Archive for February, 2008
7 Questions About the Hubbard Clause Answered
February 18th, 2008 categories: Home Buyers, Home Sellers
The Hubbard Clause, or Sale of Buyer’s Property Contingency, is a clause in the real estate purchase contract that protects the buyer who must sell their home from having to buy their next home before selling their current home.
In Central Connecticut, we utilize a addendum to the real estate contract called the “Sale of Buyer’s Property Contingency.”
In the addendum, the buyer and seller agree to the following:
That the buyer will immediately list their house for sale, if they haven’t already done so.
The buyer has a certain period of time to obtain a contract on their home and for all the contingencies in that contract to be met - mortgage, inspection, etc.
If another buyer puts in an offer on the seller’s house, how many days the buyer has to remove the Sale of Buyer’s Property Contingency (by either having the contingencies met in their contract or by obtaining a 2nd mortgage).
Whether the seller may accept another contract with another Sale of Buyer’s Property Contingency.
Confused? Don’t worry - you’re not alone. Here are some common questions and answers regarding the Hubbard Clause.
Sellers
Why should I accept a contract with a Hubbard?
If you have no other options, if you are confident the buyers will be able to sell their house in a reasonable time, and if you don’t mind waiting.
Can I show my house while it is under a Hubbard?
Absolutely. In fact, you should. You may be able to find another buyer who does not have another house to sell.
Will other buyers want to see my house if they know it’s already under contract?
That is the big question. And the answer depends on the agents and their buyers’ instructions. Personally, I show properties that are under a Hubbard but I know some other agents think it’s a waste of time.
What happens if my buyers don’t sell their house?
As long as your contract gives a time deadline and the buyers don’t have a contract with all contingencies met, then you can renegotiate or decide not to give the buyers any more time. If the buyers have well-priced their home and are making all attempts to sell it, then I think giving them extra time is warranted. If their house is overpriced and they haven’t had too many showings, then it’s time for some tough love.
Buyers
Why should I bother seeing homes with a Hubbard clause?
Homes with a Hubbard may be slightly less “available” in that when you submit an offer on the home, there is another buyer who has 72 hours, for example, to release their contingency on the property (by obtaining a mortgage or having a contract). If they can’t do so, the sellers can then negotiate with you. If you like the house, I think it’s worth the wait.
Can the seller accept another offer even if it’s below my offer?
In the standard Sale of Buyer’s Property Contingency form, there is no space for price. So, the answer is, yes. A seller may determine that a lower priced offer may be better than yours if it has fewer contingencies.
| Discussion: 2 Comments »
The Truth About Deducting Private Mortgage Insurance
February 17th, 2008 categories: Home Owners
Private Mortgage Insurance, or PMI, is
“insurance that protects a lender or investor against loss if a borrower stops making mortgage payments. It makes it possible for you to buy a house with as little as a three percent down payment or less for qualified borrowers, helping you buy a home sooner than you otherwise could. ” PrivateMI.com
Although it protects the lender, the borrower actually pays for it. And until recently, PMI was not a tax deductible item for primary residences.
PMI is now tax deductible for some. Here are the requirements:
Borrower must have purchased or refinanced* the home using a loan backed by PMI in 2007. For the next three years, ending in 2010, borrowers who pay PMI will also be able to deduct it as long as they meet the other restrictions.
Only borrowers with an adjusted gross income of $100,000 may deduct 100% of the premium. Families earning up to $109,000 may deduction a portion of the premium.
Premiums are deductible for the borrower’s primary residence or for a second home. Owners of rental property are already allowed to deduct PMI.
The IRS publishes a 16-page guide to “explain” this further.
*There is some confusion about whether a loan that’s been refinanced qualifies. Contact your tax advisor for more information.
| Discussion: No Comments »
Got Asbestos?
February 16th, 2008 categories: Home Buyers
I happened to take this picture during a showing I did this week. While I can’t say for sure the wrap on the pipes is asbestos (you need an actual test), it probably is. Asbestos is relatively common in older homes and can be found in pipe insulation, roofing materials, shingles, and floor tiles.
The general rule is to leave asbestos alone - don’t take it down yourself because not only is it a health hazard when the particles are disturbed and become airborne but you can’t dump it anywhere without paying for its disposal.
You can also have it wrapped if the asbestos is deterioriating - this is far less expensove than removal. This wrap actually looks to be in pretty good shape. If this were located in a basement that was finished or could be finished, I would have it wrapped or removed.
For more info on asbestos, see these related posts:
Home Inspection Options in Real Estate Purchase & Sales Contract
How Much Does It Cost? A guide to some common and not-so-common repairs
Home Buying 101 - Step 10: Get A Home Inspection
| Discussion: 3 Comments »
The Number One Reason Why You Have No Showings for Your House
February 15th, 2008 categories: Home Sellers
It’s Too Hard to See!
Do I really need to say more? It’s not that your pictures are bad, it’s not that you offer breadcrumbs for a commission, or that the disclosures mention toxic waste in the basement. The number one reason your house won’t get shown is that I have to pass through a gauntlet to see it. With inventory so high in many areas, don’t make your house the one I pass by. Read the rest of this entry »
| Discussion: 6 Comments »
The Truth About Deducting Private Mortgage Insurance
February 11th, 2008 categories: Home Owners
Private Mortgage Insurance, or PMI, is
“insurance that protects a lender or investor against loss if a borrower stops making mortgage payments. It makes it possible for you to buy a house with as little as a three percent down payment or less for qualified borrowers, helping you buy a home sooner than you otherwise could. “ PrivateMI.com
Although it protects the lender, the borrower actually pays for it. And until recently, PMI was not a tax deductible item for primary residences.
PMI is now tax deductible for some. Here are the requirements:
- Borrower must have purchased or refinanced* the home using a loan backed by PMI in 2007. For the next three years, ending in 2010, borrowers who pay PMI will also be able to deduct it as long as they meet the other restrictions.
- Only borrowers with an adjusted gross income of $100,000 may deduct 100% of the premium. Families earning up to $109,000 may deduction a portion of the premium.
- Premiums are deductible for the borrower’s primary residence or for a second home. Owners of rental property are already allowed to deduct PMI.
The IRS publishes a 16-page guide to “explain” this further.
*There is some confusion about whether a loan that’s been refinanced qualifies. Contact your tax advisor for more information.
| Discussion: 2 Comments »
