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First Time Home Buyers in South Lake Tahoe: Step Nine

November 30th, 2009 categories: First Time Home Buyers, For Buyers, For Sellers, Lake Tahoe Real Estate, South Lake Tahoe, CA, Stateline, NV

Managing Last Minute Issues

This is inspired by a colleague and friend of ours, Rich Jacobson , who owns the Kitsap County Real Estate Blog in Washington state. His work for the source of this series is superb, and with his graces we are retooling it for first time home buyers in our South Lake Tahoe real estate market.

This then is the ninth in a series of articles focused on helping 1st Time Home Buyers successfully buy a house in South Lake Tahoe. Each time, we’ll focus on key events, or steps if you will, in the South Lake Tahoe home buying process.

1. In the first of these, we talked about Mortgage Lenders and Loan Pre-Approval.
2. In the second article we looked at the first five of the top ten traits to look for in finding A Great Real Estate Agent ( Pt 1).
3. In the third article we discussed the second five of the top ten trails to look for in finding A Great Real Estate Agent (Pt 2).
4. In the fourth article we looked at the initial meeting with your agent and Exchanging Vows: The Buyer Agency Agreement.
5. In the fifth article we looked at How Much $$$ Does it Cost to Buy a House?
6. In the sixth article we provided Tips for Home Tourists.
7. In the seventh article we looked at Writing the Offer they Can’t Refuse.
8. In the eighth article we looked at the Home Inspections.

Step Nine: Managing any 11th Hour Incidents

You have completed you home inspection and have successfully negotiated any repair request with the Seller and have released your due diligence contingency.

We now enter the phase of the home buying process where the sales contract is fully formed, with the likely exception of your loan contingency release and final walk-through.

Typically, at this stage there aren’t many places of possible surprise left in the transaction process, but it is helpful to understand some additional steps in the transaction that could lead to unforeseen challenges or delays.

The Lender’s Appraisal

About the time of your inspection contingency release, your mortgage specialist and/or lender will order the appraisal. Your lender must document the house you are purchasing is worth what you have agreed to pay for it.

There are several possibilities that may occur as the result of your appraisal:

1. The property appraises at the full value of your agreed purchase price and with no conditions for funding. This is the preferred result, one which normally assures a closing on time.

2. The property appraises at full value, but there are some conditions for funding that need be satisfied prior to closing. Even though have done your home inspection and negotiated any requested corrections with the Sellers, the Lender may yet require other issues be resolved before they will fund your loan.

Additional funding conditions are especially prevalent in VA or FHA transactions. Both VA and FHA loans typically employ more stringent standards, focusing primarily on safety and structural concerns, when conducting their appraisals. (We see few such loans here in South Lake Tahoe’s second home resort market.)

Shortly after the appraisal is completed, your Mortgage specialist will receive notification of value and any specified conditions for funding. These additional conditions or issues may need to be negotiated with the Sellers for clarification (or correction). Most every such condition we have experienced is resolved satisfactorally in a timely manner.

3. The property appraisal comes in under value. In this situation, the appraiser has determined that the current market value of the property is below the agreed purchase price. The financing contingency of your contract provides language which protects you in such a situation (it’s very rare), and offers you some options to address the difference:

A. Depending on the amount, you may ask the Seller to lower the sales price to match the appraised value. (The Seller may, or may not agree.)

B. If you have the resources, you can make up the difference.

C. In some instances, depending on your loan, you can request that the Sellers pay for another appraisal by a company that is acceptable to the Buyer’s lender.

D. You can back out of the contract and retain your earnest money deposit.

Homeowner’s Insurance

Documentation of insurance is required by your lender prior to funding. Often our Buyers have relationships with an insurance company. We will also recommend area insurance specialists as well. There is a clause in your purchase contract that protects you in the event that the home can not be insured (we have never seen such a situation, however).

Seller’s Remorse

This rarely occurs, but it should at least be mentioned. Though we have never seen it, a Seller may have second thoughts about selling. If you’ve ever seen the Steve Martin movie “Father of the Bride” you’ll understand exactly what we’re talking about.

We always counsel our Buyers not to worry about issues before they arise. If and when challenges occur, we’ll deal with them immediately to achieve a mutual resolution agreeable to both parties.

The 1st Time Home Buying process can be, and normally is a smooth and enjoyable adventure!

The first post in this series, Mortgage Lenders and Loan Pre-Approval here.
The second in this series, Get a Great Agent (pt 1) here.
The third in this series, Get a Great Agent (pt 2) here.
The fourth in this series, Exchanging Vows: The Buyer Agency Agreement here.
The fifth in this series, How Much $$$ Does it Cost to Buy a House here.
The sixth in this series, Tips for Home Tourists here.
The seventh in this series, Writing the Offer They Can’t Refuse here
The eighth in this series, your Home Inspections here
The last article in this series, Closing and Owning Your New Home here.