The Real Estate Transaction Explained!
Notice: The inventory of houses for sale in Ocala is moving towards stable market levels. However, we are still in an active seller’s market and this is an advantageous time to list your home. Lets take a close look at the sales transaction:
The Offer
You have viewed many houses for sale in Ocala, Florida and found a gem. Its time initiate a transaction.
When, as buyer, you present an offer and a seller accepts it, it becomes a formal binding contract. The contract must be in writing. In it you agree to acquire and seller agree transfer property ownership at a stipulated purchase price and subject to specific terms and conditions.
As a seller in receipt of an offer, be sure to act wisely and review it carefully. You have decisions to make. You can accept the offer and have a binding contract, counter it or reject it. If you counter, you are in effect making a new offer by changing the offered price, terms or both. Therefore, you should only counter issues that warrant walking away from the transaction if necessary.
Escrow
As the buyer, you will provide an initial deposit to escrow. On the path to closing, you may make one or more additional deposits the contract requires. You will add each to escrow funds and bring the remaining required cleared funds to the closing.
Contingencies
Your contract usually includes contingencies which you or the seller must satisfied as the sales process progresses. Typical contingencies include an inspection contingency, a mortgage approval contingency, an appraisal contingency and a clean title contingency.
As the buyer, it is up to you to satisfy the inspection contingency. You will contract with a reputable expert to inspect the subject property. For many, the purchase of a home is the largest investment they will make. Therefore, you would be wise to save elsewhere and have the inspection done the right way.
Your inspector must complete his work by a date specified in the contract. Usually, you have two options if you are unhappy with defects that come to light. You may terminate the contract and obtain a deposit refund or try to negotiate a resolution. However, you and the seller have invested time and effort in moving the transaction forward. Therefore, you will usually try to negotiate a compromise resolution of issues raised instead of simply walking away.
As buyer, you will want to move quickly to obtain mortgage approval from your lender and remove the mortgage contingency. First you will provide all documents required to confirm your finances. Then you will authorize and pay for an appraisal as a final step.
If the appraisal falls short, you may ask the seller to reduce the contract price to appraised value. You may also negotiate to arrive at a compromise. If you agree on a compromise, you may need to bring additional funds to the closing. If the two of you do not agree, however, either of you may terminate the contract. You will then have your escrowed deposits refunded. You can expect the mortgage approval process to take 30 to 60 days.
Proof of ability to close
As seller, you will not want to take your property off the market without evidence of buyer’s ability to close. You may decide that a prequalification letter is sufficient. A mortgage prequalification letter assures you that the buyer will be able to close if information presented is verified. Very rarely will houses for sale in Ocala see a contract accepted without clear evidence that the buyer has the resources to close.
However, asking for a preapproval letter is wiser since it assures that all documents were verified and the buyer has qualified. Remember that the preapproval is contingent upon a qualified property being identified and placed under contract and may be effected by changes to the buyer’s finances.
Clean Title
As seller, you will be required to transfer unencumbered title to the buyer at closing. You must take steps to remove encumbrances, if any, prior to that date. If you fail to do so, the contract may be terminated and all deposits refunded to the buyer. Encumbrances include recorded liens, unpaid taxes and permit fees, and permits that have not been properly closed out for example. As is the case everywhere else our country, houses for sale in Ocala must have clear titles in order to close.
Once all contingencies are removed, including obtaining final mortgage approval, the transaction is ready to proceed to closing.
As seller, you must pay off your mortgage and deliver a release of lien in recordable form. In addition, you must pay for documentary stamps on the deed and unpaid property taxes. You must also pay for the buyer’s title insurance policy, a title search, and an estoppel fee. Of course, brokerage fees your responsibility as well.
As buyer, you are responsible for paying for the lender’s title insurance policy and loan closing costs. You must also pay for your share of the closing fees, the recording of the mortgage lien, the inspections, the appraisal and a survey, if one is required.
