Selling your Crescent City Home - Part 3 - You're in Escrow
Congratulations! You've made it. Your Crescent City home is in escrow. Don't make moving plans just yet. You have SEVERAL HURDLES to overcome.
First, if your agent didn't get a preapproval letter from the buyer when negotiating the offer, you will definitely want to see one now. Why let one more minute go by without knowing your buyer is truly qualified to purchase your home. If that's a go then start praying your home appraises for the purchase price.
The lending industry is in CYA mode big time. Underwriter's, account executives, mortgage brokers and yes, appraisers, have all been made out to be the bad guys in the subprime fiasco to varying degrees depending on who you talk to. This has caused the lending industry to become VERY conservative, overly so. Lending went from, "Just state your income, no verifciation is needed," to the buyer needing to have a rectal exam to qualify.
All that to say that appraisals sometimes come in under the purchase price, even when your agent did their job diligently in pricing your home. Thanks to HVCC there are appraiser's who are now doing appraisals outside of their preferred niche or area of expertise. You don't have to look far to find blog fodder about this topic.
I prepare my clients when we are listing their Crescent City home, especially if they are listing above my recommended price range, that the appraisal may be an issue. If you price your home high and are blessed to get a full price offer, but the appraised value comes in lower than the purchase price, you generally have a problem. If the buyer is financing the home, the bank will not loan above the appraised value. Even if a buyer has cash to bring to the transaction, my experience has been that a buyer is not willing to pay more than the appraised value and who can blame them? Would you pay more for a home than it is worth with prices projected to continue to decline?
If this happens to you then you can, A) Renegotiate, B) Cancel the escrow, C) Hope the buyer doesn't care and will bring the additional cash to close the deal (do not hold your breath on option C). In my humble opinion, renegotiating is the best option as all experts point to increased foreclosures in 2010 which will further decline list prices. If you were breaking even at the originally negotiated purchase price talk to your agent about ways to negotiate other aspects of the offer, i.e. inspections costs, commissions, title/escrow fees, etc. to keep your escrow moving forward.
So your home came in at the appraised value. That's great. What else can go wrong? Don't even ask.
The pest inspection came back with $3000 in section 1 repairs. Holy cow, now you're done for. The buyer has 17 days from the date the contract is fully executed to back out and retain their deposit if they find out anything adverse about your home (the due diligence period). $3000 in pest work would qualify for adverse. This is one example but there are dozens of pitfalls and hurdles to overcome in an escrow even if the home is in perfect condition. Use a full-time agent with a proven track record that sells a lot of volume. If the agent sells a lot of volume, the agents escrows MAKE IT TO CLOSING! No small feet in the current Crescent City real estate market.
If you would like to talk to an experienced, full-time agent regarding selling your Crescent City home, give me a call and I would be happy to do a free market analysis for you using up-to-the-minute market data. Please subscribe to my monthly market report for an indepth look at the Crescent City/Del Norte County real estate market and how it affects you.
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