Listing Agents: Do’s and Dont’s When Financing Real Estate is Involved

This blog will deal with advance strategy of listing a property which will save your seller both time and money when financing is involved. What many listing agents don’t understand is that all cash sales and financed sales are not the same when it comes to listing a property. If a property is going to be finananced their are several things a proacitve agent needs to do in advance of both the appraisal and closing. What items you mention online in the listing of your seller’s property can have dire consequences both in delays, time spent and expense. I already have a blog on this site that is a companion to this one, but deals with lisitng a property all cash. Below is a list of what a proactive listing agent does.

LISTING THE PROPERTY CORRECTLY

It is important to understand that the appraiser will view your listing and see the repair or liability issues you place in there and will require them to be repaired prior to close. YOU CANNOT CREDIT MONEY TO THE BORROWER FOR KNOWN REPAIRS. (Solution for this covered later).

Listing a property that will involve financing should not over disclose problems with the property both in repairs or code vilolations. An agent’s over concern with liability can kill the sale of a property before it even gets to escrow. So why Isn’t over disclosure in a listing a good idea for liability purposes? First of all, it is the wrong place to disclose. The listing is public information that the appraiser will also see before he appraises the home. Please leave out of your listing any comments related problems including code or public safety violations, termite report repairs, roof condition, sceptic, wells, dry rot or any other detriment to the property. These issues instead should be put into the TRANSFER DISCLOSURE STATEMENT which the lender never sees and has to be given to the buyer in 7 days. This will cover everyone’s liability as to the issues with the home. If the listing agent and the buyer’s agent does not list any of the problems with the property in the contract or the listing, then they will not be picked up by the lender or the appraiser unless the appraiser notices them when he inspects. In many cases the appraiser misses all these items. This is not defrauding the lender. The lender does not want to know about them and it is the appraiser’s report is what is relied upon for the condition of the property and the purchase contract. You are covered by the transfer disclosure statement.

MAKING THE HOME APPRAISAL READY

  1. After lsiting the property, a proactive agent will make sure that there are carbon monoxide detectors and smoke alarms on all levels of the floor plan and that the water heater is double strapped and elevated on a slab or wood platform BEFORE the appraiser comes out. If this is not done, the appraiser will call these Itimes out and have to reinspect once those items are installed. This will cost the buyer up to $300 for the reinspection and could delay the close of esscrow.
  2. Any debris in or outside the house can affect value, please remove.
  3. Any old appliances, couches or other items sitting within 2 feet of the home will show up in the appraisers photos and the lender will see it. Please move these itmes away from photo range.
  4. Any chipped paint any where on or in the property will have to be painted so you should do this before the appraiser comes out if yoiu don’t want to have it reinspected.

Finally, any repairs that arise out of the buyer inspection period can credited back to the buyer from seller in the form of recurring and non-recurring closing costs that the buyer is paying. Remeber credits are compensating for these are repairs the lender does not know about. So for example is a roof would cost $10,000 to replace, then the seller would either replace the roof at the close of escrow or credit the borrower with $10,000 in both recurring and non recurring closing costs. Non recurring costs are all loan, title and escrow fees and any interest due..

Ralph Migliozzi,

Broker Originator, Serving Northern California

 NMLS 282851 DRE #01002038

(p) 530-330-3073

Posted in blog and tagged , , , , , ,