Navigating the Waters
A real estate contract can be confusing for both buyers and sellers, especially for first-timers. Not only is there plenty of jargon that many may not be familiar with, there are also many deadlines stipulated that must be met. Failure for these deadlines to be satisfied can result in a dead deal, which is why it’s essential that all necessary parties do their due diligence to meet these milestones. Our team is here to make sure both parties fulfill their obligations to ensure a smooth transaction.
Although there are many dates and deadlines in a real estate contract, most of the time they’re not all used. The following are some of the more common deadlines that will be stipulated in a real estate contract that both buyers and sellers need to stick to.
If the buyer does not submit the earnest deposit check with the offer, there will be a certain timeframe within which it will need to be handed in. Usually, this deadline would be anywhere between 24 hours to a few days after offer acceptance. By law, an agent is not able to retain any escrow funds in their possession beyond the legal time limit. There may be a requirement for a second deposit to be made into escrow, which will be stipulated in the contract. Some buyers in Florida require a 5 to 10% total escrow deposit, some lower. Keep in mind, the higher the escrow deposit, indicates to the seller the you are a serious buyer.
The seller is obligated to submit the existing title insurance policy or title abstract within two to three weeks after the date of the real estate contract and before closing. If not, the seller will be obligated to issue a credit to the buyer.
Real estate contracts can come with any number of contingencies, depending on what the buyer or seller agree to. That said, the more common contingencies tend to be for financing, home inspections, and appraisals. These contingencies need to be either fulfilled or waived before a specific date, or the deal can fall through. In addition specifying the contingencies in the offer, the contract will also stipulate specific deadlines for each.
For instance, the default home inspection contingency deadline for the buyer in Florida is 15 days, which is when the inspection will need to be completed and the contingency waived. However, the buyer can specify another date in which the inspection will be completed by. We are beginning to see many sellers requesting a 10 day inspection period, which allows the sellers more flexibility to get the home back on the market should the sellers not meet the buyers demands.
HOA Disclosure Summary
If the property in question is run by a homeowner’s association, then the HOA documents need to be delivered by the seller to the buyer within a certain timeframe. This will provide the buyer with enough time to review the documents to ensure they are satisfactory. If purchasing a condo, villa, or townhome in Florida, your lender will request these documents to ensure the property is "warrantable".
The real estate contract also requires the seller to request these documents from the HOA within 3 days following offer acceptance. By default, the buyer has 15 days from acceptance to waive the HOA disclosure contingency, or cancel the contract altogether.
The buyer may obtain any survey of the property to identify if there are any setback violations or encroachments on the property. The seller will have a deadline to deliver the survey, after which the buyer has a certain amount of time to review the survey and notify the seller of any issues before the contract closing date.
If the buyer does not obtain a survey from the seller or communicate any grievances within the time frame specified in the contract, the buyer can no longer make any objections to issues that probably would have been evident in a survey.
When the buyer initially submits an offer, the seller will have a certain amount of time to either accept or counter it. Usually, the deadline to communicate offer acceptance or a counter offer is 11:59 pm of the same day, or even a day or two later depending on the day of the week. If the offer is accepted within the time frame specified, the contract now enters an escrow period. If acceptance or a counter is not communicated within this timeframe, the contract is null and void. If the seller counters the offer, a new deadline is established.
This is the date that title is transferred from the seller to the buyer and the keys are handed over. If either party does not successfully close on the specified closing date, that party is considered to be in default of the contract. At this point, the other party may choose to seek out legal options. If the buyer defaults, the earnest deposit may be forfeited to the seller. If the seller defaults, the buyer may sue for damages.
The Bottom Line
While the standard NABOR Contract for Sale and Purchase, or, the “AS IS” is common in Collier and Lee Counties, both will include deadline suggestions for various components, these deadlines can be negotiated between the buyer and seller. That said, it’s important to consider what would be an appropriate amount of time needed to ensure each deadline is comfortably met without each party having to either be rushed to meet these dates or have to wait an unnecessarily long time. Once deadlines are inserted in the contract, both parties should do their best to make sure they’re met, or else the contract could be either delayed or killed altogether.
If you're looking to purchase your first home, buy a second, or time to move up or down, reach out to us. We can help!
Selling Your Home in the Fall: What You Need to Know
Most homeowners who are planning to sell their homes in the not-too-distant future think it is best to wait until the spring market to list their homes. Conventional wisdom is that more buyers are looking in the spring months and so the odds of selling your home in the fall at your desired price are better.
Not so fast. Allow us to break down why selling your home in the fall, especially THIS fall, may be the wiser move.
1. SERIOUS BUYERS
People need to move at all times of the year, due to such transitions as a job relocation or life change. The people looking in the Fall are not lookie-loos, but serious house hunters. While yes, there may be fewer buyers in the fall market than in the lightning fast spring market, there are more SERIOUS buyers looking in the fall than in any other time of the year.
2. INTEREST RATES ARE ON THE RISE IN 2018 & 2019.
Interest rates usually go up in the spring so financially savvy buyers are out there looking NOW. Furthermore, The Fed has said recently that they intend to raise rates twice more in 2018 and perhaps three more times in 2019. It’s certainly possible to see mortgage rates above 5 percent before the year is over should the Fed follow through with these plans. This will affect the overall market, but it will especially affect move-up buyers, many of which have mortgage rates around 3% if they purchased 6-8 years ago. A change to a mortgage of 3% to 5% will be a huge jump for many.
3. LESS INVENTORY
The best of all reasons for selling now is that fewer houses are listed in the fall months so buyers have fewer homes from which to choose. A smaller housing inventory means that odds of a buyer wanting YOUR home increase (and could even turn into a multiple offer situation). The inventory of available homes is very low in our area and has been for well over a year now. Since few sellers like to put their homes on in August there is pent-up demand.
If you are looking to buy or sell, a first time homebuyer, or looking to move up, reach out to us. Our team is here and ready to help!
By Sue Goodhart
Top 3 Ways How to Pay Your Mortgage Down Faster While Growing Equity In Your Home!
In order to fully understand how to pay your mortgage down faster, it’s helpful to understand your relationship with your loan. When it comes to managing your mortgage, there are two types of people. I am the first type.
So, what does this have to do with how to pay your mortgage down faster? Everything!
Both types of people, the set it and forget it and the thrill-seeking balance checker, likely are making one monthly mortgage payment a month, twelve months out of the year, and then go about their daily lives. Their amortization schedule aligns perfectly with their loan balance. We're here to help you change the game. Follow these tips and you will pay down your mortgage faster and will constantly be ahead of where your amortization schedule predicts.
Why should you do this? The faster you pay your mortgage down, the more equity you have in your home and the more money you will get when you go to sell your home. In other words, the more you pay towards the principal of your loan (not towards interest or your lender escrows), the less interest you pay, so more money goes towards your equity and less goes to your bank!
Now that you know WHY you should do it. It’s time for the HOW. So, how you ask? It’s easy! Here are some of my favorite ways to pay down your mortgage faster.
Regardless of which of these tactics you choose, they work equally well for both types of personalities. You set it & forget it, while watching your balance improve over time. It’s a win-win!
If you’re thinking about making a move in the near future, we are happy to walk you through which options make the most sense for your specific situation, whether you are buying your first home, moving up, downsizing or anything in between. Reach out below!
Live Naples Luxury
The Team at eXp Realty are available to answer any questions you may have regarding the Naples/Marco Island market. Contact Us.
It pays to have agents who are familiar with the ins and outs of the community. We're here to help guide you.