St. Croix Real Estate
Ava Gail Bourdon

St. Croix Real Estate
Your Home Team Advantage For Your Residential & Commercial Real Estate

Author: Ava Gail Bourdon

What Goes With You When You Sell Your Home?

When you are getting ready to sell one of the things you will need to consider is what stays in the home and what goes. There are certain things that are generally considered to be part of the home and others which are often negotiable. Before you put the home up for sale you will want to figure out what things you absolutely want to take with you and what might be up for discussion. If you know where you will be moving to next then you are already one step ahead of the game because you know what is in your new place. If not, or if you are moving far away, it can be trickier to decide what is worth moving or putting in storage and what is worth offering to the buyers of your home.

Generally things that are not attached go with the seller. If there are things you are absolutely certain you want to take with you that are attached, make sure you tell your Realtor and so that they are included in the listing and you don’t end up breaking any potential buyer’s heart.

Some people, especially if they are downsizing or moving far away, may choose to include the furniture as part of the package. This can be tricky because furniture will not factor into an appraisal value so if it adds significant numbers to the sale price then the sale may need to be done separately. These items can also be included as a value add for the potential buyer.chandelier

There are several areas which generally feature in this type of discussion:

Lighting: Lighting fixtures are often something that people are attached to because they often reflect personal style. In general things that are attached to the home such as lighting fixtures are generally considered to be part of the home. For example, when I bought my condo, the owners wanted to take their crystal chandelier in the dining room with them. For me this wasn’t an issue, the chandelier wasn’t my style and I was happy with having the chance to replace it with something else. However if I hadn’t known this in advance and I had my heart set on the way the dining room looked with the chandelier it could have been an issue. Fixtures are to remain in the home unless the seller explicitly stated the item is not to be included in the sale. The seller also needs ensure that the item be removed without damage to the home. Lamps are moveable items and are considered personal items that can be claimed by the seller when they vacate the home.

Appliances: Appliances are often an area where the buyer and seller can negotiate. In some cases, the buyer may actually prefer that the seller remove appliances because they have their own. Other times, the seller may be ready to take the appliances but could use them as an incentive to get the buyer to pay the list price because the buyer won’t have to pay for new appliances. If you are absolutely certain that you want to take the appliances with you make sure your agent notes that. If you are willing to negotiate let your agent know that too. Most appliances are moveable items that the seller would normally be allowed to remove from the home. Moveable items are considered personal items or possessions of the seller.

Landscaping: Plants, shrubs and trees are items that are affixed to the property and will remain with the home however if you have container gardens or perhaps flower-filled urns on the front porch those can be negotiable. Backyard equipment, such as lawn chairs, tables, swings and grills, are all considered personal items. The swing set may get a bit tricky because it can be claimed that it is attached to the ground in some cases. The seller may often be very willing to sell all of the backyard items for a price.

Window Treatments: Window treatments are another area that can be negotiated. Often window treatments were bought to fit the specific size and shape of the windows and so the seller may not be interested in taking them to a new home. If you are planning to leave the window treatments behind be sure to let your agent know so that it can be added to the listing. This is often a great selling point to use because it means the person can move in and not have to worry about privacy.


Breaking Down the Buyer’s Offer

After all the preparation and waiting, you finally get the call you’ve been waiting for: A buyer is writing an offer. First, you want to know the price — but don’t get excited or exasperated by the number until you see all the terms. Contingencies, seller concessions and real property requests can dent (or boost) the bottom line. It’s possible to get a full-price offer and yet net less money than you would get from an offer that’s $20,000 under asking price.

iStock_000006136827XSmall1For that reason, agents usually don’t want to tell you the amount of the offer over the phone. Ask your agent to explain the terms in full. Although real estate sales contracts can vary by state, they generally need to include similar information. Here’s what could affect your bottom line:

Purchase price. This is the line everyone cares about the most. But before breaking out the champagne, read on and adjust the price based on what the buyer wants as part of the offer.

Earnest money deposit. This deposit shows that the buyer is serious. If an offer might be considered weak, a buyer may include a large earnest-money deposit to show that they are committed to purchasing the property. The buyer usually dictates where the deposit is held, and that’s rarely in the hands of the seller — most of the time, the check goes to a third party, such as escrow, an attorney or even a broker’s trust account. This depends on local real estate custom. The earnest-money deposit usually goes toward the buyer’s down payment. If either party is unable to meet the agreed-upon contingencies and the deal falls apart, the deposit is returned to the buyer. Most real estate contracts also have a section on any disputes going to arbitration, so the odds are doubtful that the seller can get all or a portion of the earnest money deposit if the buyer backs out.

Mortgage contingency. This is likely the first contingency you will see in the offer. Here, the buyer states that their offer is based on acquiring a mortgage for a certain term and rate. Make sure both are realistic. Occasionally, a buyer states unrealistic figures, such as a 30-year, 5 percent fixed-rate loan with no points, when that type of loan carries a 7 percent rate with 1.5 points in your area. If you don’t address that sort of discrepancy, a buyer could tie up your property and then back out because of cold feet or because they find something they like better. It doesn’t happen often, but be aware of the possibility. Also, make sure there is a realistic time limit stated in the contract; otherwise the buyer can take as long as they want looking for terms that they are not going to get. This contingency clause is also where a buyer can specify whether they want you to carry back a first or second mortgage.

Seller concessions. Such concessions can include anything from the seller paying some or all of the buyer’s closing costs to agreeing to set seller funds aside to pay for a new roof. If you are in a hot market, buyers usually ask for few concessions, because they know they aren’t likely to get them. The cooler the market, the more seller concessions the buyers want.

Inspection contingency. Here, the buyer states that their offer is contingent on them accepting a home inspection report that they pay for. The clause also can include contingencies for the pest, well or septic inspections.

Personal property. This is where the buyer can ask for everything and the kitchen sink. Basically, anything physically attached to the property is considered part of the transaction and would belong to the buyer — light fixtures, the dishwasher, custom bookcases. Furniture or a refrigerator are not attached and therefore belong to the seller. As the seller, though, make sure to state in your listing or any counter offers if there are “attached” items that will not be included, such as the Viking stove that matches your fridge or your antique light fixtures. Buyers may also include items they want removed before closing, such as the dilapidated shed or the cans of old paint in your garage.

Appraisal contingency. The buyer includes this to make sure the house appraises for the sales price. In rare cases, a bank won’t appraise the house for the agreed-upon price. This contingency is more common when there are more seller concessions. For example, if the agreed-upon price is $300,000 but includes up to $10,000 in buyer closing costs, the house may not appraise if it’s really worth $295,000.


Understanding Earnest Deposit

The earnest money deposit is an important part of the home-buying process. It tells the seller you’re a committed buyer and helps fund your down payment.

earnest depositWhat Is Earnest Money?
Earnest money is a deposit on the house you want to buy. It shows sellers that you are earnest about buying their home.

Without earnest money, you could make offers on many homes, essentially taking them off the market until you decided which one you liked best. Sellers rarely accept offers without deposits.

Assuming that all goes well and you buy the house, the earnest money will go toward the down payment and closing costs. In many circumstances, you can get most of your deposit back if you discover something that you don’t like about the home.

How Much Should You Put Down in the Earnest Money Deposit?

The amount of the deposit varies. In a slow real estate market, $1,000 might be enough. When there is more demand for the house, the seller will require more — usually 1-3 percent of the offer.

In some markets demand is so great that the seller will look for a higher deposit before accepting your offer over someone else’s. You can sometimes win a bid if you give the seller a large deposit. In fact, the seller may be willing to come down in price a little if you make a bigger deposit. If your deposit is extremely large, your mortgage lender may want to verify the source of the funds. As long as you can show you’ve had the money for at least 60 days, it won’t be a problem.

When Do You Pay the Earnest Money, and Who Holds It?

You hand over earnest money after your offer on a home has been accepted and you have signed the purchase agreement.In some states, the real estate agent holds the deposit. Always check the credentials of the firm or broker taking the deposit, and verify that the funds will be held in escrow until the purchase goes through.

Never give the earnest money to the seller. It could be impossible to get it back if something goes wrong.

Can You Get Your Earnest Money Back?

If the deal falls through, a small cancellation fee is usually taken out of the deposit, but the remainder remains in escrow. Whoever holds the deposit determines whether you should get the money back under the terms of the purchase agreement.

Make sure that the purchase agreement covers how a refund is handled. Eager buyers sometimes give up their rights. But keep in mind that even if you are pre-approved for a mortgage loan, you can be declined when you apply for one. Standard contracts allow you to recover your earnest money deposit in this case. You can also usually get your money back if you find problems with the property.


Sharing Closing Costs

Closing costs are all the taxes and fees required to complete a real estate transaction. Home sellers often forget that closing costs come out of their selling price, and the expense can be substantial — and are usually unavoidable.

What are all the closing costs, and who pays them — the buyer or the seller? Closing costs vary from state to state and can even differ by county or city. In most states, buyer and seller split closing costs. In other states, the buyer is responsible or the costs are negotiated.

Who pays for what also depends on the market. In a seller’s market, the buyer may pay a greater portion than usual. In a down market, the buyer usually negotiates for the seller to pay a bigger portion or all of the closing costs. Sometimes the buyer’s offer includes closing costs in the price so that the mortgage loan will cover those fees and the buyer won’t have to come up with more cash.

Ask your agent for a standard breakdown of what you and the buyer are expected to pay in closing costs. Here are the typical closing costs that sellers face:

Escrow/attorney fees. Some states require that third-party escrow companies handle real estate closings, while others dictate that attorneys close transactions. Title companies, title agents, lenders, brokers and even real estate agents are allowed to handle closings and/or escrows, depending on the state. These fees are usually split between the buyer and seller.

Transfer or documentary taxes. These are paid either to the state, county, city or a combination, depending on the state. This is also known as a reconveyance tax.

Recording fee. This is usually paid to the county for recording the deed, which shows ownership of the property.

Settlement or closing fee. This is usually split between the seller and buyer and covers the costs charged by the escrow company, lawyer or whoever handles the transaction’s financial transfers.

Brokerage commission. The fee you contractually agreed to pay for the selling of your home.

Pest inspection. Most lenders require a pest report to make sure the property is in good condition. Usually sellers pay for the inspection, and sometimes the seller is responsible for repairing areas damaged by termites, carpenter ants, dry rot, fungus and other pests. Generally repairs can be negotiated, and who pays may depend on whether the market favors buyers or sellers.

Buyers pay many more fees than sellers, with most fees tied to their loans. Buyers may negotiate to include these expenses in the price listed in their offer letter. Generally, the negotiation results in a statement such as “The seller agrees to pay up to $5,000 in buyer’s closing costs.”

Sellers are also responsible for some recurring costs, including mortgage interest on their loan, property taxes, home owner association dues and hazard insurance. The seller is responsible for paying these until the actual closing date; then the buyer takes over payments from the closing date forward. If the seller pays for any of these beyond the closing date, the seller will be reimbursed.

Other items deducted from the seller’s share include any home warranties you agreed to purchase for the buyer or credits you agreed to give the buyer, such as for roof repairs.

Finally, federal law requires that sellers and buyers receive a copy of a HUD-1 form outlining all charges in a real estate transaction.

Repairing Bad Credit: Three Essential Steps to Take

Having bad credit is scary and disheartening, especially if you are trying to buy a home, but it doesn’t have to be a life sentence. Many credit problems can be fixed with time and diligence. When trying to repair your credit it can be tempting to want to opt for a quick fix but the best approach is often a reasonable and methodical one. The good news is that in many cases you can repair your credit on your own.

Assess the Situationcouplewithbills

You don’t know what you need to fix until you assess the situation. Visit and obtain your credit score. This will alert you to any potential problems you may not be aware of. You can request your credit report once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. This will keep you apprised of any situations you may need to resolve and verify that no one else has used your identity to obtain credit.

If you find inaccuracies, the Federal Trade Commission advises that you tell the credit reporting company in writing about the inaccuracies. The FTC recommends sending a letter with copies of documents that support your position and requesting that items be removed or corrected. The credit reporting companies must investigate the claim and give you the results in writing as well as a free copy of your report if there has been a change. If you request it the reporting company can also send an updated report to anyone who received it during the past six months (or the past two years for employment purposes). You can also follow up with the creditor in the same manner, providing copies of documents that prove your position. If the investigation doesn’t resolve the dispute you can request that the credit reporting agency include a statement of the dispute in your file and in future reports.

Pay Your Debts And Renegotiate As Needed

Nothing delights banks and finance companies more than regular, incremental payments. If you owe more than you can reasonably pay off over time or your monthly obligation is unaffordable then it may be time to negotiate with your creditors. Creditors would rather have some payment than none at all. You may be able to negotiate partial payment of your debt. Lenders do not have a negative view of partial payment settlements because that shows that a debtor took responsibility for bad credit repair. Once your bills have been straightened out, close all unused credit accounts and keep only a couple of cards to re-establish yourself in lenders’ eyes as a responsible credit user.

Use Your Credit Cards but Keep Balances Low

Having a lot of credit cards with outstanding balances can work against you and having inactive cards is also not advised. The best policy is to consolidate and have a couple of cards that you use and pay off regularly. Carrying a small amount of debt on a credit card with a large limit can work to your advantage because it shows that you can handle credit responsibilities appropriately. It’s a good way to build up your credit score. If you cannot get credit cards you could use secured credit cards to help repair your credit. You pay the credit card company up front and each time you use the card, you’ll tap into the available funds and further your credit repair.

The most important thing is to make sure you pay your bills on time each month. Consistency is key. When it comes to credit repair the most important thing you can do is just keep working at it especially if you are looking for a home. “Interview mortgage brokers and obtain recommendations on them to find the one that works best with you, advises Lee Dworshak of Keller William LA Harbor Realty. “Work with them on improving your credit. You’d be surprised on how much progress you can make in a short period of time. Once your credit is established, your new mortgage broker will be able to show you an entire suite of loan options.”


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