Barb Szabo's Blog

Should We Ask Even "Normal Sellers" To Prove They Can Close?

This post is not about foreclosed or short sale homes. Rather it's about what I have affectionately come to call "normal sellers".

I came across such a seller this week while I was showing a young couple some homes. There was some interest in this home so I started doing my usual investigation...getting disclosure forms, checking on the number of mortgages that have been filed, checking the taxes and the county valuation etc..

I then called the listing agent to ask some questions and I voiced some concerns about the work that needed to be done to the property. His response was that the owners wanted to sell and would look at all offers. I mentioned the amount of the mortgage that had been filed, and he said "yes, the seller owes $183,000 and the list price is $199,900 so we would have to close it in the mid 190's. I asked him if it was a short sale or on its way to foreclosure? The answer was no. But he assured me the sellers could close.

Now call me crazy, but $195K minus about 15K in closing costs equals $180K leaving the seller 3K short to close. But, the buyers I have would never agree to pay that amount for this home. It would be substantially less, leaving the seller much deeper in the hole.

So I started thinking, should we ask our "normal sellers" to prove that they are able to close? If I write a cash offer I tell the buyers that they must offer proof of funds. If I am the listing agent, and I get a cash offer I will insist on proof of funds. Keep in mind that a cash buyer does not have to divulge all his assets, just enough to show he can pay cash for the house.

So, if we come across a seller who may be a few thousand dollars short at closing, should we insist that they prove they have the funds to close? Again, the seller need not disclose all his assets, just enough to show that he has enough to cover the shortage.

What do you think? I'm thinking the answer is yes.

BARB SZABO

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If you would like to buy or sell a home in the southern communities of Cleveland Ohio, please call me at 440-263-7496, or you may want to visit my website for more specific information on the communities I service: Brecksville Ohio Real Estate, Broadview Heights Ohio Real Estate, North Royalton Ohio Real Estate Independence Ohio Real Estate, Seven Hills Ohio Real Estate, Parma Ohio Real EstateParma Heights Ohio Real Estate and Middleburg Heights Ohio Real Estate.  Information is obtained from Neohrex (Northeast Ohio Real Estate Exchange) and is deemed reliable but not guaranteed and should be independently verified. Properties subject to prior sale, rental, or other status changes. All properties that are advertised as being listed or sold by Barb Szabo are in conjuntion with ReMax Trinity.

Comment balloon 61 commentsBarb Szabo, CRS • August 05 2009 07:35AM
Should We Ask Even "Normal Sellers" To Prove They Can Close?
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This post is not about foreclosed or short sale homes. Rather it's about what I have affectionately come to call "normal sellers". I came across such a seller this week while I was showing a young couple some homes. There was some interest… more