Is Your Buyer Qualified?

Unless the buyer who makes an offer on your home has the resources to qualify for a mortgage, you may not really have a sale. If possible, try to determine a buyer's financial status before signing the contract. Ask:

1. If the buyer has been prequalified or preapproved (better) for a mortgage. Such buyers will be in a much better position to obtain a mortgage promptly.

2. Does the buyer have enough money to make a downpayment and cover closing costs? Ideally, a buyer should have 20 percent of the home's price as a downpayment and between 2 and 7 percent of the price to cover closing costs.

3. Is the buyer's income sufficient to afford your home? Ideally, buyers should spend no more than 28 percent of total income to cover PITI (principal, interest, taxes, and insurance).

4. Does your buyer have good credit? Ask if he or she has reviewed and corrected a credit report.

5. Does the buyer have too much debt? If a buyer owes a great deal on car payments, credit cards, etc., he or she may not qualify for a mortgage.

6 Forms You'll Need to Sell Your Home

1. Property Disclosure Form: This form requires you to reveal all known defects to your property. Check with your state government to see if there is a special form required in your state.

2. Purchasers Access to Premises Agreement: This agreement sets conditions for permitting the buyer to enter your home for activities such as measuring for draperies before you move.

3. Sales Contract: The agreement between you and the seller on terms and conditions of sale. Again, check with your state real estate department to see if there is a required form.

4. Sales Contract Contingency Clauses: In addition to the contract, you may need to add one or more attachments to the contract to address special contingencies-such as the buyer's need to sell a home before purchasing yours.

5. Pre- and Post-Occupancy Agreements: Unless you're planning on moving out and the buyer moving in on the day of closing, you'll need an agreement on the terms and costs of occupancy once the sale closes.

6. Lead-Based Paint Disclosure Pamphlet: If your home was built before 1978, you must provide the pamphlet to all sellers. You must also have buyers sign a statement indicating they received the pamphlet.