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Question
What are my responsibilities to sell to a first time buyer for a house I am selling. They want me to pay for everything with -0- down!!!!
Dear Lee;
Thank you for your question… Unless you have a city, county, state, or federally guaranteed loan program that was used when you purchased home with stated conditions when you sell your home, you are not responsible for paying any closing costs at all.
If the loan that the buyer is obtaining is a VA, FHA, or another government guaranteed loan that requires the seller’s assistance in paying certain closing costs, then it is your option to decide whether you would want to participate with that offer or not. You don’t have to unless you want to.
If the loan is a sub-prime loan, one of those loans that you may have heard so much about in the news, once again the buyer can request the seller to pay those closing costs in order to make a deal happen. The lenders allow those closing costs to be paid by the seller up to 3% of the selling price of the home which would be applied towards the buyer’s non-recurring closing costs at the close of escrow. In some cases depending on the lender and the buyer’s qualifications, the seller can credit a dollar amount not to exceed 6% for recurring and non-recurring closing costs. Recurring closing costs are those costs that the buyer will pay monthly or annually, such as property tax and insurance. Non-recurring closing costs are one time charges such as lender fees, title fees, etc… You can also elect to pay just a portion of those closing costs as well, not the whole amount.
If you elect to participate in this type of financing, you would want to make sure of the quality of the buyer to the best of your ability, and have assurances from the lender prior to accepting the offer and then once again with additional assurances that this deal will close.
Usually with 100% financing, the buyer places the minimal amount of good faith deposit due to lack of funds for the duration of the escrow. If the buyer’s release their loan contingency and do not obtain the loan for whatever reason, the risk of the loss of their deposit on their behalf is minimal. On the other hand your risk of taking your property off the market for the duration of the escrow, while passing on other potential offers that may come your way, could be costly in time and money. The sub-prime lenders are a risky bunch right now, with buyers getting loan approval, but the lender pulling from the deal at the last moment.
One other thing, do not pay broker fees on the entire sale price. Your participation in this type of transaction should not cost you any additional fees for your willingness to participate. As an example, if you sell your home for $500K with a 3% credit towards the buyer’s non-recurring closing costs, your net sales price should actually be $485K and the broker fees should be based on that figure, not the $500K figure, and that should be clearly stated in the contract. The only cost you may have to pay would be a property transfer tax to the city and county in which you live if applicable, which is normally minimal.
The market conditions of your community, your desire to sell your home, and the quality of the buyer will be major portions of your decision to sell to this buyer. Just beware of some of the potential pitfalls that may come your way. I trust you have a good Realtor, and I recommend to ask for their opinion or even their broker/managers opinion regarding all your options before signing the contract. After all that is why you are paying them a fee for their representation.
One more thing, not knowing what area of the country you are from makes me want to advise you even more to consult your Realtor to verify all that I have said prior to signing any contract.
Good Luck!!!
Warmest Regards;
John Hendricks
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John Hendricks
Expertise
As a California Realtor for 23 years practicing in Marin and Sonoma Counties, it is now time to provide counsel through AllExperts.com to those who need advise in real estate. My knowledge and experience includes a wide range of resale residential real estate purchases, new home sales, income related investment properties involved in 1031 exchanges, and land. Let me help you in any of these areas...
Experience
John Hendricks has established himself as one of Marin & Sonoma Counties premier Realtors. A native Californian, John is a well-known and respected Realtor in both Marin & Sonoma Counties who has resided in the Northbay since 1976. John began his real estate career in 1986, and since then has distinguished himself as one or Northern California's top producing Realtors. Before joining Frank Howard Allen Realtors, John was an associate of the Prudential California Realty from 1990-1992 where his outstanding sales achievements earned him one of the company's highest honors, the prestigious "President's Circle Membership", presented to the top 2% of associates for sales and earning excellence. Since his association with the highly regarded Frank Howard Allen Realtors in 1992, John has once again established himself as one of his company's Top 10 Producing Realtors in Marin & Sonoma Counties for the years 1993 through 2007 and now in 2008. Five continuous years of outstanding performance has now allowed John to join 15 other Realtors in the prestigious "Lifetime Hall of Fame" for Frank Howard Allen Realtors.
John established a group of professional individuals who specialize in a variety of areas in real estate called, 'Lundmark-Hendricks Fine Homes' This group of professionals are dedicated to the success of representing clients with the greatest amount of care and service when either buying or selling real estate.
Organizations
California Association of Realtors
National Association of Realtors
Education/Credentials
Upon Request...
Awards and Honors
Frank Howard Allen Realtors "Hall of Fame Member"
Chairman's Circle for 10 consecutive years
Past/Present Clients
Joe Louis & Sharon Sigurdson
We want to thank you again for your excellent representation of interests during the recent purchase of our home in Petaluma as well as the sell of our home in Mill Valley. We had the unusual pleasure of working with you during the last year both as sellers and buyers.
We felt that our interests were always paramount and that we received a very fair price for the sale of the Mill Valley house as well as our purchase of our new home. This speaks particularly well of you, because of the recent unstable and chaotic real estate market.
Will Finke
"Quite frankly, we came out of a very difficult situation, which time does not allow elaborating on. This was one of the greatest experiences of our lives as clients. John Hendricks is one of the top businessmen I have ever met."
Bruce & Nancy Rosentreter
"I chose John Hendricks to sell my house. I picked him because I thought he was professional, aggressive, and that he could get top dollar for my house. He fulfilled my expectations completely."
Joy Schuelke
"Since we were trying to sell a high end home in a very tough market, and in the middle of a very rainy winter, the prospects seemed quite bleak. I was convinced at the time, and am even more so now, that without John's tenure, patience, and tenacity, we would have not been able to move the property."
Lynn McCarthy
"I cannot stress strongly enough how impressed I was with the service provided to me by John and his group. Throughout the entire transaction, John was always available, always forthcoming with excellent advice based on his years of experience, and always willing to put in the extra effort to make this a positive experience for me. I feel lucky to have had the experience of working with him."
Lea Lieurance-Turk
"Thank you John for your outstanding real estate services for the past 5 years I have known you. You have made my dreams come true as far as selling and buying property."
http://www.LundmarkHendricksFineHomes.com
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