I know there has been someone that has been through this process and could help me with my question.
Numbers are BS numbers just for the example.
I'm buying a house and the appraisal came in low at $100,000. The Seller won't sell for any less than $101,000. So I'm putting in $1,000 of "cash".
How do I get that $1,000 to the Seller?
Obviously I could write a check for $1000 but that doesn't seem to be the correct way to do this for documentation purposes. Before the sale goes through the seller is going to want to know they're getting the extra $1,000. I'm going to want some kind of documentation that the $1,000 was received for the Gap Appraisal.
Rental Property Investor 路 RVA 路 Member since 2016 路 5k+ posts 路 4k+ votes
4y
You'll close through escrow. Their job is to handle funds and act as a trusted 3rd party to make sure everyone gets paid as agreed. If you're looking to prove to the seller that you have the funds beforehand, that's called proof of funds. For example, the most recent proof of funds I received from a buyer was a screenshot of their bank account, with sensitive information redacted & enough to demonstrate that it was really their account.
Rental Property Investor 路 RVA 路 Member since 2016 路 5k+ posts 路 4k+ votes
4y
You'll close through escrow. Their job is to handle funds and act as a trusted 3rd party to make sure everyone gets paid as agreed. If you're looking to prove to the seller that you have the funds beforehand, that's called proof of funds. For example, the most recent proof of funds I received from a buyer was a screenshot of their bank account, with sensitive information redacted & enough to demonstrate that it was really their account.
You'll close through escrow. Their job is to handle funds and act as a trusted 3rd party to make sure everyone gets paid as agreed. If you're looking to prove to the seller that you have the funds beforehand, that's called proof of funds. For example, the most recent proof of funds I received from a buyer was a screenshot of their bank account, with sensitive information redacted & enough to demonstrate that it was really their account.
Taylor is, of course, exactly right. Your title and escrow company will manage the funds for you.
With that said, I'm curious about your market. Has the market cooldown not hit where you are yet? If it has, the seller probably doesn't have any leverage to expect you to pay more than the home is worth. Unless of course, this house is unique/perfect for you, and you just think it's worth it. 馃
No it has cooled off some. Various components came into the mix.
Yes, I do like the property. I'd been searching for what I'm calling my "final home" for about 2 years and this property checked off all the boxes. Location, size, etc.
When I put in my original offer things were still a little warm (not hot) in the market. I came in under asking but still a bit over what I felt the property was worth. The appraisal came in under what evenI thought it was worth and then I renegotiated the price to between my estimate and the appraisal so I'm still good with it. I did have to push the Seller to back down a little.
Interest rates are (IMO) about to start going higher again and I have a good rate locked. A big market crash could put me underwater but again it's going to be my last home so if that happens I'm OK with it. I "live" there, it's not an investment per se. And even with my experience with finance (I'm weak in mortgage lending :) I don't foresee a crash in the near term.
Thanks for asking though. Good to have people try to keep you in line with reality.
Investor 路 Las Vegas, NV 路 Member since 2013 路 8k+ posts 路 10k+ votes
4y
When you go to the title or lawyer for closing they will have a sheet of paper with 2 sides for buyer and 2 sides for seller. On each side it will say here鈥檚 things you鈥檙e being charged for, here鈥檚 things you鈥檙e getting credit for and here鈥檚 the balance you owe or are receiving.
Buyer owed $100k purchase, plus $350 appraisal, plus $1000 for prepaid taxes/insurance, plus $3,000 is closing assistance from seller, minus $200 for pro-rated taxes, minus $80,000 coming from the bank as a loan. Buyer owes $18,150.
Seller gets $100k sales price, minus $25k loan balance, minus $200 pro rated taxes, minus $3,000 in closing cost assistance to buyer, minus $2,000 in actual closing costs. Seller gets $69,800.