Archive for the ‘Closing’ Category

It Takes a Village To Buy or Sell in the Brooklyn Real Estate Market!

Friday, October 30th, 2020
Couple Holding keys to their new home

Buying or Selling a home in the Brooklyn Real Estate market can be a complicated process. Truly it takes a village of people for the purpose of completing just one home sale.

Wikipedia explains the phrase “It takes a village to raise a child” as an African proverb. It means an entire community of people must interact with children to experience and grow in a safe and healthy environment.

The phrase “It Takes a Village” has been adapted over the years for other references. In fact, it is a great explanation of what the home buying and selling experience is like in the Brooklyn Real Estate Market.

How many different parties do you think are involved in one real estate transaction? You may find it surprising. Let’s take a look.

SELLER

First, you need to find someone ready to sell their home. We often hear the term “Motivated Seller.” What would make a homeowner a “motivated seller?” Motivation to sell a home can come for many reasons.

When a buyer hears the seller is motivated, it may trigger many thoughts.
  • There is room to negotiate the price.
  • The owner may be open to making concessions to consummate the sale.
  • There are material defects to the home or property that the seller doesn’t want to address.
  • The home is near foreclosure.
  • The seller is ready to take the home off the market and wants to see any offer.
  • The seller is in a financial bind.
  • The owner MUST sell now.

Determination, not desperation, may be what motivates a seller.

There are many reasons a seller would want to sell a property that is not related to the desperation thinking above.
  • Job relocation
  • Downsizing
  • Upsizing
  • Retiring to a new location
  • Divorce
  • Settle an estate

Knowing the seller’s motivation would be an advantage in negotiations. However, you may or may not understand the seller’s reason for selling when you place your offer. 

BUYER

Next, you need someone qualified and ready to purchase a new home. Obtaining a pre-approval from a reputable lending institution makes you a qualified buyer. They also have proven they have the necessary funds and qualifications to buy a home in the Brooklyn Real Estate Market. The reasons someone may be interested in purchasing a home vary as much as the reasons a seller would want to sell.

Some reasons to purchase may be:
  • Achievement of “The American Dream”
  • Sound investment
  • Build equity
  • Potential tax benefits

The buyer’s motivation is as important as the seller’s motivation. An apathetic buyer can take a home off the market for some time and then decide to terminate the sale. Your real estate agent can help you vet the buyer’s motivation. Unfortunately, you would need to have a crystal ball to definitely know what will happen.

LENDER

In hopes of financing the home, the buyer will choose a financial institution for their mortgage. Surprisingly, the lowest interest rate is not always the best option. You may want to compare several lenders.

Obtaining an estimate of the lender’s fees can be eye-opening. Some things you will want to compare are:

  • Interest rates
  • Lender fees
  • Cash required to bring to closing

By all means, it is essential to find a reputable lender who is knowledgeable in lending in your area. Out of state or internet mortgage companies may not know the intricacies of a home purchase in the Brooklyn Real Estate market.

The lender should do a thorough analysis of the buyer’s financial situation to determine if they qualify for a mortgage. The buyer should offer evidence of their qualifications when they make an offer on the property.

There is a difference between a pre-qualification and a pre-approval. A pre-qualification provides the buyer with a general estimate of what they can afford. A pre-approval is more valuable because the buyer’s credit has been checked, and documentation has been verified to approve the buyer for a specific loan amount. A pre-approval can be valid for 60-90 days and should be re-verified to confirm no buyer’s status changes.

REAL ESTATE AGENTS

Typically you will find two real estate agents involved in any Brooklyn Real Estate sale. The first agent works on behalf of the seller, helping them prepare their home and price it competitively. The second agent represents the buyer and helps evaluate an offering price and terms once the right home has been found.

The real estate agents work together, bringing the buyer and seller to an agreement on the best terms possible.

You will want to find a trustworthy agent to represent you in either a sale or purchase.

What are the qualities of a trustworthy agent?
  • Local Market Expert
  • Proactive
  • Knowledgeable
  • Good Communicator
  • Educated

Your real estate agent should hold the designation of Realtor®, which means they belong to the National Association of Realtors® and their local Board of Realtors®. Notably, a member of these associations must follow guidelines to ensure they are fair and ethical in their business practices.

Home Inspection Checkmark

HOME INSPECTORS

A critical component of the buying process is the home inspection. The purpose of the home inspection is to determine if there are any major ticket items or safety issues affecting the home. In reality, these are items that the seller may not have been aware of. Nitpicking the seller for trivial issues or updates that were visible upon your visit to the home is not the purpose of a home inspection.

The home inspector will usually look at the following areas of the home:
  • Exterior structure
  • Roof
  • HVAC System
  • Hot Water Heater
  • Electric Panel
  • Outlets
  • Windows
  • Plumbing in kitchen and baths
  • Attic

Be sure to check the credentials of the home inspector you choose. There are certifications required for home inspectors in the Brooklyn Real Estate market.

The home inspector will highlight areas of concern. You will also learn from the inspector the home components that may need to be replaced in the future. With this information in hand, you can make an informed decision about whether this is the right investment for you.

LAWYER

You will most likely need to hire an attorney to represent you either as a buyer or a seller when purchasing in the Brooklyn Real Estate market.

What is the lawyer’s role in a real estate transaction?
  • Write and negotiate the sales agreement.
  • Represent their client’s best interest.
  • Review closing documents.
  • Attend the closing to ensure a smooth transition.

For more information on the importance of real estate lawyers, see this previous blog post that explains it all in detail.

TITLE COMPANY

The title company researches the history of homeownership to determine the buyer receives a clean title to the property when they take possession of the home. In the event that they find any issues on the chain of title, they will resolve them before closing.

They will also research any judgments, liens, outstanding mortgages, or unpaid taxes on the property.

The title company will then prepare a report (abstract of title), revealing all the research findings. This document will validate the title of the property.

Title insurance is issued to protect the lender and new owner against any lawsuits or claims undetected on the original title search. The lender will require a title insurance policy.

If you are a cash buyer, it would be your decision to purchase title insurance. Although, if you are purchasing a home with cash it is highly recommended that you purchase the title insurance policy.

APPRAISER

An appraiser will visit the home to prepare an opinion of value for the lender. Do not confuse the appraisal with a home inspection but, the appraiser may note any safety issues that are apparent to them. Requirements for an appraiser and a home inspector are different. An appraisal is not a substitute for a home inspection.

An appraiser will prepare a report called an appraisal that will provide their opinion of value based on several factors.
  • Location
  • Structural Construction
  • Age
  • Bedrooms
  • Bathrooms
  • Condition
  • Square Footage
  • Recent Neighborhood Home Sales

Providing a fair and unbiased assessment of the property can be accomplished by randomly assigning appraiser through a third party.

The cost of the appraisal is an expense the buyer will pay. This is a requirement of the buyer’s lender.

In the event that the home does not appraise for the amount of the sales price, it can trigger a negotiation between the buyer and the seller. If both parties come to an agreement acceptable to the lender, the sale will be completed.

UNDERWRITER

The underwriter works for the lender. Their role is to review the buyer’s information and the appraiser’s opinion of value to determine if the mortgage can be issued for the purchase price agreed upon. The underwriter will evaluate that granting the mortgage to the buyer is a sound investment for the lender.

An underwriter will look at several different areas to determine any risk of the buyer defaulting.
  • Credit and payment history
  • Income and assets of the buyer
  • Downpayment
  • Appraised home value

The underwriter may need to request additional information to clarify any uncertainties that arise to be sure lending the money to the buyer is a solid investment for the bank/lender.

The last hurdle in the process of buying or selling a home is clearing underwriting. The type of loan, buyer’s financial situation, title issues, survey issues, and missing paperwork will all affect the time the underwriter will need to complete the process.

Once they have completed their review, the Underwriter will issue the loan a “Clear to Close” status!

TEAMWORK

Real Estate Team

Buying or selling a home in the Brooklyn Real Estate market involves many parties and this doesn’t include assistants and others within these companies who help. It really does take a village to pull all the pieces of buying or selling a home together.

That is why it is so important to hire the right Realtor® to work for you, whether you are buying or selling a home. Coordinating all these parties takes a thorough understanding of the sale process and experience in the local market.

Charles D'Alessandro

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I can help both buyers and sellers coordinate all the details.

In the event our office is shut down we are always committed to your safety during the COVID-19 health crisis in compliance with the State of New York public health policies. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

How Much Money Will You See From the Sale of Your Home?

Tuesday, June 30th, 2020

Big question, “How much money will you actually see from the sale of your home?” It’s one of the first questions sellers ask when they put their home on the market. But there are a lot of factors that come into play when calculating your home sales profits. And sellers are often blindsided by the closing costs.

Home sales profits
Home seller, do you want to know how much money you’ll see from the sale of your home? Of course, you do!

What are Closing Costs?

In New York, real estate closings are very technical procedures. And when you close on a property, it involves costs.

Closing costs are fees paid by the buyer and the seller when the title of the property is transferred from the seller to the buyer at the close of a real estate transaction. And they are separate from your agents’ commissions.

Buyers pay for more at closing than the seller does. But it’s usually the seller’s responsibility to cover both agents’ commissions. And real estate agent commissions run between 4 to 6 percent of the purchase price.

As the seller, your closing costs are subtracted from the profit you make on the home.

What Fees are Deducted from the Sale of Your Home?

According to Mosheslaw.com, the closing costs you can expect to be deducted from the sale of your home at closing can include:

  • Fees the lender charges you to process and finalize your loan
  • Appraisal fees
  • Inspection fees
  • Credit search fees
  • Title search fees
  • Real estate attorney fees for closing
  • Transfer taxes
  • Prepaid property taxes
  • Prepaid interest
  • Homeowner’s insurance

These costs vary by lender. They also vary depending on what type of property you are purchasing – a house, co-op, or condo. And they equal about six to ten percent of the sale price of your home.

Transfer taxes are a major fee that you as the seller will pay. In New York, transfer taxes depend on the type of property you’re selling. But you can plan on paying 1 percent of the sale price for a residential property selling for $500,000 or less. If the sale price is $500,000 or more, you can expect to pay a transfer tax of 1.425 percent. The State of New York charges the seller $4 for every $1,000 of the sale price.

You should also be aware that as the seller, you may incur a Capital Gain tax when taxes come due at the end of the tax year.

Estimating closing costs

 Mosheslaw.com offers a free consultation for closing costs for sellers in New York.

What are the Average Closing Costs for Sellers in New York?

Closing costs for sellers in New York are slightly higher than costs for buyers. They range from 8 to 10 percent for sellers. It’s crucial to have an experienced real estate attorney with you throughout the entire real estate transaction, but especially during closing. Why? Because simple mistakes made during the property sale negotiation or when the paperwork is being filled out could cost you thousands of dollars. And an attorney who doesn’t practice real estate law, much of the real estate transaction process will be foreign to them. Thus, it is extremely important that you hire an experienced real estate lawyer.

As a seller in New York, you can expect to pay the following closing costs:

  • Attorney’s fees vary depending on the time they spend preparing documents and giving advice
  • County clerks charge $30 to $100 for recording fees
  • Transfer Tax in New York is about 1.825 percent of the sale price
  • Mortgage contracts provide for the repayment of the outstanding mortgage. Buyers won’t take usually take a property unless the mortgage for the property is paid off before closing. This cost depends on the amount of the remaining mortgage, so this amount is impossible to estimate.
  • Your real estate broker’s commission is 5 to 6 percent of the sale price

What You can Expect Before and at Closing

Before closing, a lender is required to list all closing costs in detail on an initial loan estimate when you apply for the loan. And they must update their closing costs estimate a few days before you and the buyer close. These updated closing costs must be disclosed on the Closing Disclosure. This allows you to know what your closing costs will be and allow you to be prepared for them before closing actually takes place.

Closing usually occurs between 60 and 90 days after the contract is signed. After the contract is signed, the buyer sends your attorney a down payment. Down payments in the State of New York average around 10 percent of the purchase price. And the down payment is held in an escrow account.

If the buyer walks away from the contract before closing day, they risk losing their down payment without a justified reason, aka a mortgage contingency clause.

In preparation for closing, your real estate attorney will:

1. Order a title report to determine if there are unsatisfied liens or property violations for you to resolve before closing

2. Complete paperwork requested by the lender and deliver the documentation required

3. Help the buyer calculate the amount owed to you at closing

4. Determine how much you will owe to lenders, the title company, and third-parties (co-op boards for example) who are involved in your real estate transaction

5. Represent you making sure the deed, transfer tax returns, and mortgage documents are in order, and that they state what you agreed to previously

At closing, you will pay your real estate attorney and other closing costs.

Assisting You in the Sale of Your Home in New York

There are a lot of additional requirements and local real estate transaction customs in New York City. Again, an experienced real estate attorney will walk you through your real estate transaction making sure everything is correct and without issues.

If you are considering the sale of your home, contact me, Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. With over 30 plus years as a Brooklyn real estate agent and broker, I can direct you to an experienced real estate attorney and help you sell your home.

Our office is completely shut down and committed to your safety during the COVID-19 health crisis in compliance with the State of New York public health policies. I can be reached by phone at (718) 253-9600 ext. 1901 or by email at [email protected].


Charles D'Alessandro

Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 1901

What are Your Responsibilities for Closing the Sale?

Monday, April 30th, 2018

Closing

What are your responsibilities for closing the sale of your house?

Congratulations! You’ve sold your house and have agreed with your buyer on a closing date. And everything that happens from the time escrow is opened until the final paperwork is recorded at the county courthouse is known as the closing.

Escrow will order the preliminary title report, the payoff balances from your lenders, the property tax balance due either to you or the county and other essential paperwork needed to complete the sale. But as the seller, what are your responsibilities for closing the sale?

Your Responsibilities as the Seller

During this period known as the closing, your responsibilities as the seller are to:

  • Maintain the house
  • Negotiate and repair issues the buyer’s inspector finds. Make sure repairs agreed upon are completed for the buyer’s final walkthrough.
  • If your buyer’s lender requires a survey of the property, review the document. If you think something is wrong, question the boundaries.
  • Notify your utility companies of your last day of service
  • Finish packing, loading up and moving out by the closing date

But don’t cancel your homeowner’s insurance policy yet. Wait to cancel it until the transfer of ownership has been recorded.

Your Responsibilities on Closing Day

On the day your home transaction closes, your deed is sent to be filed at the county courthouse. You and the buyer will sign a stack of closing documents at the title agency at separate times. You as the seller usually sign your stack of documents before the buyer signs their stack.

Agent commissions, mortgage payoffs, and down payments will all be paid on closing day. And if there are proceeds coming to you, you will receive a proceeds check.

At the time the buyer signs their stack of documents, they will receive the keys, remotes for the garage doors, and possibly receipts from any work that was agreed on to be done.

Bring the following with you on closing day:

  • The deed to your home, if the home is paid off and has no mortgage or liens
  • Your driver’s license or passport for a photo ID
  • If required, bring a certified check for the amount told to you by escrow
  • The keys, garage door openers, and security codes for the house

If you have been keeping warranties and instructions for heating, cooling, and plumbing systems, as well as for the appliances that will stay with the house, leave them for the buyer when you move out.

Your Responsibilities for Expenses as the Seller

  • The outstanding mortgage
  • Real estate commissions
  • Property taxes, utility bills, homeowner’s insurance, and condominium dues, if any are due (most of this is prorated at closing)
  • Escrow, title and/or attorney fees

Warranties are a kind of insurance policy that guarantees the mechanical systems and appliances for the year. If you live where home warranties are popular, this could mean another expense for you.

If your sales price doesn’t cover the total cost of paying off your loan and the other costs of sale, whatever you agreed to pay at closing will be deducted from your selling price or proceeds.

You can determine your closing costs will be here.

For more information on what your responsibilities as seller on closing day are, contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate at (718) 253-9600 ext.206 or email [email protected]. With over 30 years of experience in the Brooklyn real estate market, Charles is a Brooklyn Real Estate Agent you can trust to sell your home from the beginning of the home selling process to closing day.


Charles D’Alessandro

Your Brooklyn Real Estate

718-253-9600 ext. 206

[email protected]

Resource: zillow.com

4 Big Changes For “0” Surprises On Closing Day In Brooklyn

Monday, August 31st, 2015

changes

Changes for an easier closing process are coming!

Changes to the new Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) will take effect October 3, 2015. What does this mean to today’s home buyer?

During the housing market crisis, millions of home buyers took on complicated mortgages without understanding them. Many lost their homes in short sales or foreclosure as a result. The U.S. Consumer Financial Protection Bureau is imposing changes to address these problems. It is their desire to improve the home buyer’s understanding of the mortgage process in order to help prevent the loss of homes to short sales or foreclosure for home buyers. The changes imposed on the closing process will be significant.

Key highlights of the changes as of October 3, 2015:

2 New Forms

The Good Faith Estimate, Truth-In-Lending Document and HUD-1 Settlement Statement will be replaced as part of the changes established by the Consumer Financial Protection Bureau (CFPB) in accordance with the Dodd-Frank Act. Home buyers will see two new forms: loan estimate form and closing disclosure form.

The new loan estimate form:

  • Shorter
  • Summarizes the terms of a mortgage
  • Estimates loan fees and closing costs
  • Clearly states the loan terms and estimated closing costs
  • Explains what the loan terms and estimated closing costs are
  • More user-friendly

The closing disclosure form:

  • Shorter
  • More user-friendly
  • Easier to read
  • Provides a detailed account of the whole real estate transaction, from beginning to end, including loan terms, fees and closing costs

The new documents are designed to make comparing loan options and understanding changes that may occur between the time they applied for a loan and the settlement easier for home buyers.

This is a dramatic and significant change to the old way transactions have been handled. Again, the CFPB’s goal is to make closing easier for home buyers. Make It Easier for Consumers

New 3-Day Rule

Home buyers applying for a home loan after October 3, 2015, will be given three days to review paperwork and ask questions instead of rushing through closing without understanding what is going on in the closing process. This rule is a good one. It is the biggest change to mortgage closings and will have the greatest impact on home buyers.

The 3-day rule gives borrowers ample opportunity to thoroughly read the loan terms and closing documents and avoid surprises at the closing table. If they don’t understand something, they will have plenty of time to call their real estate agent, lender or title company and ask for an explanation.

  • Lenders must provide a loan estimate to borrowers within three business days after they apply for a mortgage.
  • Lenders must provide a closing document three business days prior to closing.

While an official loan estimate is only generated after a loan application for a specific property is made, lenders can generate a “fees worksheet” or similar document to help borrowers prepare for their cash needs at the closing during a preapproval process.

Requiring lenders to provide a loan estimate to borrowers within three business days after they apply for a mortgage redefines what goes into a loan application. A loan application requires the borrowers’ names, the borrowers’ income, the borrowers’ Social Security number, the property address, the estimated value of the property and the loan amount. Once the lender has that information, they have three business days to generate a loan estimate. Then the borrowers must sign an Intent To Proceed form to start the normal underwriting process.

Lenders cannot charge any fees except for a credit report and cannot require verification of any information from the borrowers before a loan estimate is generated and the Intent to Proceed form is signed.

Nothing else can be done and no other fees can be charged until the borrowers sign that Intent To Proceed form. The consumers can shop around during that 10-day period for other loans and use the loan estimate form as a comparison tool.

The new CFPB rule requirements will cause lenders and title companies to work in coordination with each other even though lenders are ultimately held responsible for meeting the standards of the regulation.

Until October 3, 2015, title companies prepared and delivered closing documents to borrowers. Now lenders are being held responsible for meeting the deadline. Lenders are typically taking on the preparation themselves.

These changes should be great for home buyers. They are going to make home buyers feel more confident about understanding their loan terms. However, while the responsibility of implementing these changes falls on lenders and title companies, consumers should be prepared for possible delays. Delays in settlements are to be expected until hiccups are worked out. Home buyers can take the following steps to avoid settlement delays:

  • Be aware of the big changes that will take effect October 3, 2015
  • Work with a lender and a title company who are well aware of and knowledgeable of the big changes
  • Realize what a great opportunity these big changes are for today’s home buyer. They are providing plenty of time to read and understand loan terms and closing documents
  • Review documents right away
  • Compare documents to the loan estimate. Make sure they match. Catching errors soon will help avoid significant delays in the closing process
  • Ask questions. Rely on the lender and real estate agent for help with understanding the documents

Here’s one more thing to consider regarding title insurance. Protecting the equity in a property is important. Title insurance protects the lender in case of a title dispute in the future. Homeowners are usually advised to purchase their own title insurance for protection of the investment they have in their home.

The new forms shared by the National Association of Insurance Commissioners and title companies use the term “optional” in reference to the purchase of owner’s title insurance. See this example. Purchasing title insurance has always been optional, but some fear putting “optional” right on the disclosure form may encourage consumers to disregard and pass over it.

Some believe stating “recommended but optional” on the new forms would better encourage consumers to purchase title insurance.

Purchasing a home is the largest transaction in a person’s lifetime, both emotionally and financially. It’s important that consumers educate themselves on the home-buying process. Visit the CFPB site and learn as much as possible about these big changes coming to the closing process on October 3, 2015.

Feel free to contact Charles D’Alessandro, your Brooklyn Real Estate Agent of Fillmore Real Estate in Brooklyn. Get answers to the questions you may have regarding these big changes coming to the closing process on October 3, 2015. Call (718) 253-9700 ext. 206 or email [email protected].

Sources:

http://www.inman.com/2015/08/20/7-trid-facts-that-every-real-estate-agent-should-know-right-now/

https://www.screaltors.org/2015/05/big-changes-coming-real-estate-settlement-procedures-act/

http://www.washingtonpost.com/realestate/closing-time-is-about-to-get-a-little-bit-easier-for-new-buyers/2015/05/13/eaa67038-f049-11e4-8abc-d6aa3bad79dd_story.html