How many of you have taken a listing, marketed the property, secured a contract, only to find out that the Sellers are "Upside Down" and cannot close without bringing money to the closing table, or getting lender approval for a "short sale", or were unaware of a prepayment penalty that puts them "upside down"?
Marguerite Crespillo posted excellent information about short sales back in October so rather than repeat that information I encourage you to read her post.
So how do you avoid that "surprise"?
Title Companies are very willing to start the "process" - pulling the title info and discovering any and all liens against the property - even before there is a contract. Obviously, they hope that having started the title work, the Buyer will be encouraged to choose them to handle the transaction - however - in Arizona - it is ALWAYS the Buyer who selects the title company. It's a numbers game for the title companies - which must work "long term" or they wouldn't do this.
Starting this process at time of listing is the equivalent to a "Pre-Listing Inspection" of the title to the property. The purpose is to discover any clouds on title and have plenty of time to take care of them - or plan ahead for them.
Often Sellers are unaware of pre-payment penalties and knowing the real payoff amount could be critical BEFORE they sign the contract.
Some Home Owners Associations have outrageous transfer fees. How would you like to find out that you have to pay a quarter of 1% of the Purchase Price on a $800K home to the HOA just because someone else is taking over the reqular dues?
Sometimes Sellers may be less than forthcoming about mechanics liens on the property - not realizing that now is the time they must "pay the piper" if they haven't already.
There are many, many hiccups that can occur during even the most straightforward appearing transactions. Don't let last minute title surprises derail your deal!
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