Dynamics

Real Estate – Getting Qualification Documentation

Selling a house with the help of a real estate agent is easy but if you insist on doing it on your own, here are a few suggestions that may come to your rescue. Over the last decade, many companies have sprung up to help FSBO sellers. You might be looking at one in your area as well. These companies not just list your house on newspapers and magazines but run television ads at the seller’s request. However, they may not go to the length of bringing the prospect to your door-step; that part is left to you. They place advertisements for your single family, condominium, wooden portable buildings or commercial land wherever you need them – on Sundays newspapers, local magazines and so on. They will send out fliers – maybe a specially decorated ones and offer to direct the prospects to you for an additional fee. What services you receive depends on the company. You can find them on the internet and yellow pages from your city department. Note that, whatever needs to be done to seal the deal is your responsibility, so don’t just rely on these companies for everything that should happen in a sale.

Now let us get to some more tips for FSBO sellers. You have a buyer who is very interested in the property and has visited at least thrice to check on the details of the house. There is an offer that closely matches with your asking price as well. Now what? The next step is to categorize the buyer as “qualified” or unqualified. What this means is that you need to know the combined gross annual income and whether or not he or she can afford the house. Simply accepting the offer is not enough to move forward with the sale. Doing so will not only cost you time but money as well.

Every real estate broker firm tells its agents to qualify the buyer which means assessing buyer’s assets and liabilities. The debt part could be student loans, other home loans, child support or alimony to be paid. The agent or the seller needs to come up with the number the buyer can afford on a monthly basis. Most of the qualifying task is done by the bank or lender who approves the mortgage. This information gives the seller a clear idea of where the buyer stands, and if the house will sell. Many inexperienced sellers will stop at the offer price and hesitate to ask questions regarding the buyer’s qualifying terms. The result is that many sales fall through before the closing date. That money spent on open house interior decoration is gone. The time and money involved in cleaning and sprucing up the place is gone. Everyone is frustrated and hurt especially the seller. Do not let this happen to you. Instead ask the buyer to come back with the lender approval documentation before even accepting the offer. The lender will gladly furnish this documentation upon request.

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Real Estate – Cancellation of Listing Contract

If you are new to the real estate market and ready to sell your home sweet home, the most important document that you sign with the real estate agent is the listing contract. It basically says that the seller is making an agreement with the agent to pay his or her percentage of commission when they find a buyer. But what if your circumstances changes and you are compelled to cancel the contract after signing it? Are you allowed to cancel the contract in the first place? The answer is, certainly yes. A listing contract is merely to assure that you would pay the commission when the agent brings a buyer for the house. Nothing in the agreement will force you to go through with the payment. And reality, things are a little different. For example, if you think the real estate agent is not doing the job as expected, you can fire him. Maybe the agent is not good with handling customers and you ended up with missing antiques from the storage locker, ruined carpets or portable garages being vandalized due to the agent’s absence during an open house. Or maybe you simply decided to hire another brokerage firm because it was cost-effective. Whatever the reason, you have every right to cancel the signed contract.

Generally, a listing contract comes with a withdrawal clause – the terms under which a seller can cancel the agreement. This clause will allow the cancellation but under bonafide change of situations. Yes, all the above described fictional incidents can be considered a reason. But the most common reasons tend to be the following:

  • An unexpected job change situation
  • Seller deciding not to sell the property
  • Financial loss
  • Sudden illnesses that require long-term care or rehabilitation

The withdrawal clause usually comes with a condition that the seller agrees to not to sell the house within the next six months of the cancellation. It can also be an unconditional clause where the seller is free to choose other agents or pursue other options. However, the listing agent must sign to whatever the agreement says before the cancellation becomes effective. Most real estate agents agree with this arrangement likely because they have no choice. Others have the seller pay a withdrawal fee for the time and money they spent on showing the property. This fee could run anywhere from $1000 to $1500 depending on many factors.

Again, note that the listing contract is not the same as the contract that sellers sign with the buyers. The sales contract has nothing to do with the listing contract. In other words, when the seller signs a sales contract with the buyer after the buyer meets contingencies, the house must be sold no matter what the circumstances of the seller are. The seller should proceed with the sale and not back out for unacceptable reasons. Changing mind only leads to a messy legal and financial problem for the seller.

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