First I would like to thank all clients who have given me the opportunity to handle more than one transaction, and clients who have referred other clients to me. Amy and Ashley bought and sold, Kathy and Jon sold, Leslie and Kent sold, Mary bought, Christine bought, John, Bill, Kathleen and Amy referred. Thank you!
The information below is provided in response to questions I have received during the past months.
New Good Faith Estimate (GFE ) rules! The new GFE is required as of January 1, 2010 to make loans more transparent. HUD declares on its website that it could save the consumer money. Some of the significant changes are:
The GFE is revised to a three page form that summarizes costs.
Lenders and mortgage brokers may only charge for fees related to obtaining the applicant’s credit report, prior to the borrower’s receipt of the disclosure.
Mortgage companies must provide a list of required services borrowers may shop for, affirmatively identifying the service providers they recommend. The list must be provided at the same time the GFE is issued.
The new HUD forms require the charges from the GFE to be directly compared to the actual charges assessed at the settlement and listed on the HUD statement. (As realtors we have always done this to protect our clients).
Borrowers get more accurate information sooner in the process and are given more time to review any changes sent by the lender.
More details such as prepayment penalties or adjustable rates are moved from the fine print section to a more prominent place.
The new system can cause delays if there are changes in circumstances – meaning potentially longer closing times.
Option and Option Period! By paying an option fee the buyer buys the unrestricted right to terminate the contract during the option period and receive a refund of the earnest money. There have been warnings about delivering the option check, delivering it on time and delivering it to the Seller. The option check has to be delivered within two days after effective date of contract to the Seller – not the title company as we used to handle this. It can be delivered to the Listing agent. I take option check and earnest money check at the time we write an offer, and submit copies of these checks at the time we submit an offer. If the option check is not delivered on time and not to the Seller or his agent, the Buyer may have a contract without option period. How much is the option fee? Option fee is negotiable but it often is $ 100 to $ 200, sometimes more but it can become a bargaining chip showing the earnestness of the Buyer especially when we have multiple offer situations. How long is the option period – often around seven to ten days but it is negotiable and might depend on how many time-consuming inspections have to conducted (home inspection, septic, roof, foundation, etc.).
What happens during the option period? The Buyer will have inspections performed, we will negotiate for repair allowances if necessary, will thoroughly inspect the property, be sure that the property does appraise, and settle any other issues that might be a concern. The Seller is obligated to close under the terms of the contract but does not have to agree to any changes the Buyer asks for during the option period in the form of an Amendment. In this case, the contract terminates, earnest money gets refunded and option check stays with Seller. If the contracts proceeds, the Buyer gets credited with the option money at closing.
Should the Seller have the property inspected prior to listing it? I often advocate this because any repairs to be completed normally cost less when the Seller does them than when the Buyer submits an estimate for such repairs. And an inspection helps your property to stand out – especially in this Buyer’s market. Such an inspection report can be attached to the Disclosures and posted on MLS. A Buyer might still get another inspection but could contact the inspector who has performed the inspection and perhaps save money.
Lender-Appraiser relationship: New rules contained in the Home Valuation Code of Conduct are in effect about lenders choosing appraisers. The recent changes were meant to remedy past problems particularly situations where lenders may have pressured appraisers to hit certain numbers. Please ask your lender about your rights with regards to the appraisal, you are paying for, of a home you are about to purchase. Realtors and lenders can talk to the appraisers including requests to consider additional data and to correct errors. Lenders may directly retain the services of an independent appraiser. Lenders may choose from a rotating roster of appraisers approved by Fannie Mae and Freddie Mac – but are not required to. Lenders may consent to transfer an appraisal to a new lender/broker. And the borrower must make payment for the appraisal to the lender or third party hired by the lender but not directly to the appraiser.
Is anybody still talking about MOLD? Ten years ago mold was a big scare and a big insurance issue. Mold is common in most homes but if unmonitored can quickly turn a desirable home into a liability. First size up the problem, call in a home inspector, if necessary call in a mold inspector (I can give you names). If mold is found in very small areas, normally less than 10 feet, and the inspector advises it, do your own clean-up. Here is how:
Wear a face mask and rubber gloves.
Seal off the area so that the tiny spores do not spread to other parts of the house during the removal process. Open windows, and cover ventilation openings and heat registers.
Wash the affected area with a mild detergent, such as laundry detergent and warm water; or use a quarter cup bleach and a quarter cup water. Do not mix ammonia and bleach – fumes can be toxic.
Dry the area completely with fans, dehumidifiers and natural ventilation.
Apply a borate-based detergent solution, do not rinse, to prevent mold from forming again.
Do not take shortcuts like caulking or painting over mold – it will peel off and mold will resurface.
If you see anything suspicious or if mold reappears, call a mold remediation company. I can give you names.
(Excerpted from Realtor Magazine)
Remodeling questions – several clients decided to remodel rather than sell and these concerns came up:
What your remodeling contract should contain:
Name, address, phone, license number of contractor; details of work the contractor will do; a list of materials to be used – size, color, model, brand name, etc.; approximate start and completion date; required plans; written notice of your right to cancel contract without penalty within three business days of signing it; financial terms, payment schedule; a binding arbitration clause; make sure all items you request are included; warranty coverage for materials and workmanship.
Quick steps to go greener: look for Energy Star – rated appliances; switch to compact fluorescent light bulbs and replace them in highly used areas like porch lights, bathroom and office; use low-flow shower heads, low-flow toilets; use power strip – even in stand-by mode, consumer electronics use a little power, and turn power strip off when not used; turn water temperature for your washing machine or dishwasher down to 120 degrees; seal hidden air leaks in attic, basement, crawl space.
Call me if I can help!
Best,
Elisabeth