throw, or accent pillows for the couch will jazz up a muted living room, as will a healthy plant or a bright vase on your mantle. High-wattage bulbs in your light fixtures will also brighten up rooms and basements.

6. Set the scene
Lay logs in the fireplace, and set your dining room table with dishes and a centerpiece of fresh fruit or flowers. Create other vignettes throughout the home-such as a chess game in progress-to help buyers envision living there. Replace heavy curtains with sheer ones that let in more light.
Make your bathrooms feel luxurious by adding a new shower curtain, towels, and fancy guest soaps (after you put all your personal toiletry items are out of sight). Judiciously add subtle potpourri, scented candles, or boil water with a bit of vanilla mixed in. If you have pets, clean bedding frequently and spray an odor remover before each showing.

7. Make the entrance grand
Mow your lawn and trim your hedges, and turn on the sprinklers for 30 minutes before showings to make your lawn sparkle. If flowers or plants don’t surround your home’s entrance, add a pot of bright flowers. Top it all off by buying a new doormat and adding a seasonal wreath to your front door.

More from HouseLogic
Spring cleaning guide (http://www.houselogic.com/articles/spring-cleaning-guide/)

Green cleaning products for the bathroom (http://www.houselogic.com/articles/green-cleaning-products-for-the-bathroom/)

Green cleaning products for the kitchen (http://www.houselogic.com/articles/green-cleaning-products-for-the-bathroom/)

Other web resources
How to make a small room look larger (http://www.lowes.com/cd_Ten+Ways+to+Make+a+Small+Room+Look+Larger_506205068_)

How to arrange bedrooms (http://www.dummies.com/how-to/content/arranging-your-bedroom-furniture.html)

G.M. Filisko is an attorney and award-winning writer who occasionally rearranges her furniture to find the best placement-and keep her dog on his toes. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

HOW TO START CALIFORNIA DREAMIN

Let s say you re thinking about buying your first house or condominium. The process of buying real estate can be an extremely rewarding experience, both from a personal and financial standpoint.

Why Buy
There are many reasons you may wish to buy a home, whether you need or want:

  • A place to live
  • Feeling of permanence
  • Stable housing costs
  • Good use of your money
  • Tax benefits.

On the other hand, you may not be ready to buy a home. Buying a home:

  • Is a complex, time-consuming and costly process
  • May bring unwelcome responsibilities such as maintenance and repairs
  • Makes it harder for you to move
  • Can create financial hardship.

The purchase of a home is, in part, a financial transaction. Much like a trip to the grocery store to buy coffee, you have many choices and a significant price range. But unlike a bag of Costa Rican coffee, a house has certain bonuses: Equity, Tax Savings and Ownership.

What s all that mean
A house is an investment in land and the existing structure. History tells us that there is a good chance that a house will increase in value over time. Also, by making timely mortgage payments, you are paying down the debt you owe and building equity.

Equity is the difference between the value of your home and how much you still owe. You may not own your home outright, but your investment has a cash value.

In addition to increasing in value over time, owning a home can have a significant impact on your monthly paycheck  in a very positive way! When you borrow money to purchase a home, the interest that you pay on that money is usually tax deductible.

For example, if you have an annual income of $45,000 and owe $200,000 on a 30-year mortgage at a fixed 7% interest rate, you ll likely save about $200 per month in taxes the first year you own the home!

Q-A Series – MORTGAGE INSURANCE

Q. WHAT IS MORTGAGE INSURANCE

Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. It’s required primarily for borrowers making a down payment of less than 20%.

Q. HOW DOES MORTGAGE INSURANCE WORK IS IT LIKE HOME OR AUTO INSURANCE

Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower can’t repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.

Q. DO I NEED MORTGAGE INSURANCE HOW DO I GET IT

You need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. The FHA offers several loan programs that may meet your needs. Ask your lender for details.

Q. HOW CAN I RECEIVE A DISCOUNT ON THE FHA INITIAL MORTGAGE INSURANCE PREMIUM

Ask your real estate agent or lender for information on the HELP program from the FHA. HELP – Homebuyer Education Learning Program – is structured to help people like you begin the homebuying process. It covers such topics as budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of this program may entitle you to a reduction in the initial FHA mortgage insurance premium from 2.25% to 1.75% of the purchase price of your new home.

Q. WHAT IS PMI

PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI’s usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.

Do They Really Like Me

GETTING A LOAN

Once you ve figured out what amount of loan you re able to comfortably afford, it s time to talk to a mortgage lender.

Check to see if the home you re considering purchasing is in a special bond assessment district. Some homes in California can be assessed yearly bond fees  for up to 30 years or more  for things like school improvements, levee protection, new roads, street lights and so on.

Home Buyer Hint

Loan Pre-Qualification
Getting pre-qualified for a loan is a pretty casual once-over of your financial situation. You provide a mortgage broker or lender with financial information, and they give you a non-binding letter indicating how much you could possibly borrow.

The lender does not verify any of the information you give them. This gives you a good  jumping off point in deciding the price range you can afford.

Loan Pre-Approval
Getting pre-approved for a loan is a much more rigorous process. A lender will verify all of the information you ve provided including income, debts, employment and cash on hand. The pre-approval process signifies to a seller that you are a very serious buyer. The lender provides you with certain guarantees that they are ready, willing and able to fund a loan.

Check with your real estate agent to determine if you should get pre-qualified or pre-approved for your loan prior to house shopping.

The Short Sale Tax Implications

In case of a real estate there are short sale tax implications which have to be noted. Primarily there are chances of receiving a form 1099-C for the total amount of loss which the lender has to bear. According to an U. S government agency dealing with taxes named Internal Revenue Service this is interpreted as loan forgiveness. Tax payment has to be made on the basis of the financial status of the borrower. If the borrower is solvent and has some assets like saving, he has to pay the required amount of tax.

A borrower can make debt settlement with the lender for a lesser amount than the total amount due. Thereby the former might have to report this debt which has been forgiven as regular income along with some exceptions. The categories which fall under forgiven debt are money due after foreclosure or repossession of property or unpaid credit accounts. The exceptions are:

o The lender exempts an amount which is more than the principal amount of the debt. A 1099-C form has to be delivered to the borrower at the year end. According to the IRS the written off debt amount has to be reported as income while filing tax return by the borrower.

In case of non delivery of the form to the borrower it is assumed to have directly forwarded to IRS by the lender. If the borrower does not report the exempted debt amount as income, there can be serious consequences. One can receive a tax bill or an audit notice if IRS is aware of the transaction on their database.

o Circumstances where the forgiven amount of debt was treated as a gift, one is not required to report the same as income.

o The borrower faces bankruptcy and discharges the debt.

o Borrower’s insolvency before the creditor’s settlement of debt is considered.

Consultation is suggested from a qualified tax and legal counsel to check whether it is possible to avail the benefits from these exceptions.

The debt amount which a borrower escapes is sometimes referred to as phantom income. Often a lender makes a probe to judge the truthfulness of the status of the borrower. This is referred to as deficiency judgment which is the difference between the total amount due and the amount paid out of short sale. Henceforth the burden on the borrower increases further. He loses the property, earns nil from the transaction and can suffer from possible insolvency. This can result in a permanent setback for the borrower.

So there has been a solution to this problem. A new federal legislation has been formulated comprising of a temporary three years moratorium. It relates to the tax treatment of the exempted debt that does not exceed the basis of the owner in the home.

The lender in a short sale makes some verification regarding the estimated closing costs on HUD-1 form used by the settlement agent. The cost includes the taxes, real estate commissions, homeowner dues, title insurance costs and other closing costs. Approval of the said form by the lender is necessary for the closing of the short sale transaction.

The short sale tax implications has been formulated and reviewed continuously to suit both the lenders and the borrowers.

Article Source: http://www.articlesnatch.com

About the Author:
Short Sale Tax Implications…what implications? All you need to know about Short Sales and tax considerations at http://www.nphsrealestate.org/short-sale/law-tax

Keep Your Home Purchase on Track

By: G. M. Filisko

You’ve found your dream home. Make sure missteps don’t prevent a successful closing.

A home purchase isn’t complete until you make it to the closing. Until then, the transaction can fall apart for many reasons. Here are five tips for avoiding mistakes that cause a home sale to crater.

1. Be truthful on your mortgage application
You may think fudging your income a little or omitting debts when applying for a mortgage will go unnoticed. Not true. Lenders have become more diligent in verifying information on mortgage applications. If you fib, expect to be found out and denied the loan you need to fund your home purchase. Plus, intentionally lying on a mortgage application is a crime.

2. Hold off on big purchases
Lenders double-check buyers’ credit right before the closing to be sure their financial condition hasn’t weakened. If you’ve opened new credit cards, significantly increased the balance on existing cards, taken out new loans, or depleted your savings, your credit score may have dropped enough to make your lender change its mind on funding your home loan.
Although it’s tempting to purchase new furniture and other items for your new home, or even a new car, wait until after the closing.

3. Keep your job
The lender may refuse to fund your loan if you quit or change jobs before you close the purchase. The time to take either step is after a home closing, not before.

4. Meet contingencies
If your contract requires you to do something before the sale, do it. If you’re required to secure financing, promptly provide all the information the lender requires. If you must deposit additional funds into escrow, don’t stall. If you have 10 days to get a home inspection, call the inspector immediately.

5. Consider deadlines immovable
Get your funds together a week or so before the closing, so you don’t have to ask for a delay. If you’ll need to bring a certified check to closing, get it from the bank the day before, not the day of, your closing. Treat deadlines as sacrosanct.

More from HouseLogic
How maintenance adds to home values (http://www.houselogic.com/articles/value-home-maintenance/)

Reducing closing stress (http://buyandsell.houselogic.com/articles/7-steps-stress-free-home-closing/)

Other web resources
More on calculating closing costs (http://www.hud.gov/offices/hsg/ramh/res/sc3sectb.cfm)

More on the closing process (http://www.homeclosing101.org/closing.cfm)

G.M. Filisko is an attorney and award-winning writer who wanted a successful closing on a Wisconsin property so bad that she probably made her agent rethink going into real estate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Short Sales Tips for Sellers

If you’re thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as: Refinancing your loan at a lower interest rate; providing a different payment plan to help you get caught up; or providing a forbearance period if your situation is temporary. When a loan modification still isn t enough to relieve your financial problems, a short sale could be your best option if:

* Your property is worth less than the total mortgage you owe on it.
* You have a financial hardship, such as a job loss or major medical bills.
* You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest. A qualified real estate professional can:

* Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
* Help you set an appropriate listing price for your home, market the home, and get it sold.
* Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
* Ease the process of working with your lender or lenders.
* Negotiate the contract with the buyers.
* Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale  package that accompanies any offer typically must include:

* A hardship letter detailing your financial situation and why you need the short sale
* A copy of the purchase contract and listing agreement
* Proof of your income and assets
* Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender s review of the short-sale package can take several weeks to months. Some experts say:

* If you have only one mortgage, the review can take about two months.
* With a first and second mortgage with the same lender, the review can take about three months.
* With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don’t expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

* You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can t pay back the balance, talk with your real estate attorney about your options.
* Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
* Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

But Seriously, What Can I Afford

One of the most important questions you need to ask yourself in the home buying process is:  How much can I pay for a house and still have a life

Ultimately, only you can decide what you can afford to spend monthly on a house payment and still be able to live the lifestyle you wish. However, a calculation provided by your mortgage lender may help you to make your determination.

When applying for a home loan, your mortgage lender will do a calculation that reveals the maximum amount the lender will lend to you. The calculation is based on a simple formula: The proposed house payment plus any fixed monthly debt payments (like credit cards and car payments) divided by your gross monthly income (your total wages before taxes are taken out) equals a percentage. Typically, mortgage lenders want that percentage to be less than 42%.

This equation is illustrated in the example below:
$1,230 (House Payment + Fixed Monthly Debt)
3,000 (Gross Monthly Income)
———
41%

Based upon this equation, after adding up your debts and reviewing your income, you may discover you can afford a pretty big mortgage payment. On the other hand, you may want to look at that number a little closer. If you borrow the maximum amount allowed, you may find that your house payment is more than you can afford based on other monthly expenditures not accounted for in the equation. For instance, the equation doesn t take into consideration money you might spend on recreation activities. If these are important to you and you don t want to give them up, you may need to keep your house payment lower than the maximum allowed in order to pay for these other expenditures.

Your best bet is to develop a budget and consider all of the typical expenses you have.

Use the form below to add up all of your monthly expenses. If there are some expenses  like auto insurance  you only pay every six months or yearly, divide by the number of months to determine your monthly expense. It s best to get everything down on paper.

Take a few minutes now and create your budget by listing the major categories where you think you have or will spend money during a typical month.

My Monthly Budget
Housing
$ ___________ Estimated house payment & association fees
$ ___________ Estimated property taxes, insurance, PMI
$ ___________ Electricity, gas
$ ___________ Phone
$ ___________ Water, sewage, garbage
Food
$ ___________ Groceries
$ ___________ Fast Food
$ ___________ Dining out
$ ___________ Beverages
Other living expenses
$ ___________ Personal care (hair, toiletries)
$ ___________ Laundry and dry cleaning
$ ___________ Clothing/shoes/hats
$ ___________ Gifts
$ ___________ Monthly membership dues/subscriptions
Transportation
$ ___________ Car payments
$ ___________ Gas & oil
$ ___________ Normal car maintenance
$ ___________ License and registration fees
$ ___________ Auto insurance
$ ___________ Parking fees
$ ___________ Bus, taxi, subway, carpool
Educational expenses (if applicable)
$ ___________ Tuition
$ ___________ Books
$ ___________ Lab fees
$ ___________ School supplies
Childcare and pet care (if applicable)
$ ___________ Day care
$ ___________ Baby/pet sitters
$ ___________ Medical/Veterinary
$ ___________ Toys
$ ___________ Special foods
$ ___________ Clothes
Expecting the unexpected
$ ___________ Traffic Tickets
$ ___________ Car Repairs
$ ___________ Medical/Dental care
(Insert other categories unique to you here)
$ ___________ ____________________________
$ ___________ ____________________________

$ ___________ Total Monthly Expenditures

* Taxes, insurance and PMI (private mortgage insurance) costs vary. Your real estate agent can help you estimate these.

Next, determine your monthly income below:

Wages and tips
$ ___________ (less taxes and other deductions)
$ ___________ Investment Income
$ ___________ Other
$ ___________ Total net monthly income

Finally, subtract your total monthly expenditures from your total monthly income. Note: Your net income, used in determining what you can afford, is different than your gross income, used to determine what you qualify to borrow.

$ ________ Total Monthly Income: (transfer $ amount from above)
– $ ________ Total Expenditures: (total of your expenses above)
= $ ________ Ending Balance

Now that you have everything down on paper, borrowing the maximum allowed may not look too good anymore! You may want to consider buying a little less house to keep a little more of your life! You may have heard the term  House rich, cash poor. That phrase was coined by people who didn t budget beforehand!

Finally, once you have a general idea of what type of house payment you can afford each month, you ll want to determine what that monthly payment will buy you in terms of the selling price of a home. Based on your estimated monthly payment, should you be looking at homes selling in the $100,000, 200,000, or $300,000 price range Your real estate agent can estimate this for you, or you can check out a  mortgage calculator on-line, which will ask a few simple questions and then do the calculation for you.

6 Tips for Buying a Home in a Short Sale

By: G. M. Filisko

By preparing for a real estate short sale, you can emerge with a great home at a favorable price.

When sellers need to sell their home for less than they owe on their mortgage, they’re shooting for a short sale. Short sale homes can sometimes be bargains, but only if you do your homework, stay patient, and remain unemotional during the sometimes lengthy and difficult short sale process.

Here are six tips for protecting yourself emotionally and financially when bidding on a short sale.

1. Get help from a short sale expert
A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they’ve represented in short sales and, of those, how many successfully closed the transaction.

2. Build a team
Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you’re interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase.
A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.

3. Know the home’s fair market value
By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home’s fair market value, it may be rejected. Your agent can help you identify the price that’s good for you. The lender will determine whether approval is in its best interest.

4. Expect delays
There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale.
The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.

5. Firm up your financing
Lenders will weigh your ability to close the transaction. If you’re preapproved for a mortgage, have a large downpayment, and can close at any time, they’ll consider your offer stronger than that of a buyer whose financing is less secure.

6. Avoid contingencies
If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it.
Also, consider ordering an inspection so you’re fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You’ll probably have to purchase the home “as is,” which means in its present condition.

This article includes general information about tax laws and consequences, but isn’t intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

More from HouseLogic
What you need to know about the homebuyer tax credit (http://www.houselogic.com/articles/homebuyer-tax-credit-what-you-need-know/)

(http://thegreenists.com/food/ted-talk-being-a-weekday-vegetarian/5803) How to claim your homebuyer tax credit (http://www.houselogic.com/articles/claim-your-homebuyer-tax-credits/)
Other web resources
More on short sales (http://www.nolo.com/legal-encyclopedia/article-30016.html)

Real-life discussions of short sales (http://www.npr.org/templates/story/story.php storyId=104803015)

G.M. Filisko is an attorney and award-winning writer who luckily has avoided the need for a short sale on her properties. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

What if They Accept the Offer?

Congratulations, your offer has been accepted!

Over the next 30 to 60 days, your purchase will be pending and you will begin the escrow process. Typically, an offer will have several contingencies. Contingencies are terms and conditions written into a contract by the buyer or the seller, which must be met within specified timelines in order for the sale to be completed. Know this, contingencies are a homebuyer s best friend. When contingencies are not met, the sale is cancelled and your deposit money may be refunded.

Some common contingencies include proper financing being in place and conducting a home inspection. Without proper financing in place, you ll have a tough time paying for your new house! In addition, conducting a home inspection can re-open negotiations to pay for hidden problems the house may have  or terminate the sale entirely if truly serious problems are found.

There are many other contingencies that can be attached to the sale of a particular piece of property depending on the different needs of buyers and sellers. Again, a good real estate agent will suggest the contingencies that you should make as part of the offer.

During the sale pending period, you will also be provided with a number of disclosures relative to the sale of your new home. These disclosures run the gamut from information about the business relationships between your real estate agent and your lender, to natural hazards that may exist in and around your new home.

Two of the most important disclosures you will receive include:
Real Property Transfer Disclosure Statement This disclosure is completed by the seller. It tells you the physical condition of the property and potential hazards or defects that may be associated with it. While the seller is principally responsible for the disclosures presented in this document, the agent is also responsible for conducting a visual inspection of the property and disclosing any readily observable defects detected in the process. This document also discloses any special taxes, assessments and other factors that may have a material effect on the value or desirability of the property.

Agency Relationship Disclosure Your real estate agent is required to provide you with a written disclosure stating whom he or she represents in the transaction. The agent may represent you as the buyer exclusively, or the seller exclusively, or be a dual agent representing both you and the seller. You should carefully review and understand this disclosure as it has a material effect on the level of responsibilities that your agent owes to you.

Attaching excessive contingencies to an offer or sale in a hot real estate market can easily kill a deal. There may be several other buyers waiting in line with a shorter list of needs.

Home Buyer Hint
Depending on the location, age and other factors involved with the residential property that you are purchasing, additional disclosures may be required. If you have questions about disclosures, ask your real estate agent.

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