Real Estate FAQ's
Frequently Asked Questions
As you ask them, I will answer them! Here are some of the most common questions I get asked and the answers to them. As new questions come up, I'll answer them here!
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How Long Do I Have to Own My House Before I Can Sell it?
Aren't Pre-Payment Penalties Illegal in Washington?
How Long Does it Take for the Bank to Accept an Offer on an REO (Real Estate Owned) Home?
Why Do You Guys Charge so Much to Sell a House?
What About "Discount Brokerages"?
Why Should I Buy a Warranty for the Buyer?
How Long Do I Have Before My Home Gets Foreclosed?
How Long Do I Have to Own My House Before I Can Sell it?
The answer to this question isn't a very satisfying one- It depends. Your mortgage or Deed of Trust probably contains language providing for a Pre-Payment penalty, and some sales (such as homes bought from HUD as an owner occupied home) may contain restrictions in and of themselves. Typically your lender will have a provision for a "Due on Sale" clause that will also allow you to sell the property and settle the balance without a penalty- Provided you are paying off the loan with the sale, and not just paying it off early. This answer usually brings on;
Aren't Pre-Payment Penalties Illegal in Washington?
It is illegal to forcea buyer to sign a mortgage or deed of trust in Washington State that contains a pre-payment penalty, HOWEVER, there is no law that says the lender has to offer you a loan that does not have one, nor that the lender must accept you as a borrower if you won't accept one. Any contract (even a mortgage contract) is enforceable once it has been agreed to by all parties regardless of what it contains (with exceptions for racial, cultural, and sexual exclusions or limitations- Those are never enforceable, they are illegal, and if you find that sort of language in a contract, don't sign with those people no matter what). The average buyer will most likely never get a loan that does not have some sort of early pay-off clause in it. In the end, you can accept a contract with a pre-payment, or you can do without a loan.
How Long Does it Take for the Bank to Accept an Offer on an REO (Real Estate Owned) Home?
This is another "It Depends" question- It depends on a lot of things. Each lender has it's own processes that an REO contract must go through for approval. The size and volume of loans the lender issues and services, the demand for homes in the area, the price offered and the net to the lender, the number of competing contracts the lender has received on the property- These all contribute to the amount of time a contract takes for review. Remember that the bank is looking out for itself, and wants to mitigate as much of it's losses as it can. By-in-large, it should take 30-45 days for review, however in a market where there are a lot of foreclosures and a lot of defaulting homeowners it could take longer. This timeframe holds for Pre-Foreclosure homes that are for less than the owed amount, or "Short sale", as well. The closer the net procedes to the seller your offer is to the debt the lender is owed, the faster it will move through the process.
Why Do You Guys Charge so Much to Sell a House?
Ok, a fair question. When you look at all the costs to you for selling a house, the real estate commission is the biggest- What does that money buy you, you may wonder. Well, lets break it down:
In the end, your agent has only made about 1.2% of your sale price for the work he or she put into your sale- When you figure not every house sells, not every house sells within the first 90 day listing, and often agent's spend money marketing homes and never make it back on the house they spent it on. Training, skills, and experience all contribute to your agents worth, and like any other practicing professional, you want one who is worth the fees you pay them.
The biggest thing you've paid for in your sale is the time- The time you DIDN'T have to spend learning real estate law, learning contracts, building flyers, advertising, holding open houses, showing buyers your house, writing contracts, voiding contracts, hunting up escrow providers, hunting up title companies, searching for an inspector... And none of it came out of pocket, just out of profit- Money you didn't have till the agent did the job of selling the home.
What About "Discount Brokerages"?
Discount brokerages thrive in sellers markets- When the market has a lot of buyers it's very easy for a homeowner to sell FSBO and make a good deal of money at it. Discount and Limited Service Brokers do well (and can serve you well) in those markets. Conversely, it is very hard for a seller to get the attention his/her property needs on their own in a buyers market- There's just too much competition. Discount brokerages, both limited responsibility and full service make their money off of sign calls and buyer leads- They attract buyers to their clients home with advertising, however 99% of all buyers end up buying something OTHER than the home they make that initial call about- Whether its listed with a discount broker or a full priced company. The discount brokers convert that call into a buyer client and show them houses (including the one they called on if they are still interested), but typically make a full 3% buyers side commission on someone else's listing. It's not to say that they do not do their due diligence to try to sell your home, just that it is in their best interest to get as many buyer leads from your listing so they can have someone to sell other houses to.
Why Should I Buy a Warranty for the Buyer?
A home warranty is a relatively inexpensive way to entice buyers to view your property, and to consider it over an otherwise identical house. The warranty coverage depends on the policy bought, and typically covers the appliances, wiring, and certain structural and functional parts of the home (such as roofs and carpeting). It's an added bonus that can make your house stand out from the crowd.
How Long Do I Have Before My Home Gets Foreclosed?
Usually, the lender will not start foreclosure proceedings until you are 90 days past due. They have been reporting you to the credit agencies this whole time, however, and so this 90 day window should NOT be considered a "Grace Period"- Technically you are in default as soon as you miss or are late that first time. From there it is about a 60 day process from the time you first receive notice of foreclosure to the auction date. In most cases, you can stop the foreclosure by bringing the account current all the way up to a week before the auction (2 weeks or more in some states and with some lenders)- Either by paying off the arrearages or paying off the loan in full. Once you are in that last week, the only remidy that will allow you to keep the home is to pay it off in full. Once the home goes to auction, it is no longer yours- Whether it sold or not. If it did not sell to a buyer on the courthouse steps the bank gains ownership. In Washington, you then have 21 days after the auction to vacate the property.
Letting the home go to auction is a heavy ding on your credit- Credit that can effect more than just your abillity to get a loan or line of credit in the future- It will also effect what you pay for auto insurance, rental deposits, and a slew of other daily costs of living. If you are facing a situation where foreclosure is imminent, you need to act fast- Hire an agent who is a skilled Distressed Property Consultant or a Home Retention Consultant. If you act early enough, you may be able to negotiate with the lender and find a way to keep the home. If you can't keep it, you can still sell it before foreclosure and safe some of your credit rating. You may even have enough equity to walk away with some money in your pocket. Just don't wait.
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Information from reliable sources but not guaranteed. No two situations are exactly alike- Always seek professional council.
