Price, Condition, Presentation & Timing = Key Ingredients for Seller Success

It’s (still) a seller’s market here in Northern Virginia.  Buyers are clamoring for the few properties that come on the market each weekend.  It’s standard practice right now for buyers to drop every contingency to beat out their buyer competitors.  No home inspection.  No appraisal contingency.  No finance contingency.  Prices are escalating wildly, upward of 6-8% on average above the list price. 

But all of this doesn’t mean that a seller can simply mail it in when thinking about putting their house on the market.  The same fundamentals apply – even in a seller’s market – when considering selling a home.  Price matters.  Condition is imperative.  Presentation differentiates.  Timing is important. In this blog, I’ll explore in more depth each of these areas.

Price Matters

As a seller in this market, it’s tempting to get swept into the idea that your property is worth a maximum price.  That impression may be rooted in what sellers hear from neighbors, read in the press or their impressions from third party valuation sites.  Zillow and Redfin often include inflated estimated values as those sites are not aware of the condition of a property, recent updates, changes to layout, etc.

What should inform pricing is comparable sales in the last 6 months.  That begs the question, however, of whether a seller should price based on properties that have closed.  Or, those that a seller knows will close after they put their house on the market. In my opinion, it’s best to base your list price on the sales that are on record.  Those are the ones that a buyer can see and, therefore, recognize as the justification for a seller’s price.  If a seller bases their price on an anticipatory closing (at a higher price than previous sales in the neighborhood), the marketplace may look at that seller’s price as an overreach.  Or as one that smacks of greed.

My general approach to pricing is to position a seller’s price within the realm of reasonable relative to recent sales.  And, in so doing, aim to attract multiple offers.  Let the buyer marketplace ultimately dictate the price, using an even-handed price as the starting point.  As they say, you can never price too low…but you can price too high.  All of my recent sales have closed 6-10% above the list price.  Equally important is that buyers of my recent listings have universally waived the contingencies, making the transactions seamless and guaranteed.

Condition is imperative

Just because houses are flying off the shelf like hot cakes doesn’t mean you can avoid putting in the time, money and sweat equity to get your property ready for the market.  What does that mean in practice?  Here are a few areas on which to focus when getting your home prepared:

  • Paint – be sure to touch up or re-paint high traffic areas.  Those are typically stairwells, corridors, insides of closets and the areas around front doors (inside and outside).  Another key high impact paint area is the front door – one of the few areas of a home where you can recapture 100% of your investment.  And it’s not an expensive one.
  • Lighting – give your home a close hard look to determine if your lighting is outdated.  You know those lights that look like part of the female upper anatomy.  They need to go!  Replace them with low profile, LED lights or drum lights.  Ceiling fans that are in that same theme or the ones with the discrete patterned globes.  Those need to go!  The “Hollywood” lights (think round bulbs in a single line) in a bathroom.  Yep, those need to go as well!  Lighting is a relatively affordable and high impact area for improvement.
  • Tile – for bathrooms with tile on the floors and wall, it’s likely the grout has become discolored and stained.  Need to replace the tile?  No!  All that’s needed is some grout cleaner and caulk.  Be sure to also replace the caulk around the edges of your bathtubs, showers and sinks.
  • Knobs and outlets – ever been in a home and noticed the beige outlets and white plate covers?  Or noticed that the door knobs are a hodge podge of brass, brushed nickel and bronze?  Uniformity is key when selling a home.  Ensuring that all outlets and covers are white is a relatively easy project.  Same thing with door knob replacement.  Keep it consistent. Both make a huge difference

Presentation differentiates

When a seller is interviewing realtors, they should consider what a realtor includes as part of the standard marketing package.  When I sell a home, I always include: (1) professional photography, (2) floor plans and (3) a 3-D video tour.  My goal with this three-prong approach is to ensure I put out in the marketplace the most comprehensive view of a property. It’s especially important in this digital age that a property make the best possible electronic impression.  It’s on the basis of pictures, floor plans and videography that a buyer will decide whether to visit a property.  You get the presentation wrong, a seller won’t get the price they want. 

Equally important is staging.  You’ve probably seen the data – it points to homes selling faster and higher when a property is professionally staged. For that reason, I always include staging as part of my service offering to sellers.  In a separate blog, I’ll show you the before and after examples of recent listings.  It’s almost mind-boggling how impactful coherent furnishings and wall-hangings can be.

Timing is important

One of the first questions sellers ask me is this – “When is the best time to sell?”  Year over year sales and accompanying data for the Northern Virginia market point to the spring months clearly being the answer.  The spring market isn’t just March through June.  In fact, it typically kicks into gear in mid-January and runs through the end of June.  It’s during this period of time that the majority of buyers are active.  In my experience, going on the market on the front-end of the season – i.e., January and February – can be to a seller’s advantage.  While other owners are busy waiting for flowers to bloom and to finish up their preparations for an April list date, sellers that go on the market in January/February face minimal seller competition and maximum buyer interest. 

All of this being said, the market here in Northern Virginia is a year-round market, with a fairly consistent flow of inventory release and sales.  There is plenty of evidence that a property that is well-priced and well-presented will do just fine in the later summer months or early fall months.  If there’s a time to avoid as a seller, it is November and December.  It’s hard for properties to compete with the big holidays over those months.  And the possibly bad weather! 

I hope you’ve found this analysis helpful.  Please be in touch to discuss in more detail my recommendations for ensuring the best outcomes when selling in Northern Virginia.

How to Choose Your Lender

Tips for Making the Right Choice

Early on in any buyer consultation, I always highlight the importance of talking to at least two loan officers before launching a purchase search.  Why?  Because only after that conversation will a buyer really know what they can (or should) afford and what makes the most sense in terms of a down payment and loan structure.  

Though I should really step into the picture after that upfront loan officer discussion, I find that buyers typically reach out to me first.  They almost always ask me for lender recommendations – which I happily make – as well as wonder how best to evaluate which loan officer/lender will work best for them.  This blog is born from the many conversations I’ve had with clients about what matters when selecting a loan officer.  

I hope these tips will prove helpful to you as you leap into the great beauty contest that is selecting your lender.

Competitive Rates  – At the end of the day, no matter how personable, responsive and skilled a loan officer might be, it’s the mortgage rate they offer you that matters most.  As one client once said when debating whether to jump lender ships upon learning that a lender I recommended would offer a better rate than the one with which they’d built a longstanding relationship – “I won’t remember the loan officer’s name in six months but I’ll remember that I’m paying more for our house than I could have.”  Harsh as that may be, it’s the truth.  So, all else being equal, the rate a lender offers you is paramount.

24/7 Availability – A loan officer who works banking hours is not the loan officer for you!  The majority of deals get done after hours and on the weekends.  It’s important that your loan officer be available at all times (even on vacation) in case you find your dream home and need a pre-approval letter to accompany your offer.  One of the reasons I encourage clients to shy away from big banks and credit unions is most of their staff and loan officers don’t work the hours necessary to get deals done here in Northern Virginia. And they’re often not available when needed most.

Plain English – I’m sure we’ve all encountered those fast talkers who know their own business so well they forget that others don’t.  Those types tend to skip across the foundational details, sometimes leaving us non-experts in the dust.  Lending is a complex business interwoven closely with economic factors like unemployment, federal government policy and the stock market.  A good loan officer is one who can explain the state of the lending market and various loan products in plain English, walking a buyer through the pros/cons of different options in an understandable fashion.  It’s so important that buyers understand the consequences of a certain loan choice (e.g., 30 yr fixed conventional v. ARM product).  It’s a loan officer’s job to help a buyer navigate to the right option and ensure the borrower understands what they’re choosing. 

The really great loan officer is the one who is solutions-oriented, able to contextualize the prospective loan into the buyer’s financial and tax picture. I always tell my clients that a loan officer is about more than the mortgage – they also serve as an adviser, helping clients make borrowing decisions that make the most sense from a financial and taxation standpoint.  Think of a financial planner, tax adviser and loan officer all bundled into one package of problem-solving excellence. 

Transparency – It’s important that a lender be open with a buyer’s realtor, especially when it comes to the appraisal valuation and status of a loan approval.  The best outcomes are from transactions where the loan officer is regularly updating a buyer’s realtor with the status of the deal – that’s because realtors are following the contract timelines and contingencies, working diligently to ensure they are satisfied.  Things go much more smoothly if a loan officer provides periodic, even proactive, updates to a buyer’s realtor.

Collaborative – I have a stable of loan officers with whom I work regularly and that I generally recommend to clients.  They are informal partners.  Collaborators if you will.  While it’s ultimately my client’s choice who they prefer to work with, I am always delighted when they select a loan officer with whom I’ve worked before and know to be open, transparent, responsive and creative.  I work hand in glove with loan officers at each key intersection of the transaction – i.e., appraisal and finance contingencies – and am always grateful when we bring a transaction to a close in a smooth and timely way.

Self-Funding – It’s important to understand the difference between a mortgage broker, a bank and a correspondent lender.  My vote is that a client go with the latter as correspondent lenders offer the best rates and most streamlined process to closing.  They fund their own loans at closing and sell them later on in the secondary market.  This allows them greater control upfront and the ability to offer the best pricing given multiple investors/outlets. Correspondent lenders have entire operations staff in-house, from processing to underwriting to closing.  This is very different from a mortgage broker who originates and places loans with multiple lenders and then adds their fees or margin on top of that loan/rate.  They do not have direct control over operations as they send the loan for underwriting through the lender.  A bank will set pricing but is generally plagued by bureaucratic-laden processes and an inability to satisfy the tight contingency and closing timeframes demanded by the Northern Virginia market.  If you want to dig deeper into this, check out this useful blog on the topic.

Timely Closings – In my 80+ transactions (as of this writing) over the last several years, 70% or so of which have been for buyers, I’ve never had a buyer fail to close on their purchase on time.  Why does that matter?  Because if a buyer doesn’t close on time, they’re in default under their purchase contract and risk losing their earnest money deposit.  That’s not something I ever want to see happen!  Hence, it’s critical that my clients work with loan officers that I know are guaranteed to help them cross the finish line on time.  In practice, that means getting a loan underwritten well before closing and issuing a closing disclosure well within the legally-mandated 3-day window prior to closing.  

I hope these tips will help guide you to the best possible loan officer/lender for you.  Please feel free to reach out if you’d like to discuss selecting the right lender.  I’m always happy to be a sounding board on this all-important decision!

Not all realtors are built the same

Tips for Finding the Right Realtor for You

Choosing a realtor is a lot like dating. There’s undoubtedly the right option out there for you but you may have to make your way through a lot of frogs to find your prince/princess. There is “someone for everyone” but getting there can be quite a journey. 

In this blog, I aim to help future home buyers and sellers leapfrog (pun intended!) over the sometimes messy and time-consuming process of selecting a realtor. As a realtor myself, I try to be the realtor I would want when considering the right realtor representation in one of the most important transactions in anyone’s life. 

Here are some of the key things that I think distinguish a great realtor from the rest of the pack and that you should look for in a realtor:

Responsiveness – If you reach out to a realtor with an inquiry of any kind and haven’t heard back from them within an hour or two, that’s not the realtor for you. This is a frenetic business, one where responsiveness can make the difference between you getting the deal you want or losing. You can’t let a realtor’s responsiveness failure get in your way. 

Follow-up – Dropping the ball in the Northern Virginia market is not an option. Neither is forgetfulness. A great realtor is one who listens to everything you as a client have said or asks and follows up on every single item. Call it crossing the Ts and dotting the Is (or whatever expression fits best) but your requests should be addressed timely and thoroughly.

Detail orientation – Let’s be honest here.  Realtors don’t typically have to draft contract documents from scratch.  They’re using boiler plate contracts issued by and through their area realtor associations (and sometimes their brokerage).  A realtor’s job is to fill in the contract blanks with correct information – e.g., price, legal description of the property, items that convey with the sale, party contact info, etc.  It’s not rocket science. Yet when mistakes get made in these legally binding documents, the consequences to a client can be significant.  You want to work with a realtor that pays attention to these important details so they don’t backfire on you!

Contract & process comprehension – I’m going to be a little self-serving here.  Most realtors do not have a legal background (like I do).  Yet they are working with legally binding documents that guide the buying/selling process and dictate the terms for the parties to follow. There is nuance and complexity to the language in the various contract documents that underpin a transaction.  You want to work with a realtor who truly understands what the contract terms mean.  What the implications are of not abiding by a contract term.  What the process for buying or selling includes, as rooted in the contract documents between the transaction parties.  Don’t let a realtor bluff you on this!

Neighborhood knowledge – No realtor can know every neighborhood like the back of their hand.  But most realtors do have a particular area of focus such that they’ll be intimately familiar with a neighborhood’s schools, parks, amenities and dynamic.  A really good neighborhood expert will even be able to speak to the unique characteristics of specific blocks and streets.  While I don’t think you need to work with a particular neighborhood expert to succeed, it can help.  And if the realtor isn’t deeply knowledgeable about an area you’re targeting – but otherwise checks your boxes – then encourage him/her to dig deep and fast to get familiar with a particular neighborhood.

Client first – Tough as it is for realtors to revolve their own lives around a client’s schedule, that is just the deal.  A good realtor will make themselves available according to a client’s needs – even if that means working early mornings/late nights and weekends.  They have to put a client first not only when it comes to schedule but also when it comes to workflow.  Realtors generally work with more than one client at a time but should make you feel like you’re they’re only client. 

Perseverance – In a competitive market, like here in Northern Virginia, there is no room for disappointment and defeat.  Your realtor needs to be dogged on your behalf no matter what the obstacle.  That means helping you navigate through multiple offer situations – potentially multiple times – until you get to the finish line.  It can be discouraging for a realtor to invest so much time without compensation – the good ones realize that the effort is not about the money.  It’s about helping a client find the best possible home at the desired price.

Choosing the right realtor for your real estate transaction is critical to ensuring your buying/selling objectives are met.  In writing this, I hope these tips prove useful to you in your selection process.  That they help you to be able to separate the wheat from the chaff.  Happy realtor shopping!

The Mighty Power of Attorney

An Essential Tool for Overseas Home Buyers and Sellers

One of the first things my overseas clients ask me when considering buying or seller is this: “We’re not going to be able to get back to Northern Virginia to sign closing documents – what do we do?”  While it’s important that they’re thinking ahead, they don’t need to worry!  Thanks to a legal instrument called a “Power of Attorney” or “POA”, home buyers and sellers not physically present at the time of closing may execute their purchase or sale documents through a third-party signatory via a POA. 

The POA has been a critical tool in 2020, especially, due to travel restrictions spurred by Covid-19.  But even before that, the majority of my overseas clients would use this instrument in order to avoid having to travel across the miles to the get to the closing table.  In the last several years, I’ve had no fewer than 30 closings where it’s been the “attorney-in-fact” designated by the POA who signs a client’s closing documents.  Though I miss being able to see my clients’ faces and expressions of excitement when they’re handed or handing off keys, I’m also relieved that this option exists to enable their closing in absentia.

Here, I’m going to walk through the nuts and bolts of the POA from its preparation through to the role an attorney-in-fact plays in a closing.

How do I get a Power of Attorney?

Once a client is under contract, I’ll alert the title company and client’s lender (if buying) to the need for a POA.  Many clients instinctively – and logically – would prefer that their realtor, a friend or a family member sign closing documents on their behalf.  Though it would be convenient, realtors are not permitted to serve as a client’s “attorney-in-fact” (a fancy word for a surrogate or proxy).  They’re too involved in the transaction.  Similarly, a representative from the title company is also too close to the transaction to serve in that role.

Friends and family seem appropriate on the surface.  However, it is often asking a lot of them to travel some distance themselves to get to a closing here in Northern Virginia, typically in the morning hours. Also, they’re not always prepared for the hand gymnastics involved!  Imagine signing “XYZ Name, as Attorney-In-Fact for XYZ Buyer Name” 50+ places in a document.  It can be draining. More than that though – it can be risky to rely on a friend or family member.  Their schedules can change.  They may not be able to travel the way they planned.  A pandemic may hit (witness 2020!).

Rather than risk not closing as a result (and losing your earnest money deposit if the closing can’t be pushed back), it’s safer to designate an actual attorney to serve as your attorney-in-fact.  Most title companies have a relationship with an attorney who is experienced in this area. The cost for this service will range between $100-$300.  In my opinion, that’s money well-spent for peace of mind and the accountability that will come with an attorney signing closing documents on your behalf. 

Once I have the POA, what do I do?

The title company typically emails the forms of POA to my clients after it obtains approval from my client’s lender.  My client then needs to sign and notarize the POA and return an original signed/notarized POA document to the title company.  This sounds easy enough, right?  Not necessarily when you’re in a Covid-19 world.  And not necessarily when you’re living in more far flung places in the world.  In the best-case scenario, a client will bring printed out copies of their POAs to a US Embassy or other location with a notary, get the original(s) notarized and return the signed/notarized documents to the title company via overnight/express mail.

In the current Covid-19 scenario, with lockdowns and other movement limitations, it may not be possible to get to a physical notary public in front of whom to sign a hard copy of the POA.  This is where technology and ingenuity come into play!  Thanks to web-based platforms like NotaryCam and others, it may be possible (subject to lender approval) for a client to “e-notarize” their POAs in lieu of an in-person notarization.  All a client has to do is log-in at a scheduled time and an e-notary will oversee their electronic signatures of the POAs. If a lender won’t allow e-notarization, a possible work-around is a Zoom session with a title company notary public staff member who watches via Zoom as a client signs the POAs.  Once the signed original POAs are returned to the title company, that notary public can then notarize the original document.  Again, this is subject to lender approval.  

A side note here is that for clients living in locales without reliable overnight/express mail, it’s important to focus on the POA process early in the transaction.  They need to ensure the original POA is in the hands of the title company well before their closing date.  Just because FedEx says they overnight mail doesn’t make it so.  Build in a cushion of extra days.  Because of this issue, I always raise the POA concern at the outset of a transaction.  And I make sure – or I encourage my client to make sure – that the lender has a clear process and established guidelines for how a client may get their POA finalized well before the closing date.

What does the Attorney-in-Fact do?

On a client’s closing date, their attorney-in-fact, as designated by their POAs, is teed up and ready to sign a client’s closing documents.  Those documents include lender disclosure forms as well as certain loan and tax documents.  Their role is not a substantive one though the function they serve is critical.  They are literally a hand and a pen – there to satisfy the lender “wet ink” requirement when it comes to closing documents.  They’ll sign in their capacity as a client’s “Attorney-in-Fact” and then transmit the package of signed documents to the title company. 

Given the non-substantive role they play, it’s important that my clients review the closing document package in advance of their closing date.  That way they know what their attorney-in-fact is actually signing.  In an ideal world, a client would receive that package days in advance.  That’s not what happens in practice.  Generally, a client will receive the package of loan documents the day or night before their closing. 

If you’re thinking of buying or selling from overseas and would like to learn more about the process, please be in touch!

Bringing the Foreign Service Home to Northern Virginia

Helping FSOs navigate the unique challenges of purchasing homes from overseas

When I left the Foreign Service (FS) due to family and health reasons, it felt like I was leaving a community that I knew and loved. A place where I belonged. Fast forward to 2016 when I launched my real estate business and my very first client was an FSO from my A-100 class. Since then, I’ve helped over 30 FSOs, individuals and families, buy and/or sell their Northern Virginia homes. It’s been an indescribable pleasure and honor to be able to serve the community of which I was a part!

As anyone in the FS well knows – whether through first-hand experience or observing colleagues’ efforts – the challenges FSOs face in buying (especially) or selling are manifold! For the outside world, buying a house sight unseen is unfathomable. It’s commonplace in the FS! The typical buyer expects to sit at the closing table and sign documents in person. That’s often not the case for FSOs who can’t travel thousands of miles to place their John Hancock on some papers! For FSOs selling properties from overseas, they can’t be physically present to manage contractors, pick paint colors/fixtures and ensure work is done to their specifications.

Over my many transactions for FS clients, I’ve developed a particular expertise – elements of which I’d like to share here in hopes it might benefit and inform my FS clients and anyone in the FS thinking about buying or selling in Northern Virginia.

Virtual showings only tell part of the story

Thanks to platforms like FaceTime and Skype, FSOs can now at least tour a property virtually with their realtor and “see” the homes they’re considering. These tours – in combination with the increasingly comprehensive photos that accompany listings – can be extremely helpful. But it’s the atmospherics and details that are lost in a standard tour. That’s where I come in. My value add is not only in the way I describe the features of the home as I show a client a property via FaceTime but also in the way I highlight the atmospherics. That might be the fact that a house is on a street with a steep grade (read: not ideal for kids’ play). Or, perhaps the neighbor hasn’t quite gotten around to mowing the grass. Then there is the all-too frequent challenge of road, highway and metro noise in places like Arlington. Sometimes there’s even a difference in noise level between the front and back of a house. If you’re talking about a condo, I always listen closely for any noise above or adjacent to a unit – you’d be amazed how many dogs I’ve heard barking loudly or music blaring!

My goal in these tours is not only to provide my clients with a good sense of the layout and condition of the home but also of the little (and sometimes big) things that might affect a client’s view of a home if they were there in person. For example, in a condominium building, it’s all good and well to have a garage parking spot. But, what if the unit’s designated garage space is practically a mile away from your unit. Perhaps not as useful! Or, if the property has only on street parking but the adjacent property has designated the spot in front as handicapped and you are not. Parking becomes a hassle.

You can be sure that the listing agent of a property has done everything possible to show a property in the best photographic light. That means omitting the tree branches that might be hovering menacingly over a roof, cropping out the commercial center that backs onto a property and angling a shot to avoid showing the speed bump in front of the house (usually a sign of a cut-through/high speed street).

My goal as a realtor is to get under the hood of a property. To the extent I can get ahold of them, I also always try to provide my clients with floorplans, surveys/plats, a list of updates, and any other relevant information that may be in the land records or otherwise obtainable. I always relay to my clients the good, the bad and the ugly – I do whatever it takes to help my clients understand all of the pros and cons so that, if they buy the home, they come in eyes wide open.

You love it! But will your renter?

I often tell my FSO clients that they have to wear two hats when looking at a property to purchase. First and foremost, of course they want to purchase a property that suits their needs. Yet, at the same time, they also have to consider the rentability of that property and whether it will be a wise investment during those times when they’re posted overseas. Sometimes, those two different priorities are in conflict with one another. My job is to help clients navigate that gap and help them to identify the property that serves both purposes.

I often find that the major points of conflict relate to price, condition, school zones, proximity to DC and access to public transportation. In other words, a client might be drawn to a house that is fully updated and in beautiful condition (which makes a house comfortable to live in) but may not feed to schools that are considered desirable (which many renters view as paramount). Or, another example of tension is when a house is close to DC in mileage terms but doesn’t have any easily accessible public transportation. Again, many renters will place a premium on access to public transportation even if it means a greater distance as the crow flies.

As soon as an FSO client tells me that they are serious about a given property, I always look into rental comparables in a given neighborhood and analyze the time it takes for those rental properties to rent. Most FSOs want to rent quickly and avoid prolonged vacancies.

Your lender can be a make or break

FSOs face a unique set of challenges when considering financing options, in large part rooted in timing and distance. Primary residence mortgages offer the best possible rates for borrowers. However, they also come with a 60-day occupancy requirement. That is, when a buyer closes on the purchase of a property, they are required to sign an affidavit that says they will occupy in 60 days. There aren’t crystal clear definitions about what “occupy” means but it’s generally understood to be that the owner will be living in the property. Buyers have asked me whether it suffices to move in some furniture within that 60 days or have a friend stay at the property or even just stop by and spend the night once or twice within that 60 days. I err on the side of caution. The last thing I ever want a client to do is commit mortgage fraud! In the best-case scenario, an FSOs timing is such that they’re looking to purchase no further out than 60 days from when they’ll be back in the Washington area.

Certain lenders with whom I work do offer loan products that either waive that 60-day requirement or provide as good a rate on a second home mortgage as they would for a primary home mortgage. Either case offers an ideal scenario for a borrower. However, those offerings often depend on top notch credit and other strong financial credentials. I always advise my clients to talk to at least one or two lenders very early on in the process to get a sense of their loan product options based on their timing. Rate and service shopping is important.

It’s also important that your lender understand the mechanics of FS employment. That is, as relates to issuance of your travel orders as well as the job or position changes. There is a certain vernacular with FS employment that is not always understood by lenders. Similarly, you’ll want to work with a lender that understands the one-off and sometimes extensive expenses that FSOs often incur around the time of their assignment transitions. Lenders don’t like to see major credit card charges or other expenses around the timeframe of loan applications and approval. That said, a lender well-versed in the FS transition rhythms will ensure their underwriter understands and overlooks such charges.

Last, assuming you are buying from overseas and can’t be physically present for the closing, you’ll want a lender who will allow all of the closing documents to be signed by an attorney-in-fact based on a signed and notarized power of attorney. In plain English, lenders still require wet ink on loan documents. That means they have to be signed by a person and cannot be signed electronically. Maybe this doesn’t sound too complicated but it often can be!  Imagine buyers in Bogota, Colombia with a co-signer in Tennessee.

If you know you can’t be at the closing, you’ll want to make sure your lender will permit documents to be signed by a power of attorney. In addition, some lenders are quite strict about who can sign in that role – they may require it to be a family member or a paid attorney. Ideally, it could be anyone with whom you are close and that you trust. Just in the last six months, I’ve had five closings where the buyers could not be present for the closing. I’ve met clients’ aunts, parents, friends… you name it!

Keep those friends on the ground

Most every FSO has a friend or colleague who is in the Washington DC area. When looking to buy a property, I always recommend that my clients give that friend or colleague a heads up. While I do my utmost to be my clients’ eyes and ears on the ground, there’s no replacing the observations and perspective of a trusted friend. I welcome the opportunity to bring those folks on property tours with me. It can prove invaluable.

That same person may also come in handy for two other purposes. First, as is the case with many of my FSO clients, they are overseas at the time of closing. Assuming a lender allows it, you may want to have that friend serve as an attorney-in-fact and sign loan documents as a power of attorney on your behalf. The second role is to be a caretaker or custodian of sorts for the property once purchased. For those FSOs who purchase prior to their return to the Washington area, there may be a few months gap before they actually occupy the property. Many of my clients figure it’s a short enough time that it doesn’t make sense to hire a property manager and pay those fees. Hence, they’ll instead ask a friend or family member to check in on the house on a regular basis. On many occasions, I’ve passed over keys to those contacts.

Open 24/7

Not all realtors are built the same. Because I practiced at top law firms and worked under the rigors of the FS, I know what it means to work and to work hard. My goal is to be as responsive to client needs as possible. To be available to them in near real-time, without sacrificing quality and accuracy. Not to let more than a few hours go, if that, without responding to them. Even if that means late nights and early mornings. I maintain that standard regardless of whether working for clients with significant time differences. Recently, I helped an FS client through three rounds of competitive offers, one each day over three days, until we got ratified. Given the 13-hour time difference, that meant early mornings and late nights to accommodate their schedule.

There are also times – especially in multiple offer situations when my clients are competing against other buyers – when I have to impose near real-time demands on my clients. I have had to wake up clients in the middle of the night for them to sign documents. I’ll never forget FaceTiming in the dark with my pajama clad clients in Malawi as they signed contract documents to get the house they wanted!

Time differences can also be meaningful when it comes to meeting contract deadlines. Most every contract contingency expires at 9 PM EST on a given date. When I have overseas clients, whether behind or ahead in time zones, I’m absolutely dogged in ensuring that we meet deadlines on time. Often, that means working on documents well in advance and ensuring my clients are prepared to sign in a timeframe that anticipates the time zone differences.

In a tough market – which Northern Virginia continues to be – FSOs need a realtor who is responsive. One who is willing to be available to you around the clock.

 

 

 

Behind the Scenes – Where Realtors Add (Often) Unseen Value

In this day and age of discount brokerages and newfangled online real estate platforms, buyers and sellers have a multitude of options. They may be tempted to try and save some commission or realize promised efficiencies from an online tool. There’s the pull and tug of those ads telling you that you can save 1 to 2% off your sales price, get a refund of thousands of dollars or that if your home doesn’t sell in 30 days, it will be purchased by your agent.

After three years in this business, I’m here to suggest that buyers and sellers should resist any such temptation! I’ve come to understand the difference in service level between a full-commission realtor and a discount agent. There is one. I’ve also come to appreciate that technology can never replace the human touch required at key inflection points of a transaction.

My goal in this blog is to go behind the scenes, to give you a sense of where your realtor can really add value, advocate for you and ensure your best interests are always represented. I’m going to focus specifically on key aspects of the real estate journey for buyers. I’ll share examples here of how having a dedicated commission-based realtor can save buyers money, headaches and complications, sometimes without them even knowing it.

A picture isn’t always worth a thousand words

Before the proliferation of Internet-based realty sites, a property was typically judged by its “curb appeal”. Today, realtors know that prospective buyers will judge a property by the pictures presented in the listing. It’s all about “photographic appeal”. That’s why realtors generally include professionally taken photos – the shots will usually have excellent lighting sometimes taken with a wide-angle or a “fish-eye” lense. The goal is to make rooms look as bright and large as possible while minimizing any negative aspects of the property.

What you won’t see in pictures of the inside – if it can be avoided – are scuffed floors, stained carpet, old fixtures and cracked walls/ceilings. On the outside, you’ll generally never see a picture of the next-door neighbor’s house, the street in front of and around the house, up-close views of the outdoor systems (i.e., roof, condenser unit, gutters, driveway) and views from the house to the front and back. A picture can be worth a thousand words – that is, unless a realtor wants it not to be!

Having boots on the ground is essential to seeing past the photographic fluff.  More times than I can count, I’ve discovered that a house that looks to be on a flat property from the pictures is on a street with a steep grade, unsuitable for kids’ safe outdoor play.  When a picture shows the back of the house from the back yard rather than the other way around, that often aims to hide what’s behind the house – like the large apartment complex, commercial building or unsightly neighbor’s junked car collection.  Or the time I discovered that the driveway-less property had street parking designated handicap only, thereby precluding anyone from parking in front of the house without a handicap placard.  Road noise is another big one that eludes pictures – in densely populated areas like Northern Virginia, it’s hard to escape but many people want to try.

Pictures help but they’re not the whole picture!

Finding the “clouds” on title

As soon as a buyer client expresses serious interest in a property, I always reach out to my go-to title company and ask them to do a preliminary search in the land records (and beyond) for anything of concern. The nature of the search may depend on whether the house is a teardown, new construction or an existing home sale but some of what I’m looking for includes:

(1) Are there any easements or encumbrances that would affect a client’s ability to do what they want to do on the property? For example, if there is a stormwater easement in a location where a client wants to install a shed, that might be an issue.

(2) Are there any building code violations or mechanics liens on the property? This may be an important issue if my clients are purchasing a house as-is and giving up the right to require the seller to address any building code violations or liens.

(3) Is there a plat of the property showing easements granted to adjacent properties for any reason? A property a client was seriously considering had a parking pad in its front lawn. The seller assured us that the neighbor had the right to park there. Only after a title company physically went to the courthouse and dug up a copy of a plat recorded over 50 years ago, was it confirmed that the adjacent property owner did indeed have that right in perpetuity.

Another important consideration for any buyer client is to have a survey of the property. I always ask a listing agent whether they have a survey they can make available to my clients. From that, we can quickly divine whether there are any fence and/or driveway location issues or other concerns. While it’s important that my clients have a recent survey of the property (though not required by lenders), an old survey can still be useful preliminarily. In one instance, a client ordered a survey that surfaced that the neighboring property had an asphalt parking lot that encroached by over 12 feet on my client’s prospective property!

Inspecting to inspect

Since Virginia is a buyer beware state and sellers have very limited disclosure obligations, the inspection is a critical opportunity for a buyer to assess the condition of a property and learn what, if anything, needs to be repaired. I am an active participant in the inspection. I don’t view it as an opportunity to kick back and review emails and catch up on other work. My job is to accompany the inspector around the property and serve as an additional set of eyes and ears (and a nose!).

Do I have the expertise of an inspector? Absolutely not.  But I do have the ability to ask questions and learn about the property along with him/her. This is especially important when I’m serving clients who are overseas and unable to be at the inspection in person. My philosophy is that I’d rather have the inspection be comprehensive and accurate even if alarming. Why would I want a client to purchase a home that has issues more extensive than they’re willing to take on or that are more significant in scope than reasonable given other factors? Putting my head in the sand or encouraging an inspector to do the same is not only unethical in my view but shortsighted. It’s to the benefit of everyone involved in the transaction that a buyer be as informed as possible about the property. Deal with the hard stuff upfront, even if time-consuming, and a buyer will be thankful later on.

One man’s junk is not another’s treasure

By the time a buyer gets to the walk-through of the property that they’re purchasing, they’re often tired. They’ve made it through the inspection, the appraisal and finance contingencies and they feel like they’re on the homestretch. The last thing they worry about is that there might somehow be an issue with the property right before they’re supposed to close. But, in fact, there is reason to focus on the walk-through. The Virginia residential sales contract requires that a seller delivers a property “free and clear of trash and debris, broom clean… “.

From this language, it’s clear that the expectation is that a property will be move-in ready for the buyer, clean and devoid of the previous owner’s personal belongings and trash. Yet, in about 30% of my walk-throughs (generally done no more than 24 hours before closing), I find the very opposite. From a stash of broken fluorescent lightbulbs poorly concealed in trash bins to old mattresses in attics to unused roof shingles from a previous roof stacked in a garage, I’ve come across a lot of unexpected items. Typically, I encounter these unwanted treasures in crawlspaces, attics and garages. Whether forgotten or overlooked by the seller, or left there with the hope that the buyer might simply absorb and deal with them, trash and debris left at properties is an issue.

My job as an advocate for my clients is to ensure that their best interests are represented. Unless my client tells me that they’re in love with grandma’s broken chandelier tucked in the nook of a crawlspace, I’m going to ensure that the seller has it removed. Sometimes, this means that the seller has to hire a junk trunk in a pinch to clear out the house. Other times, it results in the listing agent having to go to the house themselves and fill their car with their clients’ personal effects. Regardless, I ensure that the property my clients are buying is indeed free and clear of trash and debris and broom clean. Recently, a listing agent got heated with me when I demanded a proper cleanup prior to closing – he argued that I shouldn’t expect things to be “perfect”. No, not perfect…just what is required under the contract.

 

Title Companies and Title Insurance: You Need Both More Than You Might Think

If you’re like most buyers, you know you need to deal with a title company and get title insurance but you’re not sure why. In this blog entry, I will break down for you what a title company does as part of your home purchase transaction and walk-through the various items on the ALTA settlement statement that you’ll receive and sign at your closing.  I’m also going to give you an overview of title insurance and explain why it’s important and what it can protect you from.

What Does a Title Company Do?

A title company performs a number of important functions starting when a contract to purchase a property is ratified (i.e., signed by both parties). Once the title company receives the contract from your realtor, it will research title to the property by reviewing all documents related to the property in the public land records.  Their goal is to find any “clouds” or defects on title that could affect the purchasing party’s ownership of the property.  Defects might include that the legal owner and seller of the property are different, that there are liens on the property (e.g., a contractor placed a mechanic’s lien for unpaid work and it’s not been removed), or that there are unpaid taxes that will have to be cleared up before the property can be sold.  All defects the title company finds will be communicated to the seller and lender as soon as possible in order that steps can be taken to “cure” or correct the problems.  As a buyer, you want to receive clear and marketable title to your new property at the time of closing.  And, your lender is not going to give you a loan if there is an issue hanging over title to the property.

The next function a title company performs is to prepare the documents to be signed at settlement as well as the final ALTA settlement statement (which replaced in 2015 the HUD-1 which you may have dealt with before). The title company will prepare the deed transferring title to the property from the current owner to the new buyer.  Also, the lender and title company will work hand-in-glove with respect to the other documents that need to be signed at closing to effectuate the loan (e.g., the promissory note and purchase money deed of trust).  At closing, the title company acts as the settlement/escrow agent, overseeing the signature of documents by the buyer and seller and making sure that the lender has everything it needs to begin to lend to the buyer and to pay off the seller’s existing mortgage.  Right after the closing, the title company handles all the wiring of money among the parties so that the seller and existing mortgage holder get paid, the realtors involved in the transaction earn their commissions and the lender receives the down payment paid by the buyer.  Perhaps the most important function of the title company immediately post-closing is to record the legal documents (i.e., deed, mortgage, assignments, etc.) at the local courthouse. By recording the new deed, the title company ensures that the new buyer goes on record as being the owner of the property. Be sure that the title company sends you a copy of the recorded deed for your records.

What Are All These Title-Related Items and Costs on My Settlement Statement?

During the closing, the title company will use the ALTA settlement statement to guide each of the buyer and the seller through their respective sides of the transaction. The settlement statement is a critical document as it itemizes all the costs, fees and payments for each side of the transaction.  The big difference between the new format of settlement statement and the HUD-1 is that the new statement is different for each of the buyer side and seller side and doesn’t show a side by side comparison of credits and debits.  In a way, each party to the transaction is now looking at their side of the deal in isolation from the other.  Whether you think this is a positive change or not, the new format is here for now so you’ll need to work with it.  Key elements of the statement are:

  •  Mortgage lender’s charges;
  • Charges for preparing documents;
  • Title company’s fees;
  • Recording costs;
  • Amount of the payoffs to release any existing mortgages;
  • Pro-ration of city and county property taxes;
  • Pro-ration of homeowner’s insurance and condo fees (if applicable);
  • Real estate agent commission fees,
  • Survey fees, and
  • Any other costs associated with the transaction.

 When you review the settlement statement at closing, you’ll want to make sure it looks substantially similar to the Closing Disclosure that your lender will have asked you to approve a few days before closing. If there is any amount that is off on your settlement statement, seek clarification from the title company and get comfortable with the amounts.  Once you sign the statement, you’re accepting all fees, charges and payments and moving forward with the purchase so it’s important that the statement is 100% correct.

What Is Title Insurance and Why Do I Need It?

Like any insurance, the aim of title insurance is to protect you from the unforeseeable and make sure you do not lose money or your property as a result of something outside of your control and/or knowledge. Title insurance is an insurance policy that covers any problems (also known as “title defects”) that arise with respect to your title on the property after you buy or refinance a property.  Those problems can range from an undisclosed (but recorded) prior mortgage or lien that affects your title to the property to a fraudulent act (yes, sometimes people sell property they don’t actually own) to your deed being recorded incorrectly.

The last thing you want to do is bear responsibility for any of these kinds of issues. While the probability of such defects arising may be relatively low, it happens enough that you probably shouldn’t take the risk. Plus, in many instances, your lender will require a lender’s policy of title insurance so that its interests are protected and it can more easily sell the mortgage to its investors.  If you’re interested in seeing an exhaustive list of the various title defects that can arise, check out  First American Title’s 70+ Ways to Lose your Property.  When you read all these, you’ll run, not walk, to purchase title insurance.

You can buy title insurance from a title insurance company or from a title agent who sells policies on behalf of a company. The cost for the insurance depends on the value of your property.  The good news about title insurance is that you buy it at the time of closing and never pay premiums again.  The coverage goes into effect from the time of closing for so long as you have an interest (i.e., own all or a portion of the property) in the property.  If you die, the coverage runs with the property for the benefit of your heirs.  If you sell the property, and give warranties of title, the coverage also continues.  The insurance itself covers the full value of your property as well as the cost of legal expenses necessary to investigate, litigate or settle an adverse claim against your property.

When considering buying title insurance, know that there are two types of policies: (1) an owner’s policy of title insurance which protects your interests as owner of the property and (2) a lender’s policy of title insurance which protects the lender from being responsible for any title defects. Owner’s policies come in two basic forms: (1) standard coverage and (2) extended or enhanced coverage.  Standard coverage is what most buyers purchase and covers you for the full value of your property plus legal expenses against the most common types of title defects (e.g., undisclosed (but recorded) prior mortgage, easement or lien).  Extended or enhanced coverage covers additional more atypical title defects (e.g., silent/off-record liens such as mechanics’ or estate tax liens) and tends to cost approximately 20% more than standard coverage.  As for the lender’s policy, while it only protects the interests of the lender, your lender will likely require you buy the lender’s policy for them at the time of closing.  Just another cost of getting the loan, unfortunately.  It will be issued for the amount of the mortgage and the coverage decreases as you pay down the loan.  When you pay off the mortgage, the policy ends.

*Please note that I write this blog in my capacity as a Virginia-licensed real estate salesperson and not in my capacity as a District of Columbia and New York-licensed attorney.

Home Inspection Addendum – Timing is Everything!

In my last blog entry, I talked about 6 key things in any sales contract from the perspective of the buyer.  Here, I’m going to delve into the Home Inspection and Radon Testing Contingency Addendum but am only going to focus on the home inspection component from the buyer’s perspective.  In particular, I’d like to share some tips on how to approach the home inspection and related negotiation period.  I’ll also explore how timing is so critical.

To Inspect or Not To Inspect

When thinking about the Addendum, you need to first ask yourself whether you want to do an inspection.  If you don’t include the Addendum as part of your offer, then you’re telling the seller that you’re comfortable taking the property as-is, waiving your right of inspection.  To inspect or not to inspect is really a question of risk tolerance and how well you know the property and feel confident about what you know.

My advice – unless the market is sizzling hot with properties being snapped up and bid up in a matter of days (or even hours), you should inspect the property.  It’s just not worth the risk of taking on whatever the seller has failed to repair or has repaired poorly.  You need to “get under the hood” of the property before you take it on.  The home inspection contingency is your chance and you shouldn’t squander it, even in the face of marketplace pressures.  Yes, you might lose a property or two to competing offers that don’t opt for an inspection but, in the end, you’ll sleep better at night with the knowledge that you are buying a property that you really know.  There are always going to be surprises but the fewer the better.

Now, let’s talk about some important things to know and consider when completing the Addendum and performing your inspection.

Inspection Period

This is the number of “Days” (and remember to read in the contract how Days is defined) you enter in the Addendum that you have from the “Date of Ratification” (i.e., when both parties have signed the contract) in which to perform the inspection.  Remember, as the buyer, you’re the one to arrange and pay for the inspection.  You have control over this part of the process.  So, you want to be sure to pick the right inspector(s) who can do his/her work in the time you have given yourself under the contract.

Before you decide on the number of days to include for the Inspection Period, you’ll want to pick the inspector you’re going to work with and confirm their schedule and average report turnaround time.  When scheduling, make sure you take into account holidays, weekends and any possible schedule conflicts/delays with the inspector(s).  Also, remember that you’re not obligated to hire a generalist inspector even though that may be easier from a logistical standpoint.  Some actually think it’s advisable to hire separate licensed contractors to perform inspections of specific parts of the house – for example, an electrician for the electrical and mechanical systems, a plumber for all plumbing and water-related systems and a roofer for all gutter, roof and drainage elements of the property.  It’s up to you which approach you want to follow.  Either way, make sure you’ve got the inspector(s) lined up and ready to go in advance of signing the Addendum.

The general rule of thumb is to include somewhere between 7 and 14 days as the Inspection Period.  I actually suggest as few days as possible, within reason, on the Inspection Period so that you can include a greater number of days under the Negotiation Period, as that’s really the period where a lot of the time consuming back and forth occurs between the buyer and seller.  Remember that you want to coordinate well the timing between the Inspection Addendum, the appraisal and any financing contingency; typically, the inspection contingency will have expired before the financing contingency so financing is the last condition before a contract “goes hard” (i.e., no other contractual basis on which to exit the contract).

Once you have the inspection report, you then need to decide what you want to do.  The first question to ask yourself – do you want to proceed with the purchase of the property?  If the answer is no, you can then provide a notice to void the contract so long as it is within the Inspection Period deadline.   If the answer is yes, you have a choice – either accept the property with the deficiencies or provide a copy of the report to the seller with a request that the seller address the issues found in the report.  If you opt for this latter course of action, you enter the zone of the “Negotiation Period.”

Negotiation Period

This is the period during which the buyer and seller engage in discussion about the items on the inspection report that the seller is concerned about.  The Northern Virginia Association of Realtors (NVAR) recommends a Negotiation Period of no less than 7 days. During this period, the buyer and seller will discuss what items on the inspection report the seller is willing or unwilling to fix.  There is no limit on how many offers and counteroffers the two parties can issue during the timeframe allotted but be careful here. You’ll want to make sure to have a “mutually acceptable” written addendum completed by the time stated (9 p.m. on the NVAR form) on the day specified under the Negotiation Period of the Addendum.  You can figure it’s going to take at least 2-3 days per round of discussion to reach some agreement so take that into account when including the total number of days for the Negotiation Period.

Another important consideration during this part of the process is whether you want to allow the seller to opt out of repairing anything in exchange for giving you a credit at closing. In some cases, this may be the preferred path as it gives you control over the repair(s) – you can select the contractor, negotiate the price of the repair(s) and get the direct benefit of any warranties.  The trade-off for this control is that you have to oversee the repairs after closing, just when you may want to move into a house that is move-in ready.  Also, remember that a credit on the closing statement is not the same thing as cash in hand.  Rather, the credit will offset some of your closing costs.

Purchaser’s Election

If the parties cannot reach an agreement at or before the end of the Negotiation Period, the buyer has the option of either (i)voiding the contract by giving written notice to the seller or (ii)going forward with the purchase and agreeing to accept the property in its as-is condition, without any repairs by or credits from the seller.

Again, be careful of timing. If you don’t give your notice to void the contract in the time specified, the contract will remain in “full force and effect” and you’ll have lost your out from the contract.  When putting in the number of days after the Negotiation Period in which you’ll either give notice or the contract will continue on, think about how quickly you’ll be able to give that written notice.  You might want to give yourself a cushion – things can come up to cause a delay – and include 2-3 days (rather than just 1 day after the end of the Negotiation Period).

 

 

Getting “Real” on Real Estate – 6 Key Things in a Contract

Welcome to my blog “Getting ‘Real’ on Real Estate”!  I’m a Virginia-licensed salesperson with Keller Williams Realty McLean/Great Falls.  My goal in writing this blog is to offer a useful resource to buyers and sellers in the Arlington/McLean/Great Falls area.  If you’d like more advice or need help finding or selling a home, get in touch!  There’s more about me as well as my contact information on the About page.

This blog entry is about 6 key things you need to focus on in your contract to buy a home. So, you’ve found the house you want to buy and your realtor tells you he/she is going to put together the contract.  All you have to do is sign it they say and they’ll present it to the seller.  It’s just a matter of the realtor filling in a few blanks.  Sounds simple enough, right?  But, it’s not.  The residential sales contract – though usually on a standard state board-approved form – is a complex legal document laced with obligations, conditions and important timing elements for both sides of the transaction.  As a legal document, it is binding once signed.  You might feel you don’t have the time to read all that fine print.  You might feel you can trust your realtor to fill in the form with exactly the terms you’ve discussed.  My advice – find the time to read it!

Read the contract with a fine tooth comb.  If you do this at least once, you’ll never have to do it again.  But, in so doing, you’ll have developed a basic understanding  of the contractual obligations to which you’re agreeing and the terms and conditions that dictate how the parties on either side should (and must) behave.  You’ll feel comfortable enough with the major sections of the contract that when it comes to you filled in for you by your realtor, you’ll then be able to focus on and know the deal-specific terms, like purchase price, financing and all the various contingencies and associated timeframes.  For example, when it comes to the contract form, you should know the definition of business day.  This matters if you’re trying to exercise a contingency and either ratify a condition or get out of the contract.  If business day is defined as 9 a.m. to 9 p.m. and you respond on a given contingency at 9:15 p.m., you’ve missed your window and the contract will bind you one way or another.

Too often – and I know they will hate to hear me say this – realtors make mistakes when filling out form contracts.  It happens all too frequently.  And, when it does, it can have dire financial and legal consequences to you, the buyer.  Spend the time to review the blanks that have been filled in by your realtor.

In particular, pay attention to these 6 key things in the contract:

1. Property Description – yes, this is the street address but it’s also the legal description of the property. That is, the description that is used by the local tax assessor to uniquely identify the property. You want to make sure you include the right information so that you’re buying the property you actually want. This means including the correct lot reference and map book/page in which the deed to the property is recorded in the applicable land records. Believe it or not, this is an area where mistakes can be and are made. Avoid the issue by reading carefully the information in this section.

2. Purchase Price – this sounds like a no-brainer but I’ve seen plenty of times where it is somehow incorrectly listed.  Double-check it and make sure the correct amount is listed, with the decimal point in the right place!

3. Earnest Money Deposit – the general “rule of thumb” is somewhere between 1-3% of the purchase price.  In reality, you should only commit what you feel comfortable with.  Realtors will tell you that sellers won’t consider your offer as serious unless the earnest money deposit is on the higher end of that spectrum, or even more than that.  My view – don’t concern yourself with the seller’s perception (unless you’re desperate to get the property or the market unquestionably favors the seller).  Rather, only put down an amount that you could live losing with if something went wrong.  Yes, that’s the worst case scenario and presumably won’t happen if you’ve done your contract diligence.  But, you never know…

4. Financing – you’ll have told your realtor up front what kind of financing you expect to get (e.g., Conventional, VA, FHA) and that will need to be indicated in the contract.  Remember, your buyer will want to hold you to this so try to be as sure as possible when you sign the contract that you’ll be seeking the type of financing you list.  What’s more tricky is what interest rate you want to include.  At the time you write the contract, there’s no guarantee you’ll get financing and at the interest rate you’d like/expect.  To protect yourself, I suggest putting in as low an interest rate as possible.  In this way, if you end up not getting approved for financing or cannot get the low rate you require, you can turn back to this provision and make the argument that you never intended to get a loan at an interest rate higher than the low rate included in the contract.  Hence, you need to back out of the contract.  Remember, your goal is to be as protective of your own interests as possible.

5. Settlement – your lender will tell you that he can get financing and button up the deal 30 days after contract ratification.  Unless you’re really in a hurry or are uber-confident in your lender, I suggest a more conservative approach.  Build in some cushion.  If a lender says 30 days, put in 45 days.  If they say 45 days, put in a date that is 60 days from contract ratification.  With ever-changing and more stringent lending rules, it’s likely, if not guaranteed, that requirements will come up and you’ll need to satisfy them.  That takes time.  Don’t risk breaching the contract and losing your earnest money deposit because of a lender’s unrealistic promises.

6. Title Company – as the buyer, you get to pick which title company to use. Often, your lender will recommend its preferred title company. It’s up to you whether you want to go with that recommendation or find your own. Sometimes, it can be to your benefit to review several companies and have them compete with one another on fees (many of which are junk) like “processing” and “seller release” fees and “mailing costs.” This is an area where you can save yourself money. It’s worth the time to investigate the best deal.

That about covers the landscape of major areas of the sales contract you should focus on.  Next time, I’ll explore some of the things to think about when reviewing the financing addendum and inspection addendum that both usually accompany the sales contract as part of your offer.  The addenda are a whole other world of complexity.  One that if brushed over, can lead to serious headaches for a buyer.

In the meantime, here are some good resources on contracts:

7 Must-Have Real Estate Contract Conditions

What to Look for in a Real Estate Contract

You Just Signed a Real Estate Contract. Now What?