Heather Morris Realtor Expert for Cedar Rapids, Marion, Hiawatha & Robins

Pending Does Not Mean Sold

 

          In today’s changing market, sale pending does not mean sold.  Most real estate purchase contracts have contingency (escape) clauses for the buyer and seller to perform specific tasks.  Whether you are the seller or buyer of the purchase contract, there are specific dates for the contingencies to be released.  These dates and results determine if you will close your sale.

 

          All contingency escape clauses are important. The financing commitment is one of the most crucial to be released.  Federal lending regulations have changed buyer and house qualifications.  Credit score, tax returns, job time, and down payment need to be verified in writing.  If the buyer qualifies, the house requirements are then determined by an appraiser.  The appraiser determines the bank’s risk for default by comparing the subject house to the three closed similar house sale prices.  The house also needs to be in good repair to pass the appraisal conditions. 

 

          Inspection contingencies are the next step toward closing.  Within 10 days from the accepted offer the buyer may perform inspections of concern with the house.  They may included radon, termite, septic, well, home inspection, lead paint, and mold inspections.  Any concerns will need to be negotiated between the buyer and seller.

 

          Transferring a clear title is usually the last contingency to be released.  Extension of the abstract and review of any unpaid liens or encumbrances will need to be released prior to recording the warranty deed.  Liens may be a mortgage, tax liens, or unpaid judgments.  Any title objections will halt the sale. 

 

          Both buyer and seller have a commitment toward following the purchase contract contingency deadlines.  Having the legal releases from the sale may effect whether the sale moves from pending to sold.  The earnest money holds the buyer to the commitment to close while moving through the sales contract.  To ensure your houses closes, hire a full time professional Realtor or legal representative to handle one of the most important financial agreements of your life. 

 

Heather Morris CRS, GRI, ABR, CLHMS

Broker Associate Skogman Realty

 

          Two new federal lending regulations effective July 30, 2009 will tighten the belts on banks, brokers, and credit unions. In an attempt to protect home buyers from predatory lending practices, the HERA and HOEPA laws were passed.  HERA, the Housing and Economic Recovery Act and HOEPA, the Home Ownership and Equity Protection Act will provide more information to home buyers prior to signing a mortgage.

 

          When interviewing lenders for a mortgage, have them provide a GFE, Good Faith Estimate and a TIL, Truth in Lending Disclosure.  The Good Faith breaks down the out of pocket cost and monthly payment for the home.  The Truth in Lending Disclosure provides the actual cost of borrowing the money over the term.  The Final Truth in Lending Disclosure and costs must be given to home buyers 4 business days before closing or sooner.  The APR, annual percentage rate will now requires the lender to disclose their fees and all third party costs placed on the closing statement.

 

          The appraisal process has also been modified to protect you.  The lender you choose will not have knowledge to who will be selected to verify the value of your house purchase.  The appraiser will review the last six months of similar closed properties to establish value.  Any appraisal required repairs must be negotiated between buyer and seller, work completed, and re-inspected prior to closing. 

 

          The new lending regulations are designed to help you avoid surprises at the closing table.  Comparing lenders payment options with the Good Faith Estimate, determining the true cost of money with the Truth in Lending Disclosure, and tightening the appraisal process to determine a more accurate value, and providing the final numbers before closing all make you a smart home buyer.  The state of Iowa is a leader in consumer protection.  Originating your new mortgage in Iowa through a local lender you trust is another smart buyer decision. 

Green grass and sunny days are amongst us!  It’s time to get moving again.  Spring boom is how I usually describe the real estate market this time of year.  2009 lends a new tag phrase I’ve been using for the market shift we are experiencing, HOT, HOT, HOT!

 

            A cooperating effort between the Federal government, NAR (National Association of Realtor) and increased FHA loan limits gives people the tools they need to buy today.  The Federal government provided a needed stimulus for real estate sales for the bread and butter market; the market recognized as the median home values.  The $8,000 first time buyer tax credit paired with historic low mortgage rates have created numerous new homeowners and move up buyers.  The trickle-up of home sales in the median sale price have converted sellers into buyers for more expensive homes.

 

            The Cedar Rapids Area Association of Realtors sales statistics reflect amazing home movement under a $150,000 sales price.  A seller’s list to sales price ratio has increased and the average days on market has dropped.  The housing shortage created by our recent flood has also increased the demand for this price range of home.

 

            The stimulated market activity for homes under $150,000 has helped the move up market.  The move up market has struggled with a decrease of relocating home buyers.  Increased FHA loan limits with a low mortgage interest rate has allowed buyers to afford more home price for less monthly payment.  Buying a better home for less money equals market stimulus!

 

            If you have ever considered building or moving up to a luxury home, it is your time.  The deflated financial markets remind us that real estate is a good option for your dollar.  The tax savings from the mortgage interest and property tax deduction also create tax relief for you.  Home builders welcome the opportunity to build the home of your dreams for a fair price in today’s market. 

 

            To view homes for sale in the Cedar Rapids, Robins, Hiawatha, Marion, and Corridor area, visit www.heathermorrisrealtor.com.

 

Heather Morris CRS, GRI, ABR, CLHMS

Broker Associate/ Skogman Realty

 

            Owning a home with a septic has a few additional responsibilities then a city sewer line.  As of July 1, 2009, a new DNR Time of Transfer inspection has been implemented called Senate File 261.  Septic homeowners will want to be aware of the new regulations if they are considering selling the real estate.  Vacant properties and homes sold when weather does not permit the inspection will be affected financially.

 

            The new regulation is called Time of Transfer because the recorder will not record the deed until the septic inspection has been done with repairs that may be needed completed or escrowed.  The septic inspection must be completed by a certified inspector with a DNR certificate.  Once completed, the inspection will be valid for two years.

 

            For real estate transfers when weather does not permit the septic inspection, a DNR recorded escrow agreement can be recorded with the groundwater hazard statement.  The buyer must have a binding contract with the seller to have the inspection and any repairs if needed completed within a reasonable time. If you are the seller, an escrow agreement for the septic inspection and possible replacement may take away or diminish the proceeds of your sale.  To protect your proceeds at closing, have the Time of Transfer required inspection before winter arrives or the property becomes vacant. 

 

If the property has not been occupied for thirty days, additional procedures to test the septic are required to inspect the distribution box and leach lines.  This will cost the seller more money.  After sixty days of vacancy, a septic meeting the Time of Transfer will not be accepted until a resident occupies the property for thirty days prior to the testing. 

 

Exclusions to the Time of Transfer septic regulations are real estate sales by court order, foreclosure, estate, transfer from marriage or divorce, and transfer between joint tenants in title.

 

Senate File 261 will be implemented on July 1, 2009 to bring current septic and leach fields protecting our groundwater.  For additional information on this new septic regulations or references of DNR certified inspectors email heather@skogman.com or call 319-350-7653. 

 

 

Heather Morris CRS, ABR, GRI, CLHMS

Broker Associate to Skogman Realty 

 

          To be stimulated is defined as a rouse to activity or heightened action, creating excitement.  This is the plan to better our economy with the American Recovery and Reinvestment Act of 2009 passed in February. This consumer benefit encourages us to move money by purchasing real estate, updating our home with energy efficient components, and is assistance to many distressed neighborhoods and home owners.  Will you be stimulated by any of these opportunities? 

 

          First time home buyers benefit with either 10% of their home purchase or $8,000 tax credit (refund) for homes purchased January 1, 2009 through December 1, 2009.  Buyers are using the tax credit in many ways.  Paying student loans, auto loans, and credit cards to lowering monthly debt.  Another option amongst new home owners is to build up savings or replace the down payment they spent to buy their new house.  

 

          Could a remodel or energy efficiency update be a consideration in the new future?  To promote green and energy independence, 30% tax credit on new furnaces, windows, insulation, weatherization, and other efficiency updates.  You must verify the components you agree to put in your house meet the requirements of the energy bill.  This benefit for updates in your home is available through 2010.  Energy efficient updates will save you monthly utility costs and be a benefit when you decide to sell. 

 

          The stimulus bill also increases FHA loan limits to $271,050.  FHA loans are government backed mortgages allowing fewer down payments, a low fixed rate term, more flexibility with your credit score for qualifying.

Neighborhood stabilization for depressed markets, foreclosure assistance, and low income housing grants are available to balance home values.

 

          Our local real estate market will benefit due to the increase of buyers purchasing homes.  For a summary of “The Recovery and Reinvestment Act of 2009” visit our e-newsletter at www.heathermorrisrealtor.com.

 

Heather Morris CRS, ABR, GRI, CLHMS

Broker Associate/ Skogman Realty

 

             A more recent concern to all homeowners is the vacant homes popping up in our neighborhoods.  The market shift has made us very aware that the house we live next to or kids walk by, could be abandoned.  Abandon houses raise red flags to potential buyers and neighbors.

 

            There are more concerns when buying a vacant house.  A whole house inspection should be completed to help you avoid owning the money pit.  Prior to all inspections, make sure all the utilities are turned on.  De-winterize the property if purchasing in cold months.  Hire a wood destroying insect report to learn if there have ever been termites, carpenter ants, or other pests that cause structural damage.  If there has been a lot of damage, require the seller to provide a structural inspection.  Always test for radon gas. Radon is the second largest cause of lung cancer.  You may not be concerned about the radon level, however when you sell it is most likely your buyer will want a radon test.  If the level is above EPA standards, it’s now your mitigation expense. 

 

            Neighboring a vacant home also has concerns.  I never thought this would happen, however I was recently called to one of my sale pending listings to find a squatter living in the house.  I understand neighbors are not outside due to the cold weather but didn’t anyone notice?  When you learn of a vacant house in your neighborhood, find out why?  Communicate with the owners or the neighbors about safety of the house.  You may want to alert the police if you see unusual activity.  Vacant homes are also targets for illegal activities.  If the property has a real estate sign, call or stay in touch with the listing agent.  Foreclosed homes are traditionally vacant for one year allowing the owner to redeem the property.  Neighbors beware is the best policy.

 

            Legal and clear title is usually stronger possibilities with a vacant house.  Estates, foreclosures, short sales may delay the closing for legal reasons.  The CR Board of Realtors listing and purchase agreements require the seller to release all liens and title concerns so the buyer has a CLEAN deed.  Use a professional Realtor or attorney in preparing the purchase contracts for vacant houses. 

 

            As vacant homes become more prevalent with the market shift, let’s be AWARE for our own personal safety. 

 

 

Heather Morris CRS, ABR, GRI, CLHMS

Broker Associate/ Skogman Realty