Once you’ve decided to sell your home, It’s difficult to know where to begin. How should you prioritize all the steps you need to take? How do you get your home—and yourself—ready for the process? One easy way to start is to make sure your buyers can get a mortgage quickly and easily. You want be able to consider buyers who need financing even if you are expecting (hoping) that many will be bringing a cash offer. Cash offers will almost always be weaker than an offer that requires financing, so you may not end up wanting to accept them. Streamlining the process for buyers who use financing gives you more options and potentially more money.
That’s why it’s important to talk to a bank before you start showing your home.
If a bank hasn’t financed units in your building before, or if they haven’t done it in a while, you may need to get your building approved or get an updated approval. Before you list your home, talk to a mortgage professional you trust, preferably one that works at a larger lending institution, such as Citibank, Wells Fargo, JP Morgan Chase, or Bank of America. Ask them what steps need to be taken, if any, to make sure your building is on their approved lending list.
The bank may require supporting documentation in order to do this. So when you begin the process, bear in mind that you may need to gather these documents:
Building financials (ideally for the past three years)
Banks want assurance that the building’s financial situation is stable—so they will be looking for signs of a cash crunch, or any other irregularities. If there has been a large recent expense, you should be able to explain why (for example, the roof may have been replaced).
Insurance certificate
The bank will want to know that the building is covered by liability insurance.
Project questionnaire
Sometimes this document is called a coop questionnaire or a condo questionnaire, depending on the type of property you have. It mostly deals with the physical property itself, some financial questions, owner occupancy, sponsor ownership, and any lawsuits or other proceedings, as well as a host of small details usually available to a board member or building manager.
Proprietary lease
This document defines the relationship between a cooperative and its shareholders—who own the rights to “lease” the unit from the corporation that owns the building. Typically leases last more than 40 years, and you will want to make sure that the proprietary lease is not due to expire shortly, which makes lending more complicated.
Once you’re all set with a building bank approval, you’ll know that you can answer buyers’ financing questions with confidence, that financing issues won’t delay and complicate the closing process, and that buyers will be more likely to submit a strong offer quickly.
You’ll also want to be prepared for all of the other questions and issues that are a part of the due diligence process. To learn about how to prepare for your buyer’s attorney, read our post on the subject. Or, to learn more about the whole process, download our free comprehensive guide to selling your home.
