The Georgia Association of REALTORS® (GAR) recently announced changes to their contract forms for 2023! In this recent coaching session, Derek Varnadoe (Broker and VP of Solid Source Realty) discusses FHA financing and GAR's FHA Loan Contingency Exhibit (F407). Special guests include Solid Source in-house attorney Heema Patel and Northpoint Mortgage loan officer Linda Stratton.
Key Talking Points:
1. GAR contract forms are available to active REALTORS® (included in annual association membership fees) and all other real estate agents who have purchased a license to use the forms at forms.garealtor.com.
2. GAR's approach to financing/appraisal is to incorporate these contingencies and terms by attaching a financing exhibit to their Purchase and Sale Agreement. Each of GAR's financing exhibits (and their All Cash Exhibit) include an appraisal contingency option. The All Cash exhibit is getting a new name for 2023 and will be titled "No Financing Contingency Exhibit." To read all of GAR's 2023 changes, visit: [ Ссылка ].
3. Most of the terms needed to complete the financing exhibit should be contained in the buyer's approval letter from their lender, Derek explains. Without the approval letter and communication with the lender, it would be impossible to complete the financing exhibit with confidence.
4. Detached or attached? Town home or condominium? When it comes to condos, they must be FHA approved. Buyers and agents can search HUD's website at [ Ссылка ] to confirm whether or not a condominium is currently approved for FHA buyers. While "spot approval" is sometimes granted, it may take longer and this is something that should be discussed in detail with the buyer's lender.
5. Be careful with FHA's 90 Day Flipping Rule. If the seller has not held title for a least 90 days, there may be an issue with a buyer seeking FHA financing. Offers are generally acceptable if they are made the 91st day or after from the date the seller obtained title. There are some exceptions, such as HUD homes (FHA foreclosures) which can be explored at [ Ссылка ].
6. FHA requires the property to be safe, secure, and structurally sound. Common appraisal/inspection issues include peeling or chipped paint, exposed wiring, termites, water damage, roof with less than two years of life remaining, missing hand railings on stairs, no smoke detectors, windows and doors that do not open and close property, etc. Essentially, Derek says the home should be in "move-in ready" condition. If repairs are clearly needed to bring the home to a safe and secure condition, there is an increased risk of lender-required repairs that will need to be made prior to closing.
7. Fillable blanks contained within the financing exhibit are important, such as the amount of the loan, interest rate, term, and type. If these basic terms are not stated, the entire contract could be unenforceable. While there are only a few blanks to complete, it's very important for all parties to thoroughly read all of the exhibit.
8. GAR revised this exhibit for 2023 by adding a new sentence to the Amendatory Clause. The form now says that if the property appraises for less than the purchase price, and the seller agrees to reduce the price to the lower amount, the buyer is obligated to move forward and close at the reduced price.
Solid Source agents are encouraged to reach out to the Broker Team with any questions or concerns. A draft of the exhibit or offer may be emailed to broker@solidsource.com and a member of our team will contact you.
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Copyright © Solid Source Real Estate Companies. All rights reserved. This material has been prepared for informational and educational purposes only and is not intended to provide, and should not be relied on for, legal advice. You should consult your own legal counsel or real estate broker if a real estate licensee before engaging in any transaction.
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