We Buy Houses in Long Island Fast & ALL CASH!

  • Home
  • About
    • About Us
  • Sell Your Home
    • Learn More
    • Inherited Properties
    • STOP FORECLOSURE ON YOUR HOME
    • Short Sales
    • Rentals
    • Deferred Maintenance
  • Investment Opportunities
  • Get Cash Offer
  • Prospective Home Buyers
  • Contractors
  • Realtors
  • Blog
  • Home
  • About
    • About Us
  • Sell Your Home
    • Learn More
    • Inherited Properties
    • STOP FORECLOSURE ON YOUR HOME
    • Short Sales
    • Rentals
    • Deferred Maintenance
  • Investment Opportunities
  • Get Cash Offer
  • Prospective Home Buyers
  • Contractors
  • Realtors
  • Blog

blog

Working with cash buyers!

11/8/2021

0 Comments

 
At face value, working with cash buyers should be easy and simple. Cash, As-Is, no appraisals….easy peasy! Unfortunately this is not always the case and working with cash buyers can be difficult. The good news is, knowing what to look out for when working with cash buyers BEFORE opening escrow can prepare you to save you time, frustration, and hair-pulling! Over the years, we’ve seen competing cash buyers include certain terms in their offers that should be seen as red flags and/or warning signs. Whether you’re thinking of selling your own property to a cash buyer or you’re listing a property for a client that is attracting cash buyers, keeping a keen eye out for the Red Flags below could help avoid choosing the wrong buyer!
Knowing why investors include these terms in their offers and how to counter them will put you in a much stronger position in the transaction and simplify the process of selling your home for cash.

1. The “Non-Contingent” Offer

What exactly is a non-contingent offer? When a buyer submits a “Non-Contingent” offer, they are essentially forfeiting any and all of their privileges to perform due diligence on a property they’re interested in. I.e. they’re giving up the right to….
  • perform further inspections
  • review seller’s disclosures
  • confirm clean ownership with a title report
  • complete a final walkthrough….
….in addition to plenty of other protections that are standard in a purchase contract.
We see it in competing offers all the time. Companies that buy houses for cash say they’re non-contingent and that they “don’t need an inspection period”. Often times their goal here is to make their offer appear as strong as possible and get their offer accepted. Unless you’ve seen the tactic before and know how to prevent it, buyers may take advantage of their Earnest Money period to complete their due diligence. They know that once their offer is accepted, they likely have the industry standard 72 hours to submit their Earnest Money Deposit and can use this 72 hours to do their initial walkthrough of the property, perform inspections, etc. If they find something they don’t like or realize the numbers don’t make sense after physically walking through the property they can cancel their offer or try and re-negotiate by asking for a price reduction. All this happens before any of their money has been submitted to escrow!

Pro tip: Write up a Seller counter! Shorten the earnest money period to 24 hours or sooner and make it clear that no further inspections will be allowed until escrow receives buyer’s nonrefundable Earnest Money!

2. Long (Unnecessary) Inspection Periods

While a typical financed buyer typically gets about 17 days to perform their due diligence on a property, cash buyers should be writing in a much shorter time period into their contracts. How much time does a cash buyer need to perform inspections? It’s a loaded question, and depends on a couple things….
  1. the complexity of the renovation
  2. necessity of additional inspections (I.e. Foundation, soils report, zoning/planning research, etc.)
The more complex a project, the more time a buyer may need to perform due diligence. With that said, a cash buyer SHOULD be able to complete their inspections on an average house of average size (up to 2,500 square feet) in 3-4 days. Some investors may be able to work faster while others may rightly need more time to perform additional due diligence. BUT – digging deeper into the buyer’s plans is HIGHLY encouraged if they’re asking for 8+ days to perform due diligence for a basic home. They may be trying to give themselves as much time as possible to farm out to other buyers!

PRO TIP: Write up a Seller counter! You can always counter inspection days to whatever timeline you feel fair!

3. Low Earnest Money Deposit

Any savvy seller should want their buyer to have “Skin in the game” i.e. something to lose if the buyer does not perform to the contract. This typically comes in Earnest Money Deposit which is usually expected to be submitted to Escrow within 72 hours of offer acceptance. Should the buyer cancel their offer or not perform per the contract after removing their contingencies, escrow may be obligated to disburse those funds to the seller. The LOWER the earnest money amount, the LESS SKIN a buyer has in the game, and the LESS incentive a buyer has to perform to the contract! It’s important that the amount of the earnest money is significant enough to motivate the buyer to perform.

Things to Keep in Mind
  • 1% of the purchase price is industry standard. (Earnest money on a $600,000 purchase contract should be at least $6,000)
  • Anything below that, consider countering it up!!
Remember: If a buyer can’t submit a reasonable amount of money to escrow, how are they going to bring all the funds to close!?

4. Unusually High Offers

If you’re selling a fixer property for cash in Long Island, it’s likely that it will get a lot of attention from local investors if exposed to the local market. If the property you’re selling has multiple offers on the table, be wary of investors that are significantly higher than the average offer price of others you have in hand. Some investors knowingly come in higher than what they can actually pay for the property to tie the property up and use the contingency period to negotiate the price back down to a number they can buy it. Keep in mind that most fix and flip investors have similar way and method for running numbers and determining their offer price. If one fix and flip buyer is significantly higher than the others, something may be amiss! Dig deeper!

Pro tip: Use logic, ask questions, and see HOW an investor plans on using the property once completed. If a buyer is doing so to renovate and re-sell themselves for a profit, how do they plan on making money by paying significantly more than other competitors?

5. Out of Area Buyer

If you catch wind that a certain buyer submitting on your listing/property is from out of your area, proceed with caution! While by no means are all out of area investors “bad” it’s likely a safe bet that these buyers don’t know the local neighborhoods of Long Island (or your area) as well as a local buyer would. Investor-buyers that are not from Long Island likely aren’t as familiar with the market as a local buyer who has an established track record of flipping homes in the area. These types of buyers usually need to do MORE market due diligence during their contingency period to confirm their numbers and that they’re comfortable with the purchase. More due diligence means more uncertainty for you, and puts the transaction at a higher risk of changing their numbers mid-escrow and asking potentially leading to a price re-negotiation.
We hope that by knowing these tips in what to look out for when working with cash buyers, you’ll be better equipped and more prepared to facilitate an EASY escrow for top dollar!
0 Comments

Understanding Closing Costs

11/1/2021

0 Comments

 
When buying or selling a home, the topic of who pays closing costs is bound to come up eventually. Any real estate transaction will host numerous costs and fees that will be factored into the purchasing process on top of the property’s value. Understanding who is responsible for paying these fees is crucial for properly valuing the sale as the buyer or seller.  Especially for those looking to budget their real estate experience carefully, closing costs can be an important factor when determining if a home is the best investment for your needs. 
In this article, we’ll explore real estate closing costs to help homeowners and potential buyers better understand the process of finalizing a real estate transaction. We’ll also settle once and for all who usually pays closing costs: the buyer or the seller? 

What are Closing Costs?

Closing costs are fees and expenses outside of a down payment that is paid once the buyer closes on a property. Closing costs can be a substantial portion of the real estate investment and can be as high as 3 to 5 percent of the down payment. These fees are calculated from numerous sources, from attorney fees to insurance costs. Each transaction’s closing costs will vary based on the property itself as well as the nature of how the transaction was arranged. The buyer and seller need to be aware of closing costs so that the point of escrow can run efficiently and according to the original listing agreement. 
​
Does the Buyer or Seller Pay Closing Costs?


Now that we understand closing costs and their role in a real estate transaction, it’s time to dive into the logistics of buyer and seller responsibility. Buying a home is a huge investment and when selling a home it’s important to optimize profits during the transaction to get the most value out of the home. Closing costs allow the transition of ownership to go smoothly and guarantee that all parties involved, from the real estate listing service to the insurance companies, are properly compensated for the transaction. Generally speaking, the buyer is the party responsible for paying closing costs. However, the closing costs can look different for each transaction and the seller may be liable for other costs unrelated to the transaction itself.

Seller Closing Costs

So do sellers usually pay closing costs? Typically not. While the buyer of a property will generally have more items that require payment than the seller, this doesn’t indicate a complete lack of responsibility on the seller’s part. Especially for sellers who choose to leverage the payment of closing costs to quicken or simplify a sale, it can’t be assumed that the seller is getting off free within a successful transaction. The majority of individuals who sell their homes will do so with the assistance of a real estate agency, and the seller is responsible for paying the sales commissions to any real estate agents that helped the deal take place. This can be a significant portion of the sales price, so those selling their property need to factor this in when listing their home. Some other potential seller closing costs that may come up include:
  • Potential Prorations: Before the buyers assume ownership, sellers might need to compensate buyers for taxes and HOA dues that are paid. 
  • Title Transfer/Insurance Fees: Sellers may need to pay regionally specific taxes or fees for the transfer of the property’s title or title insurance in the case of issues coming up. 
  • Home Warranty Premiums: Sellers will occasionally offer a home warranty for the first year to peak buyer interest. 

Buyer Closing Costs

As we briefly stated, those looking to purchase a new home or property should anticipate financial liability for the majority of the costs associated with closing the deal. This is mainly due to the many steps that are taken to secure a loan for a home’s down payment, as well as the process of properly valuing a property. It’s important to note that these closing costs are not usually paid to one party but rather a collection of individuals that played a significant role in the purchase of the home and transfer of ownership. Some closing costs that buyers can anticipate during a real estate transaction include, but are not limited to:
  • Attorney Fees: Closings that involve an attorney for the buyer, seller, or both will feature fees that typically fall on the buyer. 
  • Loan Origination Fees: Fees associated with processing and underwriting the loan, paid to the lender. This may include credit report fees that lenders will use to determine if you qualify for a mortgage. Lenders also might charge an optional fee in exchange for lower interest rates during the lifespan of the loan.
  • Appraisal Fees: Appraisals are strongly suggested to verify the sale price of the property is a fair one to pay,
  • Inspection Fees: Some lenders might require an inspection before a loan can be approved for a mortgage. This may include survey fees, which confirm the size and dimensions of the property’s land. 
  • Title Insurance: While the seller pays the title insurance costs, for a lender to be protected the buyer will usually need to assume the policy. Title search fees may also be needed for background checks conducted on the title to identify concerning liens for the property. 
  • Escrow Deposits: Lenders might ask for a pre-payment of a few months of property taxes or insurance for financial comfort within the loan’s account. 
  • Record Fees: Every real estate transaction needs to be recorded within local records. These fees are usually paid directly to the property’s city or county. 

Who Can Pay Closing Costs?

While the majority of financial items that fall under the umbrella of “closing costs” tend to lean to the buyer’s side, each real estate transaction is different and closing costs can be easily adjusted. Many sellers will assume responsibility for a portion of the closing costs as an incentive for interest or to expedite the sale of their property. Negotiation of closing costs is fairly common but should always be calculated towards the beginning of the real estate transaction to ensure no one gets blindsided down the line. 
Closing costs can be leveraged by both sides of the transaction to make the process of paying them a bit less overwhelming for the buyer. Some buyers will even make their initial offers with buyer closing costs factored within a purchase price which could lead to the seller negotiating an alternate deal. Closing costs can be an incredibly expensive stage of the real estate transaction, and buyers might be surprised by how many sellers are willing to negotiate these figures for the sake of a simple and streamlined real estate experience. 

Sell Your Home Fast with Help from 180 Homes!

Whether you’re a first-time homebuyer or you’re simply looking to maximize an investment’s value, understanding who usually pays closing costs is a major part of conducting any successful real estate transaction. By properly anticipating what costs will be incurred and delegating these as negotiated, the process of buying and selling a home can become much simpler. 180 Homes can help sellers list their property and have a care-free real estate experience. With cash offers that help sellers move on to the next great investment quickly, 180 Homes can expedite the process of selling your home. Contact 180 Homes today to learn more. 

Pay ZERO Closing Costs when selling your home! Get Cash Offer today!
0 Comments

    Recent post

    October 2023
    September 2023
    August 2023
    July 2023
    March 2023
    December 2021
    November 2021
    October 2021
    September 2021

    Categories

    All
    Financing
    Home Buying
    Home Improvement
    Home Selling
    House-flipping
    Landlord-resources
    Passive-income
    Real Estate
    Sellers

    Connect on Social

Picture

Navigation

Contact Us

Follow us

Home
About Us
Sell Your Home
Buy a Home
​Investment Opportunities
Get Cash Offer
​Contractors
​Realtors

Blog
185 W John Street
Ste. 7737
Hicksville, NY 11802

(877) 332-CASH
info@180HomesAndProperties.com
180 Homes & Properties, LLC is a private real estate development and investment company; we are not a real estate broker.