Selling your home may seem simple, but it actually can get pretty complicated, so it’s important to understand the process in order to make the best financial decisions. Inspections and appraisals are an important part of the process when selling your home in SW Florida. Read on to find out what home sellers need to know about inspections and appraisals in SW Florida.
Contingencies to a Contract
Inspections and appraisals are an intricate part of traditional real estate contracts. These contracts typically have an inspection contingency or due diligence contingency. This protects buyers, who are given a specific time period of time to inspect the property before they are fully committed to buy the home. Should there be any issues found with the in SW Florida, the options for both buyer and seller are clearly outlined in the contract.
For example, a buyer makes an offer on a home and puts down earnest money of $1000 to take the property off of the market. Typically, the buyer would have 15 days to inspect the property for any defects. This allows the buyer time to do a thorough inspection of the home before he is fully committed to purchase the home. This includes items such as air conditioning, heating, plumbing, electrical systems, water damage, termites, and the condition of the roof and foundation. The inspector will prepare a report for the buyers, to make them aware of any issues that were found. These out of pocket expenses can quite literally run into tens of thousands of dollars, depending on the severity of the problems found in the inspection.
It is wise to schedule a home inspection whenever purchasing a new home. If the inspection turns up major problems with the home, the buyer can either ask the seller to reduce the price of the home, make the needed repairs, or cancel the contract. The buyer would get their earnest money returned to them if they decide to cancel the contract before the inspection period ends.
If the buyer does nothing the 15 day inspection period passes, and the buyer cancels the contract due to inspection issues, the buyer loses the earnest money to the seller, a penalty for missing the deadline. The seller lost 15 days of selling time on the market but is compensated a little for the inconvenience.
Should Buyer’s Have an Inspection! HECK YEAH!
Appraisals can be costly, but if you’re getting a loan from a financial institution, they are required. Appraisals compare your property with others that have recently sold. Other homes that have sold are called “comparables”. Comparables must be as similar as possible to the house, and they have to be nearby, usually within a mile.
Appraisers have predetermined values for bedrooms, bathrooms, and the like. They add value to a property with more features than the comparable properties, or subtract from the subject property value for what may be lacking, such as having only a two-car garage, when those nearest all have three-car garages. Mortgage lenders require the appraisal to meet the loan-to-value (LTV) ratio. Lenders use this measurement as a guideline, the lower the resulting number, the lower the risk on the loan. Should the loan-to-value be a higher number, the lender may require mortgage insurance to be purchased as well. Wise buyers will ensure that there is a contingency clause in the contract based upon the appraisal results as well.
Failing to understand the impact of inspections and appraisals in SW Florida can lead to disastrous mistakes which can end up costing a home seller valuable time and a great deal of money. Sadly, buyers may find their house isn’t worth what they thought it was worth after the inspection and appraisal have been completed. With these and many other clauses that can be in place to protect buyers, problems may cause sales to fall through because the lender will not approve the loan. The buyer may ask the seller to pay for repairs, out of pocket, before closing or to deduct the value of the repairs from the price of the home and renegotiate a contract. All the while, the clock keeps ticking and the seller is now paying to hold the property longer than expected, meaning that in reality, they are losing even more of the valuable equity that had been built in the home, and actually making even less on the sale.
SWFL Homes LLC makes real estate transactions easy without any of the problems that accompany inspections and appraisals in SW Florida. At SWFL Homes LLC our network of professionals will lay out a plan to save valuable time and avoid what could potentially be thousands of dollars in repairs. A professional buyer’s purpose is to solve problems for buyers or sellers, so why not let a professional buyer, like those at SWFL Homes LLC, guide you step by step through the process? Send us a message or give us a call today to learn more! (941) 999-3163