The Real Estate Transaction Explained

Do you know that the inventory of houses for sale in Ocala Florida is well below stable market levels? So we are in an active seller’s market. These are exciting times to market a home. Lets take a close look at the sales transaction.

The Offer

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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 and detail a purchase price and specific terms.

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 which is placed in escrow. On the path to closing, you may make one or more additional deposits the contract requires. These too will be added to escrow funds. You will then bring the remaining cleared funds required 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. You and the seller may want to negotiate a compromise resolution of issues raised, since both of you are invested in the transaction closing.

As buyer, you will want to take all steps necessary to obtain mortgage approval from your lender and remove the mortgage contingency. First you will provide all documents required to verify 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 be required to bring additional funs to close. 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 pre-qualification letter is sufficient. A mortgage prequalification letter assures you that the buyer will be able to close if information presented is verified. However, asking for a preapproval letter is wiser. This is so since it assures that all information has been verified and the buyer has qualified for a mortgage. Remember that the preapproval is contingent upon a qualified property being identified, and may be effected by changes to 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.

Once all contingencies are removed, including obtaining final mortgage approval, the transaction is ready to proceed to closing.

As seller, you are responsible for paying off your mortgage and delivering a release of lien in recordable form. You must also pay for documentary stamps on the deed and unpaid property taxes. Your closing costs also include the buyer’s title insurance policy, a title search, and an estoppel fee. Of course, brokerage fees are also your responsibility.

As buyer, you are responsible for paying for the lender’s title insurance policy and loan closing costs. You must also pay for closing fees, the recording of the mortgage lien, the inspections, the appraisal and a survey.

Keep in mind that almost everything in a real estate transaction is negotiable.

Search and you shall find amazing houses for sale in Ocala, Florida.

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