First and foremost, you will want to determine if you qualify for financing, and for how much. Your mortgage advisor will answer this for you. Two questions come into play when determining which price range to shop in. First, how much do you qualify for from the lender’s point of view? Second, how much of a payment are you comfortable with? Just because you qualify to borrow a certain amount does not mean you will be comfortable with the payment that accompanies it.
There are two primary ways to achieve an opinion from a mortgage advisor with regards to the maximum price point up to which one should be shopping:
- Pre-Qualification is when one attains that opinion by way of verbally describing to the mortgage advisor their credit, down payment and income situation.
- Pre-Approval is the only way to fully verify this by way of pulling credit and providing that mortgage advisor all requested documentation that proves the above.
Once you have been pre-approved, your mortgage advisor will provide you with a pre-approval letter. It is extremely important that your circumstances do not significantly change after the pre-approval without first conferring with your mortgage advisor.
We have developed strong ties with many reputable mortgage lenders in the area and will assist you by pairing you with one best suited to fit your lending needs.
Contingencies in Contracts
In real estate, a contingency is common and written into almost every contract. Contingencies are clauses in a contract that give either the buyer or seller a way to get out of the contract if certain conditions or timelines aren’t met. Every contract can be unique. The possibilities for contingencies are virtually endless, however, here are some of the more commonly used contingencies in the order you would usually exercise them:
- Home Inspections. Probably the most common type of contingency is the “contingent upon satisfactory completion of inspection”. There are any number of specific types of inspections for which a contingency might be included in a contract. Some of the more common would include inspection by a qualified home inspector for hidden defects, radon tests, sewer line inspections, pest inspections, water system inspections and inspections dealing with the presence of mold to name a few.
- Appraisal. It’s not unusual for a buyer to have a contingency that requires an appraised value at or above purchase price. Since lenders will nearly always want an appraisal performed too, sellers usually don’t have a problem with this.
- Financing. Contingencies that depend on the buyer being able to obtain financing are very common.
Remember, just like everything else in real estate contracts, contingencies are negotiable. In drafting your offer to purchase a home or piece of property, we will ensure that you are comfortable with all contingencies included in your contract and help you determine if it is appropriate to add additional ones as well.
One of the most important steps when purchasing a home is to have the home inspected by a licensed and experienced home inspector. Home inspectors are trained to test the heating, electrical and plumbing systems in addition to many other components of the home. We have worked with dozens of inspectors over the years and can provide you with a list of some of those whom we felt performed well for our clients in the past. Ultimately, you will be the one to decide which inspector is right for you.
At the end of the inspection your inspector will often provide a summary with a question and answer period. Use this opportunity to ask questions regarding terms or conditions that you may not be familiar with. A good inspector should be able to explain the answers to your questions. If for some reason a question cannot be answered at the time of the inspection, the inspector should research the question and obtain the answer for you.
After receiving a written copy, take the time and become familiar with your report. Digest it completely so as to understand the condition of the home you are about to purchase. After all, it is most likely one of the largest investments you will ever make.
In addition to a traditional home inspection, there are many other possible inspections which may be appropriate and recommended. We will carefully evaluate your circumstances and provide you with recommendations of other possible inspections that could benefit you.
Foreclosures & Short Sales
At Ultra Realty Group our strategic partnerships allow us access to many foreclosure and short sale opportunities that other brokerages don’t have available. Nonetheless, it important to ask yourself upfront whether such a transaction is right for you. If not, rest-assured that we also sell many non-distressed properties and therefore are well-rounded and can service all of your needs.
A short sale is when a home is sold for less than what is owed to the bank by the current owner. A short sale can only occur if the lender or lenders agree to release their lien rights to a property in exchange for proceeds from the sale which are insufficient to cover the total remaining balance of the mortgage. Even under the best of circumstances, buying a short sale property will usually take longer than a typical real estate transaction. Be aware that most short sales will not close in the customary 30 days or less. Remember that you’re not only having to get approval from the seller, but the lender must also agree to the discounted price. Commonly, your offer will have to be reviewed by several processors, an asset manager and ultimately the mortgage loan investor for approval which will add time – sometimes even 2 to 3 months or longer.
Are foreclosures and short sales a bargain?
It’s sometimes presumed that any foreclosure or short sale must be a good buy and a possibility for easy money. This isn’t always true. You have to be prudent about buying a bank owned home or short sale if your only intent is to make money. While it’s true that a bank is often eager to offload their inventory promptly, they are also looking to minimize any losses. There are many short sale or foreclosure opportunities which have the potential to make money, and many of our clients do very well buying and selling foreclosures. Still there are also many short sales and foreclosures that are not good buys and not likely to turn a profit. Keep in mind too that seldom is a distressed property in move-in ready condition. To the contrary, they are usually in very bad shape and in need of major repairs and updating. While this can sometimes present an opportunity to gain “sweat equity,” it is certainly not a situation for everyone. When pondering what to pay for a bank owned or short sale property, we will help you carefully analyze comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling.