Check the details to coast into a smoother signing !
Sealing the deal on selling or buying a house can be stressful as you
approach the unnerving reality that you're about to put your name on the
dotted line of a major contract, but we've gotten some "insider information"
that may help you coast into a smoother signing.
You'd think this tip would be obvious, but here it is, anyway - read the
contract and know what you're signing, says Bo Harrison, attorney for the
Huntsville Area Association of Realtors.
"People often don't take the time to read or understand the contracts they sign," Harrison says. "If they're unsure of what it's saying or meaning, that's what the agent is there for - to help you understand. If you still don't understand it, ask a lawyer."
Another reason to thoroughly read contracts and terms is because they vary from county to county, Harrison says.
Here's another tip you'd think was accepted practice. Betty Hughes, Association president and owner of Hughes Properties in Huntsville, advises agents and signers alike to ensure all contract blanks are filled before signing.
"It sounds silly, but it happens, and there's a reason for those blanks in the contract to be filled in," Hughes says. "Even if it's not applicable, it needs to be filled in. It leaves no questions or doubt or room for something to go wrong. You have a full, complete contract."
Hughes also advises anyone signing a contract to review it paragraph by paragraph with the seller and buyer to avoid confusion.
"Be careful with putting a closing date, and if it's going to change, you need to get that in writing from both buyer and seller to change that date in the MLS system," she says. "If they miss the closing date, the contract is sitting there. Time is of the essence, so a later closing date needs to be agreed upon and it states 'the closing date shall be no later than...' and then you sign."
Without a final date, issues can arise to complicate the deal, such as additional interested buyers.
Hughes says the strongest path to a smooth signing is to anticipate issues and head them off early.
Harrison and Hughes say one potentially sticky area is deciding who pays fees like closing costs.
Harrison advises settling upfront any questions about the seller's obligations such as closing costs, which can vary per transaction, and any costs beyond them. A quick way to answer that question is for the seller to check the contract to determine to what costs they're obligating themselves.
"Most contracts have provisions for items to be paid by the seller that may be in addition to closing costs, such as preparing deeds or providing a termite letter," he says. The provision for title insurance and who pays for it will vary from county to county.
"With most people, if they understand what's going on, it's not a problem," says Harrison "Just make sure everybody's on the same page."
Settling who will pay closing costs is another potentially sticky closing issue, Hughes says.
"It needs to be worked out and written into the contract - meaning a dollar figure," she says. "The agent should get a good faith estimate from the mortgage company on closing costs, and determine how much the seller is willing to pay, and then put that fixed figure into the contract. The attorney at closing will give the buyer credit on their settlement statement, so it comes from the seller's proceeds."
A seller may agree to pay closing costs, but how much will it be? Hughes suggests working out a fixed figure in advance of contract signing, because costs can vary drastically depending on the mortgage company's financing fees.
Another potential bug in your deal can arise over termites.
A termite letter, required in a property transaction, is different from a termite bond, which is not required. Hughes and Harrison say the letter is required because it states the property (house and surrounding land including woodpiles or a kid's playhouse) is free from termites after a pest patrol service visits the location and verifies it is termite-free or has treated it to be able to make that statement.
While many houses may have a termite bond, the letter is generally all that is requested in the transaction, Hughes says.
A bond covers any damage or reoccurring infestations. Some transfer to new owners and some don't, and the cost varies. Buyers typically ask about the bond if there's been an active infestation and the prospect of damage. She advises inspecting the bond language to determine if it addresses only repairs, only treating a recurring infestation, or both.
Buyers should also stay with the pest patrol service that earlier treated the house, Hughes says, because they know the property and history of the location.
"If there hasn't been any pest control," Hughes says, "we provide three names to the buyer, they choose one and we tell them to get a termite letter."
Now comes what Hughes calls the most contentious, dreaded obstacle course to reaching a closing - resolving home inspection issues.
"We have more issues with home inspections and what's required," she says. "A seller and buyer must be realistic over what should be done, although it's commonly understood that everything needs to be in working order and subject to health and safety."
But Hughes says many buyers want top-notch instead of good working order.
It's the buyer's job to hire a home inspector to determine what's in good working order, and to report on potentially serious issues with the house. Hughes says she dreads it when a long inspection list comes from an inspection, because it'll affect both buyer and seller "and most times it's not pleasant."
The unpleasantness can result over genuine issues, she says, but sometimes it can mean educating a buyer that it's not the seller's job to handle cosmetic upgrades such as changing door knobs. That's why Hughes encourages sellers to have a home inspection and repairs done before putting a house on the market to avoid these issues.
Harrison and Hughes also say a buyer should state his or her expectations
about what is desired in the house, such as furniture, garage shelving or
appliances, in the contract or an addendum.
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