Wednesday, October 12, 2011 / by Ira Miskin
Once a Purchase and Sale Agreement is bound, a number of "next steps" are triggered which also involve servicers such as inspectors, an appraiser, a loan officer and their underwriters and government agencies that guarantee or insure loans like FHA and VA. That's a lot of people and a lot of hoops to jump through. There are also additional negotiations that can take place, triggered by issues that surface during the Due Diligence period such as requests for repairs stemming from the inspection reports, or appraisal that is lower than the agreed-upon sale price triggering a new sale price negotiation.
Concerned, nervous, worried, scared about buying or selling a home in Atlanta? Don't be. Here is where your Realtor and Team, working together and drawing on their experience can sail you through the choppy waters to safe harbor.
The two primary elements of the "closing" process are Due Diligence and Loan Approval. Although separate elements they are linked. During the Due Diligence period, a specific number of days negotiated during the offer stage, a variety of inspections should take place. A home inspection evaluates the entire property and points out any issues that should be addressed. A termite and pest infestation inspection evaluates the property for past and current infestation issues and in Georgia, triggers issuance of an Official Georgia Wood Infestation Inspection Report stating the current condition of the property and stating what, if any, remedies may be required. An HVAC system inspection - inspecting the heat and air conditioning systems - will tell you whether it is clean, operating efficiently, and how close to the end of its "usable lifespan" the system may be. If the property's roof is older, or shows signs of visible wear or damage during the home inspection, a roofing inspection will diagnose roof issues that may be evident or lurking. A licensed plumber should inspect the hot water heater and plumbing system, especially if the home was built with Polybutylene piping, to detect often small issues that could lead to major problems if not immediately addressed. There are other inspections that can be done as well, such as Radon gas testing, air quality testing, inspections for mold and mildew. Your Realtor and Team will have a ready list of professionals that can be called upon to perform these inspections and work with you and your Realtor to understand which issues need to be addressed, and what the best solutions may be.
During this Due Diligence period, your lender will order an appraisal. This is how you and your Lender determine whether the sale price of the property is in line with current market values and therefore eligible for loan financing. In this difficult market appraisals can be the determining factor in whether a transaction will close. Your Realtor will have completed a detailed market analysis before working with the Buyer to determine a property's value so that you can correctly structure and negotiate your offer. For the Seller, a detailed market analysis allows you and your Realtor to confidently negotiate and accept an offer. However, even though an appraiser uses current and recent comparable transactions that have sold and closed, and other market factors as well as their experience to produce an appraisal report, property appraisals are a combination of science and art. There is some leeway for an appraiser's opinion of a property to shape the final appraisal report. If a property appraises for less than the agreed sale price, an additional negotiation is required between Buyer and Seller to adjust the final sale price in order to receive financing approval.
All the while, working in the background is you Lender's underwriter. Their role is to dig into your finances and determine for the Lender whether you are truly a good prospect for a loan. Your loan officer will keep you up to date on the underwriter's concerns and tell you what you will need to provide to answer the many questions underwriters must answer in order to approve your loan. Don't panic. Achieving loan approval is a process, and not an easy process. But it is achievable when you and your loan officer fully and clearly communicate and problem solve together. Your Realtor should be able to recommend several experienced loan officers you can interview prior to starting the home search process.
Through all of these steps, your Realtor and Team should be working alongside you, providing you with the resources, personnel and industry-wise guidance to bring you through to a successful close.
Remember, selling or buying a home is a process and a journey, not an event, you will want to subscribe to our free video e-mail series for home sellers and buyers. For access to the complete series of free video and informational emails that can provide you with many of the important strategies and information you will need to make the best home selling or buying decisions you can email us at info@TMTRealtyGroup.net and ask for the SPECIAL E-MAIL SERIES REPORTS, the free no obligation series of email reports to be sent to you regularly over the next few weeks. Just put FREE VIDEO EMAIL SERIES in the subject line and let us know if want the home seller or home buyer series.
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