Low Appraisal

What happens if the bank's appraisal come in lower than the agreed upon sale price? One of three things can happen. The seller can accept the banks price. Or, the buyer can say no to the entire transaction ( because the offer is contingent on getting a mortgage) . Or third, there can be a negotiation where buyer and seller each contribute to "meet in the middle".
If the house appraises, we are a matter of days away from closing. Really, after the loan is "underwritten", its just a matter of getting all parties to the closing table at the same time.

Getting Close

Stopping by to finish up the steps of the house buying process.

Once the title comes back "clear", contracts and title are forwarded to the bank for processing. There, the bank or buyer will order the appraisal. Here is where the entire transaction hangs in the balance.
An appraiser goes to the house being purchased and determines the value of it based on very specific criteria. Such factors as age, location square footage of living space, acreage and architecture amongst others will determine the house's value. Most important of all however, is the recent history of houses that sold in the immediate area. All these things are evaluated and ultimately lead to an appraisal price.
When this price is different than the agreed upon price, we have start to have issues...But good thing there's me....LOL see you soon for the rest...

Title

Back again..and here we go. Once there are signed contracts (sometimes earlier than this) , the buyer's attorney orders "Title". Title insurance is basically a search for any outstanding liens against a property or owner, as well as violations or open certificates of occupancy. This process can take several weeks to complete. Its a physical search for any and all records of a property's history all the back to the days of the original settlements. It establishes credence to the seller's legal ability to sell a property....Its his to sell.
Title insures the purchaser that he (or she) will actually own the property and is insured against the loss incured if somehow the property turns out to belong to someone else ealier in the property's life.

Contracts

Hey Bloggies...After the inspections are done, the buyer gives the OK to go ahead with the preparation of contracts. Some agents will ok this before the inspection, but I wait in case there is a change in the contracts due to inspection problems. One of three things can happen...The buyer can just agree to make any neccesary updates or repairs without compensation form the seller. Or,the buyer can request the repairs and updates be made or, most common, an agreed upon price reduction to compensate for the costs of inpsection concerns. The last two would require changes to the contract which adds to the time it takes for the transaction to come to fruition. Once the contracts are drawn up by the seller's attorney, they go to the buyer's attorney where they are reviewed and (if agreed to) signed by the buyers. This is the time the deposit goes into the attroney's escrow account. The contracts and most often the deposit are then forwarded to the seller's attorney for review and execution (signing) by the sellers..

The Home Inspection

When there is an accepted offer on a home, you want to make sure the home is trouble free and devoid of safety and municipal concerns. By municipal concerns, I mean violations of town codes or open certificates of occupancy. A licensed building inspector is educated in these areas. They can pinpoint areas of concern and address their rectification. After an inspection ( yes you should be there), you will have a list of minor problems and or major problems if any. These are usually handled in one of three ways.. The first is that nothing is done about them., especially if the buyer is getting a good price on the home. The second is that the homeowner agrees to fix them. And, third the homeowner agrees to a lower price as a means of compensation. All three, of course, depend on a mutual agreement between buyer and seller. I work in Orange, Ulster and Sullivan counties and in each of them, inspections are pretty much handled the same way. Although, zoning ordinances do vary from town to town. For example a fully finished basement may be fine in one town and an outright violation in another. All in all, the inspection should be primarily an education as to what needs to be updated, fixed or in extreme cases, replaced. During the inspection, there will also be a well test, if there is one; as well as a radon test to see if there is intrusion of the gas into the basement. Once there is a satisfactory inspection, we can move to the contracts...more to come

The buying process

Nice little pick up in the market this week..I have four accepted offers with three inspections already done. The Orange County Association of Realtors has actually shown a 6% price increase in the average price of Orange County Homes.
What I want to do here is take the reader through the real estate buying process..Buyers first.
When a Realtor takes you around to several different houses and you find one you like, you put in an "offer". Basically, its an outline of the price you want to pay, the amount of down payment, a description of the financing and a representation of what you are buying (described in the listing).
The offer then gets presented to the seller and is usually negotiated in a back and forth, offer-counter offer scenario until we have an agreed upon price. Once that price is accepted by BOTH parties, then the offer is signed and the buyer orders a "home inspection". More to come...