How The Offer Contracts Work

Joe Always Recommends Selling As-Is:

This relieves you the seller from being under any obligation to fix any defects that might arises during the inspection. The inspection period should not be more than 10 days preferably less. During the inspection period the buyer can cancel for any reason and receive their deposit back and is released from the contract.

Once results from inspection are in, many times buyers will ask for the owner to fix or repair certain items. If the items that are requested to be fixed are mortgage issues, the homeowner has to decide if they want to hold the deal together to fix those.  If the owner does not agree to fix the items, the contract will have to be cancelled as the property will not qualify for the buyer’s mortgage so the buyers deposit must be returned and released from the contract.  If the problem items are going to make the house not qualify for a mortgage the owner has a problem, because it will have to be changed to a cash only buyer, which will normally be an investor who will want to pay far less then market value.

In addition to a private house inspection:

A 4-point inspection must be completed to qualify for insurance: Roof – A/C – Electric – Plumbing.

If the 4 point does not pass inspection the items that failed must be fixed by the owner, or the buyer will not be able to get insurance, and the deal will have to be cancelled.

Optional mitigation inspection: This is only for the buyer’s benefit and does not affect the contract)  if property has hurricane shutters or impact glass a wind mitigation and if it passes will lower the policy premium  a lot.

Buyers Mortgages

FHA: buyer can put as little as 3.5% down and can ask for as much as 6% back from seller in closing costs. I never recommend the seller to agree to more than 3% back. Sometimes buyers will ask for nothing back. When we receive an offer, if any money back from owner is requested it will be in the offer contract. Sometimes buyers use this program because qualifying ratio’s, credit scores and down payment required, are a lot lower then Conventional Mortgages.

VA: many different programs: This is for Active & Retired Military and has a  zero down payment. They had a bad reputation in the far past, but working well now. We will look at the buyer’s program when a offer is submitted.

Conventional Mortgages: There are many different programs- I will review with you what is offered. Normally they put a higher down payment yet can also ask for closing cost assistance from seller.

Cash: Cash is great! Do not have to do anything other than agree on price and close. The cash buyer does normally do an inspection and the 10 day As-Is rule would apply.

Note:

A buyer with any mortgage has to pay in advance at closing the full years plus 3 months of the Homeowners Insurance Policy, plus closing costs. The buyers lender will provide the total cash needed for closing, in a Good Faith Estimate. The amount of cash to pay for all items required for closing costs is substantial, and that is above the down payment, so that is why it is common for buyers to ask for allowable closing coasts to be paid by the seller. Every Mortgage Lenders fees are different. The buyer must have necessary cash to close to obtain the mortgage and their lender provides a Pre-Approval letter based upon obtaining financing approval that takes about 45 days.

The Buyer in Broward County by contract (unless changed) pays for title insurance, so they pick a title company or an attorney. The seller can get a quote from the buyer’s closer and go with them, or hire their own attorney. It is normally cheaper to use the buyers closing agency.
Proceeds from closing are now wired, so sellers will give closing company their banking instructions for the wire to be sent. All commissions due and sellers expenses are deducted direct from closing company and reflected on the closing statement which is refer to as the ” Hud

ONCE THE OFFER IS ACCEPTED:

  1. Under The Florida Bar As-Is contract the buyer has 5 days to apply for their Mortgage from the acceptance date, which is the day that all terms of the offer is completed making this a contract.
  2. The Lender Needs To Order an Appraisal- The appraisal normally is completed with-in 2 weeks time. We can add in special clauses a maximum period for the appraisal to be complete, so if the appraisal is not completed, the seller may cancel the contract and release all escrow money on deposit back to the buyer, making the contract null & void. IF THE APPRAISAL COMES IN SHORT OF THE CONTRACT PRICE- THE BUYER MAY OFFER TO LOWER THE PRICE TO MATCH THE APPRAISED VALUE OR THE BUYER CAN PUT MORE MORE DOWN-PAYMENT MONEY; OR BUYER AND SELLER MAY MEET HALF WAY. IT IS ALL NEGIOTABLE, WHEN BOTH SELLER AND BUYER WANT TO MAKE THE TRANSACTION HAPPEN
  3. The Mortgage Company will be processing the Application and working to get what is called a Mortgage commitment . The As-Is Far Bar Contract is 45 business days days. If their is no commitment at the commitment Due Date; it will extend 10 days. If we pass the due date the seller may cancel the contract and release escrow money back to the buyer, making the contract null & void.

( We do not want a seller & buyer have to cancel a contract due to above reasons. So we can write extensions that are agreeable to both seller & buyer, and keep the transaction working toward the closing.)

ON THE DAY OF CLOSING: All furniture is to be moved out and house is to be clean and all items must be working as they were at time of entering the contract. A final walk- thru is done just before going to the closing.

If the seller cannot be at the closing, the closing company can have them sign their end and if needed mail documents with instructions.

Seller – needs to call to cancel service after closing- All services must be on including hot water for final walk- thru just before closing.

• FPL 954-797-5000
• Water – Ft. Lauderdale 954-828-5150
• Xfinity – (Comcast) 1-800-934-6489
Example of closing costs for you the seller:
$300,000 contract price
$ 2100 Florida doc stamps (.70 per hundred)
$850 update abstract & prepare closing documents
$9,000 professional fee to buyer’s agency
$9,000 professional fee to seller’s agency
$50 recording coasts
$295 administrative costs
$278,705 net – (minus) property taxes due from January 1st to day of closing. + (plus) all escrows need to be requested after closing by the seller and will be mailed direct to the seller.
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