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Posts Tagged ‘clarkston michigan’

writing an offer on southeast michigan homesUnless you’re a cash buyer, our standard purchase agreement contains a financing contingency. Even if you are pre-qualified you need this contingency to protect yourself. If your financial situation changes after writing the offer (such as job loss) you need the protection of the financing contingency. It also protects you if the house has problems with mortgaging, such as appraising too low, clouded title, etc. When it comes to rural properties, the property can present many issues when it comes to obtaining the mortgage. I won’t get into those specifics here, but the bottom line- a standard contingency in the offer to purchase is financing.

Once the seller accepts your offer, their house is off the market while you fulfill the contingencies in the offer, so it is muy important to submit a pre-approval letter with the offer. The pre-approval letter will state the down payment required from you, the type of mortgage you’re getting, how much of a mortgage you can afford, and needed seller’s concessions if any.

Actually, it’s important to get that letter before you even start looking at houses. I need to know what you can afford (or what you’re comfortable with- I bought much lower than the bank was willing to lend me) and the type of mortgage you will be getting. If you are getting a rural development loan, I will know not to look in Lake Orion for example, but 3 miles north into Oxford the houses would qualify- even in a sub. If you are going to go FHA, I would know not to show you fixers. Etc. So meeting with a good, honest, experienced loan officer, before you start looking, is also muy important. If you don’t already have a loan officer you like and trust, I can supply the contact information for one. More about that in a future post.

At the time we write the offer we also need to decide if you would like a home inspection, and what type of inspections you should get. Now some people think if they get an FHA loan that there is an automatic inspection built into that process. That is not correct. Your lender will send out an FHA approved APPRAISER who will look for repairs that FHA deems necessary, but that person IS NOT AN INSPECTOR.

If your offer is contingent upon the sale or closing of another property, we would include that in the offer. But beware- bank owned homes do not take offers subject to the sale of another property. If we make an offer subject to the closing of another property that you currently have an accepted offer on, we need to submit a copy of that offer with our offer to purchase. We want to submit as strong an offer as possible and to relieve the seller of any doubts of your ability to close. It’s much easier to negotiate from a position of power.

Other things included in the offer to purchase include “possession.” Or how long you are willing to let the seller live in the house once the sale is closed. They usually ask for a specific amount of time in the listing- 30 days or 60 days for example. After the closing the house is yours, and if there is possession, the current seller is now your tenant. They will typically pay you rent in the amount of your new house payment for any time they stay after closing, and that money is typically escrowed from their proceeds at closing. Possession is something we negotiate up front.

We also include time frames in the initial offer to purchase. We give them a certain amount of time to answer our offer. We give them a time frame in which you will make your formal mortgage application and a time frame for you to get a full mortgage commitment. We will include a time frame to close by.

For the most part, the above are the most popular contingencies included in an offer to purchase. Of course everybody’s situation is different, and sometimes there are contingencies that may be unique to your situation. I wrote an offer recently that was subject to the buyer finalizing their job transfer. But no matter what the contingency is, we must include time frames.

One other issue that is not covered above is the EMD or earnest money deposit also known as a good writing an offer on southeast michigan homesfaith deposit. It is usually a check I collect from you at the time we make the offer that shows your “good faith.” Hence the term good faith deposit. If there’s a problem on the inspection or financing, and the sale doesn’t close, you get that money back. If everything goes just fine, and we close on the property, that deposit is applied toward you closing costs/down payment. If everything goes just fine and all the contingencies are fulfilled satisfactorily, and you just change your mind and back out- then that deposit goes to the seller.

 

Hopefully this gives you a basic understanding of how the offer making process goes. If you have any questions or would like to see a copy of our purchase agreement, please don’t hesitate to call or email me. My direct line at the office is 1-800-401-1444. My cell number is 248-736-6407. And my email address is Jackie@JackieHawley.com 

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Pre Closing Walk Through- What is it? And Why You Should Do It

The majority (if not all) of the purchase agreements used in Oakland and Lapeer County Michigan have a clause allowing the buyer to walk through the house up to 48 hours prior to closing. I typically like to recommend to my buyers that we walk through on the way to the closing. What follows are 2 examples of why you (the buyer) should take advantage of this clause.

The pre-closing walk through is just to make sure the house is in the same condition as when we made the offer.

Story #1 is a true story about a closing this past January. It was a short sale, vacant house and immediate possession. We showed up to do the walk through the morning of the closing. The alarm was going off (the neighbor said it had been going off all night), and when we walked into the house it was how I would imagine a rain forest. Condensation dripping from the ceiling and drooling down the walls. It was a one story lake front home with a walk out basement. The entire first floor with the exception of the living room were soaked. Almost like it was raining. And the basement was pretty flooded.

Somehow the furnace had been accidently turned off and the hot water line for the bath tub split. When we got there it was spewing hot water and evidently had been for quite a while. Needless to say we didn’t close that day. The seller called his insurance company, took care of the problem and we closed the next week- with new plumbing, floors and a few other things that had been destroyed.

Story #2 is a true story that took place several years ago. This time it was my listing. The seller had strategically placed furniture, throw rugs, ect. over dog pee stains. Bad dog pee stains that had gone through the carpet and into the wood flooring below.

The buyer and seller went to arbitration and the seller won. One of the reasons given was that the seller was giving immediate occupancy and if the buyer had done his walk through, he would have seen the stains and would have had the option to either renegotiate or back out at that time. Even though the seller had obviously gone to great pains to hide the defects.

Would the outcome have been the same with different arbitrators? Hard to say, but in this instant the buyer was SOL.

Above are two very good reasons to exercise your right to walk though prior to closing. I surely don’t mind taking my time to meet you at the house and walk through. It’s for your protection, not mine.

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