Buying or selling a home can be a tedious process. No matter your side of the divide you belong, you will likely have gone through a series of negotiations before agreeing to the terms of sale/buy. Both the buyer and seller need to know about credits
When the buyer and seller complete the first round of bargaining, money is transferred to an impound/escrow account; buyers and sellers may end up entering into another round of negotiations. To prevent this, buyers/sellers will need to have good knowledge of credits.
Below, I will be stating five important things prospective buyers/sellers should know about credits.
Sellers should expect prospective buyers to ask for credit.
Sellers should always assume that a prospective home buyer knows about credit and will request minor repair work on the property before closing the sale. So, leaving room for credit will ensure negotiations go smoother. It serves as protection to the seller allowing for quick closeout of property sales on both sides.
The buyer can request the property inspection.
A prospective buyer can ask for a property inspection, which is usually part of the real estate contract. As part of contingency, a general home inspection may be ordered; or a specific inspection such as sewer line, mold, termite or pool inspection may be arranged for.
The result of an inspection may bring to light several issues the buyer couldn’t have known about. The buyer might request credits of up to three (3) percent of the purchase price to offset repairs to be done on the property.
Getting the right amount to be given as credit requires both parties receiving bids from two or three contractors to cover repairs on the property and decide based on the average of the bids received.
The seller can ensure repair work is done before the close of escrow.
The seller may also agree to effect repair on the property before the expiration of the escrow. Lastly, the seller could also ensure credit is paid directly to the contractor for the repair works. This agreement will help protect the seller from buyers who ask for credits to reduce the property’s closing cost
The seller can carry out property inspection before listing.
Sellers can inspect the property and inform the buyer upfront. This can help resolve any issue that may come up during negotiations. Also it will ensure the buyer knows what they are getting. An “as-is” clause can be inserted into the contract based on the property’s good shape or a complete inspection report given to the buyer.
This clause ensures that buyers do not request credits as the property’s current state was in full disclosure during negotiations.
Having a credit might be a good marketing strategy for selling your home.
As a seller, you know the least amount you intend to sell your home. And the likely listing price may be slightly higher than the least amount you are willing to sell your home. So, having a credit pegged at a certain amount that wouldn’t erode on the least amount you value your home will help sell your home quicker.
As more buyers know about credits, they will want listings. Listings will allow them to negotiate prices as they seek to get the best value for money.