By Melissa Dittmann Tracey

Mortgage expert Tracey Rumsey, author of Saving the Deal (AMACOM, 2008), responds to your questions about how you can avoid potential transaction deal killers.

What’s the most common deal killer in a transaction that you’ve seen in the mortgage business?

RUMSEY: I’m seeing a lot of problems with home inspection issues, especially with the buyer’s market environment we’re in now. Buyer’s are much more demanding when inventory is high. Sellers who don’t want to comply are seeing buyer’s walk away without a backward glance to move on to the next house. Real estate practitioners who prepare their sellers for this attitude and help them be proactive by offering them a pre-listing checklist of maintenance/repair items will come out ahead.

The ideal solution is to convince your seller to have a professional home inspector go though the home immediately so that issues can be addressed now. What a boost to the buyer’s confidence in the property when they can view a report, and then be shown the repair items and how they were remedied. My favorite icing on the cake is when a practitioner offers, as part of the listing agreement, to pay for a home warranty for the buyer. The practitioner only pays when a sale is successful and the property becomes even more attractive in a competitive market.

Can incentives that sellers are offering to buyers — such as buying down points on a mortgage or even adding other temptations — affect an appraisal later on?

RUMSEY: Yes in some cases. Some costs, such as normal closing costs and prepaid items of the buyer, can be paid by the seller without affecting the appraisal (as long as they are within underwriting guidelines for that loan program). Contributions in excess of underwriting guidelines must be considered a sales concession and deducted from the value. Another good example of a sales concession problem is selling a home fully furnished. Contract language must be very specific to avoid problems. Continue reading »