Essential Information for Realtors: Key Points for Clients Before Contracting
5 Things I Wish ALL Realtors Told Their Clients Before Going Under Contract 🔗
00:00 Introduction
Tiffany Weber, a real estate attorney, welcomes Ila Rogers, a new attorney, to discuss important information that realtors should share with their clients before going under contract.
01:00 Restrictions
Understanding property restrictions is crucial. Buyers must know if there are limitations on rental properties or home businesses before signing a contract. Failure to check these can lead to issues later in the buying process.
03:30 Improvements
When planning to make improvements, such as adding a pool, it's essential to verify local regulations beforehand. Buyers can include contingencies in their contracts to protect against potential permit issues.
06:00 Due Diligence and Earnest Money
The due diligence fee secures a period for buyers to evaluate the property, but it becomes non-refundable after this period. Understanding the timing and nature of these deposits is vital to avoid losing money.
08:30 Pre-Qualification vs. Pre-Approval
Buyers should understand the difference between pre-qualification and pre-approval from lenders, as pre-approval carries more weight in securing financing and can prevent delays in closing.
10:00 Contingencies
Including a contingency in the contract for the sale of a current home is important. Without it, buyers risk breaching the contract if their home sale falls through.
12:00 Setting Expectations
Setting realistic expectations with clients about the closing process and potential delays is essential. This includes understanding the logistics of back-to-back closings and ensuring all necessary funds are available.
What should buyers check before going under contract?
Buyers should check for any restrictions on property use, such as rental limits or commercial activity bans, to ensure their intended use aligns with community regulations.
Why is pre-approval more beneficial than pre-qualification?
Pre-approval involves a thorough review of financial documents, making it a stronger indicator of a buyer's ability to secure a loan compared to pre-qualification, which is based on self-reported information.
What happens if a buyer’s home sale falls through?
If the contract lacks a contingency for the sale of the buyer's current home, they risk breaching the contract and losing their earnest money if the sale does not go through.