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ERRORS TO AVOID WHEN SELLING YOUR HOME:
The intent of this newsletter is to provide you with an insight to some of the major concerns you should have when attempting to sell your own home. Hopefully, you will find this information valuable and it will assist you in avoiding some of the problems many sellers face and point out items that you need to be aware of concerning potential buyers.
Don’t waste your time with unqualified “lookers”!
Make sure that any “buyer” who wants to see your home has been
“Pre-Approved” for a mortgage. The Pre-Approval process is something relatively new and there is often confusion regarding its meaning. If your “buyer” states they are Pre-Approved, ask to see their “Pre-Approval Certificate”. If they cannot produce one, they probably are only Pre-Qualified!
Here’s the difference!!
Pre-qualifying is when information is taken from the potential borrower, many times just over the phone, and the lender states that they qualify for a mortgage of a given amount.
This casual method of qualifying has been around for years and in today’s marketplace is practically worthless.
We receive panic calls from buyers, who were allegedly pre-qualified, only to run into the proverbial “brick wall” when they actually applied for a mortgage. Many times they have an accepted offer from the seller or contract from the builder already in hand and now they don’t know what to do!
When a prospective buyer tells you they have been “pre-approved”, you should always ask to see their approval document for verification. If they can’t produce one, they most likely were only pre-qualified! If your prospective buyer is Pre-Approved by The First National Bank of New Richmond, we actually declare in writing that they qualify for the monthly payment indicated on their “Pre-Approval Certificate”!
During the pre-approval process we examine paycheck stubs, bank statements, W-2s and tax returns. The complete credit package is reviewed and the underwriting decision is made to approve the mortgage. This certificate also states any conditions that must be satisfied by the prospective buyer.
The Pre-Approval Certificate actually is our loan commitment pointing out exactly what must occur for the buyer to purchase your home. In many cases the approval is subject only to clear title and a satisfactory appraisal.
The buyer is pre-approved for a certain payment amount based on their income. Therefore, the actual loan amount they might qualify for will vary depending on interest rate changes.
If your buyer produces an approval letter that states they will qualify for a given mortgage amount, that approval letter may not be valid if the rate has increased from the date they received it.
In addition to the potential change in interest rate, real estate taxes and insurance will be different from the estimate we used. Therefore, the First National Bank of New Richmond qualifies the buyer based upon a monthly payment only. When the buyer finds the home they want, we merely subtract the taxes and insurance from the pre-approved monthly payment and determine the loan amount supported by the payment remaining.
Did you put yourself in a position to buy your next home before you attempt to sell yours?
If you will need a mortgage to buy your next home, doesn’t it seem prudent that you should be Pre-Approved? The last thing in the world you want is to sell your home and then not be in a position to buy your next home.
Unless you purchased your home within the last couple of years, you will find many changes have occurred in the mortgage business. As a leader in the mortgage lending field, the First National Bank of New Richmond has an experienced team of professionals and the latest in technology to work for you.
Once you and your buyer are Pre-Approved , the remainder of the transaction will be a pleasant experience because your worst fears are now behind you. It will be much easier and quicker for you to find and buy a house.
When you sell your home by yourself, there are a number of questions and responsibilities that you will be faced with. The First National Bank of New Richmond can help you with some of these obstacles.
How do I establish a price for my home that will reflect the true market value?
If you price your home too high, it will not sell right away and this becomes a negative marketing situation for you and results in wasted marketing efforts on your part. If you price too low, you will not realize all of the equity you worked so hard to build.
You can order an appraisal before you put your home on the market. This will put you in a comfortable position when negotiating with the buyer and you will know that you have placed your home on the market at “the right price”.
This will also reduce the chances that the lender’s appraisal will come in below the sales price causing problems later.
How do I estimate the profit from my sale?
In addition to paying off your mortgage(s) there will be other expenses you will need to be aware of. You are responsible to provide title evidence to your buyer either by way of an updated abstract or title insurance. It will be necessary to have an attorney draft the deed and transfer return. There will be recording fees, real estate transfer fee and pro-ration of property taxes.
Depending on the purchase agreement, you may have other expenses and responsibilities.
You will want to check with your current lender and ask if your mortgage requires any type of notice prior to paying off your loan.
What if there is a problem with the title to my property?
The First National Bank of New Richmond has an arrangement with a title company to provide you with a preliminary title report. This will make you aware of any potential title problems so they can be cleared prior to marketing your home.
How much should I be concerned about defects in the property?
According to Wisconsin Law, you will be required to complete a Real Estate Condition Report and provide it to the buyer. This form lists the defects in your property that you are aware of. However, even if the buyer notices defects after the closing, you may still be responsible.
To reduce your exposure, you could have a home inspection performed by a qualified home inspector. The cost is about $250. This may be an issue during your negotiations. By having an inspection done before your home is on the market you may avoid any related problems.
Am I going to be responsible for paying financing costs for the buyer?
This will generally happen with some government loans but will also depend on the manner in which the purchase agreement is drafted. It can be a negotiable item.
Another thing about government loans is that they can take quite a while to process. If you are in a hurry to move, it could slow things down for you.
The First National Bank of New Richmond offers conventional mortgage financing which offers some of the same low down payment opportunities with an investment as low as 3% of the purchase price. These conventional loans are submitted through an automated underwriting system and we can have a credit approval for you and your buyer literally in minutes.
How do I go about advertising my home?
There are, of course, a number of ways to get the word out that your home is for sale. The obvious method is to put an ad in the classified section of the local papers and putting a sign in your yard.
In addition to the obvious, the First National Bank of New Richmond can provide you with a “Financing Options” sheet. This sales tool lists information regarding all of the programs available to finance your home including minimum down payment, estimated closing costs, income required estimated payment and more.
This information is extremely meaningful to anyone interested in buying your home.
The First National Bank of New Richmond “Financing Options” sheets can be made available in brochure boxes, copied to the back of information sheets, displayed on bulletin boards and made a part of your presentation to buyers.
There is probably a very good reason why you have not seen a newsletter like this available from any other lender. It’s maybe because they are concentrating too hard on the buyers and are not concerned about the sellers.
Knowledge – When Combined with Action - is Power!
To get the best results from your sale it is necessary to understand the real estate market and to recognize the implications of financing available to your buyer.
There is a lot of information contained in this newsletter. Even if you have been involved in selling real estate before, you will probably have questions.
Please do not let the fact this information is being sent to you by a lender cause you concern. Just because nobody else is doing it does not mean it won’t work.
Give us a call to find out more about our For Sale By Owner program. There is absolutely no obligation or cost to you if you enroll in our program.
We wish you the best as you attempt to sell your home.
Please give us a call so we can answer all your questions.
Eric Tostrud, Hudson (715)-381-7129
Julie Dodge, New Richmond (715)-243-6126
Brian Campbell, New Richmond (715)-243-6147
Ken Zaruba, New Richmond (715)-243-6133
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