Sellers Have Closing Costs Also; an honest report from Vested Land Services LLC

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, #NewJersey, we are the #titleinsurance agent that does it all for you.

Question: I have recently become licensed as a Real Estate agent. The market is "hot", and many of my selling clients are asking what they will be charged for closing and settlement costs. Can you summarize these various costs?

Answer: That's a very good question. In my opinion, when a seller signs a listing agreement with a Real Estate Broker or agent, authorizing that person to sell the house, in addition to all the other forms which sellers receive, the seller should be given a estimated settlement statement. This statement will project the bottom line to the seller, based on the listing price. When an offer is later presented to the seller, the settlement statement should be updated, to reflect the actual terms of the proposed contract. And of course, the lender will also summarize all of the appropriate selling costs.

I have analyzed a number of real estate transactions, and the following charges are generally made to the seller:

Real estate commission: The seller should be informed of the dollar amount to be paid out of settlement for the commission. The broker should also make it clear that the commission is earned only if closing (settlement or escrow) takes place.

Mortgage payoff: Most sellers have at least one mortgage outstanding on the property. The seller's lender will be able to assist you in obtaining an approximate payoff figure, if you give them a tentative settlement date. Don't forget to add a daily interest charge until the lender receives the full mortgage payout. You should also inquire whether there will be any prepayment penalty. Some older loans still require the borrower (in this case the seller) to pay a percentage of the loan if it is paid off in full prior to the full expiration of the mortgage term. In some instances, the prepayment penalty can be avoided, or waived by the lender, and you should inquire as to the policy of the particular lending institution.

Points: This is perhaps one of the least understood areas of real estate financing. Sellers often question why they have to pay points to enable the buyer to get their loan. A point is one percent of the loan. For a number of years, no one paid points, especially since interest rates were very low. However, I have recently seen a revival of points being paid, either by buyer or seller or both.

Some loans, such an FHA or VA, put limitations on the amount which the buyer can pay for closing costs. Many buyers who will be obtaining conventional financing also want the seller to pick up some of these settlement charges -- including points paid to the lender.

Seller paid points are still deductible for tax purposes by the buyer, but the buyer must confirm this with his/her own attorney or financial advisor. Thus, while sellers want to get the most dollars from their house, there are often negotiation advantages if a seller offers to split points with the buyer. Such an arrangement may be the clue to closing the deal.

Termite: Most buyers require that a termite inspection be performed, at the seller's expense. Normally, the fee for this service runs between $50 to $75. But I have seen too many instances where the seller is "hit" with a sizeable repair bill, due to termites and damage being discovered by the termite company.

Ask the seller if they have a current contract with a termite company. If so, that company should be willing to give the required letter for no cost or at most a nominal charge. Finally, when you make arrangements with the termite company to do their inspection, make sure they will not do any repair work without informing you in advance. Since the seller is paying for these charges, the seller should have the option to shop around for another company.

Water escrow: In Maryland and the District of Columbia, water is the only utility that creates a lien on the property. In order for the title attorney to give free and clear title to the buyer, all liens must be paid and satisfied. Thus, it is standard practice for the settlement attorney or company to escrow some money to cover the final water bill. Usually, the office conducting settlement will make arrangements to obtain a final water reading, pay the bill, and refund the balance of the escrowed funds, if any, to the seller.

Release charges: When the seller obtained mortgage financing, it usually was in the form of a deed of trust. This is similar to a mortgage, but the property is deeded "in trust" to independent trustees who are authorized to sell the property if a default occurs. When the mortgage is paid in full, the trustees are entitled to a nominal "trustee's fee" and there is a small governmental charge to record the trustee's release. These items are always withheld at settlement and deducted from the seller's funds.

Other government charges: In the Washington metropolitan area, each jurisdiction imposes a tax (called Grantor's tax in Virginia, and Recordation and Transfer tax in Maryland and the District of Columbia). In Virginia, the seller customarily pays the Grantor's tax. In the other jurisdictions, payment of this tax is negotiable between buyer and seller, although often the tax is split between the parties.

Settlement charge: Some settlement offices will impose a nominal charge on the seller for "settlement."

Many sellers are often surprised when they learn, for the first time at the settlement office, that they will not be getting as much from the sale of their house as they had anticipated. In my opinion, it is incumbent on you -- as the seller's agent -- to advise your principal as accurately as possible what all of these miscellaneous charges will be.

Care to read the above on-line?  Go to Realty Times

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Tip for Realtors - Forge Lasting Contractor Relationships

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, #NewJersey, we are the #titleinsurance agent that does it all for you.

From Realtor Mag

Forge Lasting Contractor Relationships

Here are eight key elements to keep in mind when you’re compiling—or updating—your list of trusted home improvement pros. We’ve also included helpful tips to share with homeowners who are vetting potential contractors, to help improve the odds that their project runs smoothly.

1. Check credentials and skills. Many trades—such as plumbing, electrical, and HVAC—require a license, insurance, and accreditation. But there’s no national accreditation system for general contractors. Furthermore, states have very different rules governing who’s allowed to work where, according to the National Association of State Contractors Licensing Agencies. Another important distinction is between being licensed and being registered to work. While some states require licensing—which tends to involve passing exams and proving reasonable competency in a trade—others only require registration, which is simply a written record of who is performing the work that doesn’t guarantee expertise.

More: Check out our customer handout, “How To Hire a Remodeling Contractor” or the National Association of Home Builders’ “Checklist for Finding and Hiring a Builder or Remodeler.”

2. Inquire about a contractor’s history and focus. Ask them what past projects they really loved working on, what their specialties are, and what type of work they tend to outsource. Also, find out what their scheduling process is like and how many jobs they typically manage at a given time. It’s far better to know that they’re too busy now but could start a new project in a month, for example, then to be surprised by calendar conflicts after the project has begun. See how they feel about taking on small handyman-type jobs, or if they’ll only agree to do so if homeowners bundle them. Finally, ask how long they’ve worked as a contractor and how long they’ve operated their own business. The two require different skill sets, says Cohen, who’s run her own firm for 22 years. While one doesn’t necessarily need to be an expert businessperson to be a skilled craftsman, the organizational skills a general contractor needs in order to get the job done on time are critical.

3. Find out how they stay in touch with clients. A lot of relationships break down not because of dishonesty or subpar skills but a lack of clear communication, says contractor Tom Sullivan, owner of T.M. Sullivan Construction in Norwell, Mass. “By communicating well, we manage expectations and help keep customers happy,” he says. Expectations need to be spelled out—for example, tell your client to relay how often they want to hear about progress and whether via email, text, or a phone call. And if you know a contractor really only responds to texts and your client needs face-to-face contact, don’t match them up as a team unless one side is willing to switch preferences.

Teach your buyers and sellers to be good clients.

Most contractors will be more flexible with and sometimes go the extra mile for homeowners who are cooperative, especially their repeat customers. So what makes for a bad client from a contractor’s point of view? Those who don’t offer flexibility when surprises occur—concealed pipes may have a leak that wasn’t visible when an estimate was provided, but now need to be repaired—can ratchet up the intensity of any given job. Homeowners who feel they’re the contractor’s most important client often don’t understand why delays should occur when emergencies require immediate attention at another job. And sometimes it just comes down to assuming the best of intentions. After all, contractors want to be treated respectfully as part of a partnership with the same end goal of getting a job done well, on time, and for the expected dollar amount. Kind words about a project’s progress often help, just as an occasional cup of hot coffee or fresh donut does.

4. Visit completed jobs in person. Explain to clients that word-of-mouth referrals are fine, as is seeing finished work on a website or in photos. But a far better way to examine results is up front and in person. Most contractors have prior clients who allow other homeowners to stop by and see their workmanship. Use your unique position as a real estate professional who spends a fair amount of time in other people’s homes as a way to get to know the handiwork of local contractors firsthand. When you see good work, ask who did it and how recently; ask about subcontractors, too. Some contractors have a regular team that works with them; other times, they assemble the right workers based on the specific project.

5. Be nosy about work ethic and attitude. It may be tempting to emphasize the final product over the process, but both are important. These workers will be inside your clients’ homes and neighborhoods, where respect is important. If the contractor or subs start showing up late or ignoring house rules—perhaps by smoking on the premises, trekking dirty shoes through an interior, or using a house bathroom when clients specified having a portable toilet set up outside—your recommendation could backfire. Ultimately, your clients will decide what works—and doesn’t—for them, but occupational habits are important elements to consider for everyone involved.

6. Bid out jobs to several contractors. Advise your client not to rush into a deal. Even if the first bid has a reasonable price and timeline and comes from a contractor with a good track record, it’s important to get another point of view or two. This is especially important for involved, costly projects where each contractor may suggest a slightly different approach. “Know what you want and convey that same information to each so they price the same job or scope,” says Sullivan. “You also may go with one, but use parts of ideas from all.” And always be sure that the contractor breaks down the estimate into fees for materials, parts, and labor, which makes it easier to compare apples to apples. Finally, convey that the cheapest isn’t always best. John Nations, chief residential real estate superintendent for T.D. Desert Development in LaQuinta, Calif., suggests homeowners “go with the lowest ‘responsible’ bid.”

7. Get everything in writing. Some contractors and homeowners are happy to start work on a verbal agreement or with a handshake. Neither may hold up if disputes arise. A written contract covers a variety of elements, from who secures the necessary permits to which manufacturer’s windows and doors are to be installed. “You want a paper trail,” Cohen says, recommending a contract even for minor jobs, such as fixing screens. Jose Oritz, project manager at Cicero’s Development Corp., a renovation company in Plainfield, Ill., says his firm’s contracts also cover assumptions such as a subfloor being in good shape and not needing patching. “And then if it isn’t, additional work needed would be billed at a time and materials charge, which is also specified,” he says. Warranties listed in the contract for labor, craftsmanship, appliances, and materials also will help if something goes awry later, or at least during a specified period. And most detailed contracts offer a way to resolve disputes.

8. Don’t pay until the punch list is fulfilled. It’s typical for homeowners to withhold 10 percent of the total cost until the contractor satisfies every point on their “punch list”—any work that wasn’t finished or hasn’t yet met the home owner’s approval when the job is close to completed. When all is finished, Cicero’s contractor in charge provides clients with a close-out package combining all signed permits, drawings, product specifications, maintenance instructions, and more. “They’re entitled to it in the same way that car owners get an owner’s manual,” Ortiz says.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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No Perfect Home Exists: What You Should Know About Home Inspections - a report from Vested Land Services LLC

As a #homebuyer, you will arrange for a #homeinspection in order to be sure your new home is in good condition.  However, as the following article from Realty Times points out, no home is perfect!  Here's what you should know about the #homeinspection.

No Perfect Home Exists: What You Should Know About Home Inspections

For many first-time buyers, buying a home can be a scary experience. They know they'll be maintaining or improving a home with little to no maintenance experience, so the solution is to buy a home in perfect condition. So they hire a home inspector to point out all the flaws.

The problem is -- no perfect home exists. Air conditioners break, plumbing pipes leak, and roof tiles blow off in the wind.

If you're buying a home, start with a reasonable expectation of what home inspectors can do. Their job is to inform you about the integrity and condition of what you're buying, good and bad.

A home inspection should take several hours, long enough to cover all built-in appliances, all mechanical, electrical, gas and plumbing systems, the roof, foundation, gutters, exterior skins, windows and doors.

An inspector doesn't test for pests or sample the septic tank. For those, you need industry-specific inspectors.

Here's what else you need to do.

1. Make sure the inspector you hire is licensed. The responsibilities of home inspectors vary according to state law and their areas of expertise.

2. Ask what the inspection covers. Some inspection companies have extensive divisions that can provide environmental for radon and lead paint. Be prepared to hire and schedule several inspectors according to your lender's requirements and to pay several hundred dollars for each type of inspection.

3. Some inspection reports only cover the main house, not other buildings on the property. For specialty inspections such as termites, make sure the inspection covers all buildings on the property including guest houses, detached garages, storage buildings, etc.

4. Attend the inspection and follow along with the inspectors. Seeing problems for yourself will help you understand what's serious, what needs replacement now or later, and what's not important.

5. Don't expect the seller to repair or replace every negative found on the report. If you're getting a VA or FHA-guaranteed loan, some items aren't negotiable. The seller must address them, but otherwise, pick your battles with the seller carefully.

A home inspection points out problems, they also point out what's working well. It can help you make your final decision about the home - to ask the seller to make repairs or to offer a little less, to buy as is or not to buy at all.

Read the full article on-line at Realty Times.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the #titleinsurance agent that does it all for you.We don't perform a #homeinpection but we do inspect the title to your new home for other problems.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

@vestedland

#NewJersewy

#titleinsurance

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