Q & A with Dottie Herman

Q & A with Dottie Herman

» Featured Columnists | By Dottie Herman | January 25, 2013 8:30 AM ET

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Dottie Herman

Q1 - When an offer is made to a seller in a co-op building, is it necessary at that time to provide the seller's broker with financial information? Twice after I provided a rather detailed financial statement upon my broker's request, the seller then came back and raised the price 10%. My broker assured me that my financials met the criteria for the building and, in both cases, I met what the seller asked for or what the broker told me the seller would take. I believe the disclosure has been a disadvantage to me, and that after the sellers have seen my financials, they have been led to believe I would offer more.

A - Demonstrating your financial qualifications is a recommended way to help the seller feel comfortable when evaluating your offer, as it lets them know whether or not you have the financial credentials that their co-op would look upon favorably. What a seller will accept is not for the broker to determine unless specifically acting under the seller's instruction. If your offers are based on current data (comparables), and have been rejected, perhaps the sellers are not working with the same information. An alternative strategy may be to stipulate that upon receipt of a Price Agreement between you and the seller, you will provide full financial disclosure.

Q2 - I am thinking of closing an old credit card that I never use will this hurt my credit? I am planning on buying a property and don't want my score to drop.

A - This is a good question, and the answer is yes, this could damage your credit score. Since this is a credit card and falls into the revolving credit category, when it closes you will lose the utilization allowance that the limit on the card gives you. If the balance-to-limit ratio on your aggregate revolving accounts is high, it will drop scores. Here is a good example of a consumer who had 3 credit cards:

  • Card 1: limit of $10,000; balance of $5,000
  • Card 2: limit of $5,000; balance of $5,000
  • Card 3: limit of $5,000; no balance
Once you close Card 3, which has a $5,000 limit, the aggregate balance-to-limit ratio changes from 50% to almost 70%. This could drop scores 20, 40, or more points, depending on the rest of your credit and your original credit score.

Having higher aggregate limits gives consumers more leeway to increase balances without hurting credit. The lower your balances are on revolving credit, the better it is for Fico credit scores.

Q3 - My home in New Jersey has been on the market for a few months. It is empty as I moved already, so there is nothing in the home. When someone people look at it they say it is nice, but they can't picture how they would lay it out, etc. Would it help if I had it staged so they can visualize? Would that make it sell faster?

A - Staged homes can greatly impact the prospective buyer's experience with the property by helping them to visualize furniture placement and the utility of the space. There are many Professional Stagers and Furniture Rental Companies who, for a modest fee, will bring in furniture that will bring your property to life and hopefully, reduce the time on the market.

Q4 - My home has been on the market for 9 months and we recently just got a great offer that we will most likely accept. The only problem is there is nothing out there right now that we want to buy. Is there a way we can negotiate to stay in our home a little longer? Or do you think that will make the people not want to go through with the sale? Should we just move and rent until we find something?

A - Congratulations on finding a qualified Buyer for your home.  There are a few things you may want to consider having your attorney propose: a delayed Closing date may be helpful to give both you and the Buyer more time to Close, or the possibility of a Lease-back might work as well.  In all scenarios, going through with the sale is most important, and renting, short term, may, in the end, be your best option.

If you have a real estate question for Dottie, please send it to;

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