YOU HAVE LOCATED YOUR HOME. “LET’S BUY IT”! (Existing Homes)

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Provided by Rate a Home, LLC

www.rateahome.com

Copyright 2005

 

 

a) You have done the research, completed the ratings, and toured numerous homes. Now comes the crucial part… “Let’s put it in writing”.

 

        Discuss the purchase price between yourselves and determine what your offer will be. Have a number in your mind, as well as a top price that you would be willing to pay.

        If you are involving a Real-Estate Agent, now is the time to explain your thoughts on the offer you would like to submit. If you are considering an offer lower then the asking price, discuss with your agent why you are doing so. This way the agent can explain it to the sellers or their agent. Your agent may have some valuable input on how to approach the offer as well.

        Ask the agent for their input on your offer. A Professional Agent should know the market and may provide you with market information that will be helpful in determining the final offer to the seller. The Agent may suggest a lower or higher offer; listen to their thoughts and suggestions. It may save you money, and also eliminate the chance of losing the home you would really like to purchase.

 

b) Writing the offer is one of the most important steps. If the offer, to purchase, isn’t written correctly you may encounter problems along the way. The purchase agreement is quite often the evidence used in many court cases between sellers and buyers. Real-Estate Associations across the nation have spent numerous dollars in legal fees, to create a purchase agreement for the Agents and their clients. Although there are no perfect documents in the world, the legal terminology in these agreements will help, in case a dispute should arise.

 

c) Items you should include in your purchase agreement:

 

        Agency Disclosure (if you’re dealing with a Real-Estate Agent). This determines if the chosen Agent is an Agent of the Seller, Buyers Agent, Dual Agent, or other.

        Seller’s Disclosure Statement, if required by law.

        Lead Based Paint Addendum: Any home built prior to 1978 may involve lead based paint.

        Property Description (Legal Description)

        Offer Price

        Terms of Purchase: If you are paying cash, getting a mortgage, sellers financing, etc. And, if the offer to purchase is contingent upon financing approval.

        Contingencies: If you need to sell your existing home to purchase the home you are buying.

        Include a List of what items are to remain with the home. Items such as appliances, curtains, mail box, etc.

        Municipal Compliances: Agree who will be responsible to meet municipal requirements for any required inspections, as well as, who covers the cost of repairs if needed.

        Title Insurance: Normally a seller provides the buyer with an owner’s policy.

        Property Survey: Agree on who will pay for a property survey if you require one, as well as, the type of survey required. Most financing companies will want a mortgage survey to close and you should discuss this with your lender on the type of survey required.

        Property Taxes: Will the seller or buyer be responsible for taxes until close of purchase? Will the taxes be pro-rated on the day of closing? Closing, meaning the day the home is transferred into your name.

        Assessments: Who will be responsible to pay for any outstanding or deferred assessments?

        Inspections: Will you be hiring a Home Inspection service and termite inspection? (recommended) Inspections are for defects in and around the home as well as items that are not up to code. The inspection will not cover cosmetic items such as paint or floor covering, for example. If defects are found, who will be responsible for the repairs the Home Inspection Service determines necessary? Do you want the purchase to be contingent upon the inspection? You may want to hire and pay for the inspector so they are working for you and not the seller. Some of the tests required may be environmental hazards such as radon, asbestos, lead in the water, flood plains, termite infestation, etc.

        Home Protection Plan: Do you want a Home Protection Plan? If so, who will be responsible for the expense?

        Prorations: If you’re buying an investment property, decide how the rental income will be prorated. Will it be adjusted at date of closing?

        Closing: Determine what the, latest date, of closing the home will be.

        Possession: Determine the date when you want the sellers to vacate. Will your possession be at the closing, or will the seller have the right to occupy the home, for a certain amount of days after the closing occurs?

        Good-Faith Deposit: Determine what you will pay as a “Good Faith Deposit”, to the seller, to constitute a binding agreement between the seller and buyer. The Good Faith Deposit agreement needs to read, that the deposit will be applied to the purchase price. Spell out what terms, if any, that the seller is able to retain the deposit. Or, if contingencies are not met, that the seller must return the deposit. If you have involved a Real-Estate Agent the “Good Faith Deposit” would most likely be deposited in the Brokers Escrow Account, until date of closing.

        Buyers and Sellers Acknowledgment: All parties involved need to sign the purchase agreement at the bottom, as well as, date. It’s possible, witnesses will be required.

        Sellers Acceptance: Insert a date and time that your offer will remain valid. If the seller doesn’t respond, or accept your offer by the set date and time, make sure your offer reads that the offer becomes, null and void, at this time.

        Different parts of the country require other items to be included in the purchase agreement; this is where a Professional Real-Estate Agent can help.

 

d) Once you have reached a price agreement with the sellers.

 

        Contact the Lender and supply them with the purchase agreement. The Lender will provide you with a formal application to move the mortgage forward. Once these papers are supplied to the Lender and the required lending fees are paid, the Lender starts the final approval process (which may take some time). The more information you provide the Lender at the pre-approval stage, the smoother the transition towards an, “end loan” will go. Once approved, the Lender (in most cases) will order the appraisal, title work and necessary papers to prepare for the closing. This is the time to request a loan (if needed). If you are requested to provide any documents to the Lender, time is of the essence.

 

e) Once you feel comfortable that the deal will go through start researching moving companies. A “Moving Check List” is provided for your convenience.

 

f) Your Real-Estate Agent, and/or your Lender, will help guide you through the steps towards the closing.

 

g) The closing may be held at a title company, lenders office, real-estate office, or at an attorney’s office. In most cases you will be required to bring certified funds to the closing. You will also need your driver’s license, (or proof of identification), and most likely a one year insurance policy, (naming the Lender and yourself as the insured). The insurance policy is usually required to be paid in full by you. Other documents may be requested, and you should inquire about those a few days before the closing so you are prepared. A couple of days before the closing you should request the closing statement and documents for review of any discrepancies.

 

h) Professional Advice: Because a real-estate purchase can be a complex and confusing transaction, it is    a good idea to seek legal, environmental, tax and other professional advice while researching the buying,    purchase, mortgage and closing process.