A Buyers Guide
To the Home Buying Process
Disclaimer: Please keep in mind that this is not intended to be a comprehensive discussion of the home purchase process. It is intended to give the reader a general overview of the process, and to allow a prospective purchaser to plan ahead.
The Initial Home Search Process
Your agent will show you suitable properties based on a discussion of your housing needs, priorities and affordability. Your agent may work with you as a Buyer’s Agent or as a dual agent. Be sure to discuss these agency relationships with your agent at your first substantive meeting as you will be presented the Agency Disclosure document at that time. If financing will be required, it is recommended that you obtain mortgage pre-qualification from a qualified lender prior to beginning your home search. A pre-qualification letter will give your offer merit in the eyes of a seller, and may allow you to be more flexible if a quick closing is in both parties’ best interest. You should also select an attorney or public notary at this time. It is recommended that you choose an attorney or notary who is experienced in representing purchasers of real estate. If you don’t have an attorney or notary already for this purpose, your agent can usually give you names of several highly regarded real estate attorneys or notary that you can interview.
The Offer Process
Once you have found a home you wish to purchase, your agent will submit an offer on your behalf. Offers and counter-offers may be submitted in writing. The offer is usually submitted in writing (especially in a multiple-offer situation) as an “Offer to Purchase” prepared by your agent; subsequent counter-offers are often added to the same document. When you have reached an agreement with the seller on terms including purchase price, personal property to be included, projected closing date, conditions and contingencies (inspections, financing, etc.), you now have an acceptable offer .
A written contract of purchase and sale states the terms of the agreement; copies are distributed to the seller, the seller’s attorney, the buyer, the buyer’s attorney, and both real estate agents. The typical time frame from agreement to closing is approximately 60 days. Of course, many factors can affect this time frame, including specific needs of the buyer and/or seller. The contract deposit check which becomes part of the down payment, is made payable to the real estate company or an attorney who holds it in a trust account until the completion date. (this down payment amount can be negotiable but is typically 25%).
After Acceptence
After reaching the agreed upon offer., you (the buyer) are given a limited time period during which to conduct an engineer’s inspection and other desired and/or required inspections (assuming that an inspection contingency is part of the agreed-upon offer). This period is usually 10 days or less.
Property Inspections
An engineer’s inspection is recommended for every home purchase. The purpose of an inspection is to identify the condition of the home and allow the buyer to make informed decisions. Even with newly constructed homes and with condominiums, it is possible that something could have been overlooked or poorly designed. An engineer’s inspection will typically take 2-4 hours. If at all possible, you should plan to be there with the engineer during the inspection. This is an opportunity for you to learn a lot about your new home, ask questions of the engineer, and receive suggestions. Subsequent to the inspection, the engineer will provide you with a detailed written report covering his/her findings. Other optional inspections you may wish to perform include a fuel oil tank test (for oil tanks buried in the ground), a radon test, a septic dye test (if applicable), a water portability test and water recovery test (for private wells), asbestos testing, and lead paint tests.
Contract to Completion
Once inspections are completed and deemed satisfactory, you should review and discuss the contract with your REALTOR®. If any changes are requested, the seller must agree to these changes. Once the contract is signed by the seller, your attorney or notary will receive two fully executed copies of the contract, one of which will be given to you for submission with your mortgage loan application. Your completed mortgage loan application with all supporting documentation should be submitted to your chosen lender promptly upon receipt of the fully signed contracts. Your attorney or notary will also provide you with an estimate of closing costs.
Prior to closing, your attorney or notary will arrange for a title search of the property. The title company will issue a title report certifying clear title. The attorney or notary will also perform a property tax search and a violations search (required by the lender), and a survey inspection. If the existing survey is unacceptable, or if no survey exists, it is typically the buyer’s responsibility to pay for a new survey.
Completion
Once all conditions of the contract have been satisfied, calls should be made to confirm with your movers, to contact utility companies to transfer service accounts, to arrange for a homeowners insurance policy (proof of an insurance policy and paid receipt for one year’s premium paid in advance must be brought to the closing), and to transfer any funds necessary for closing. Your attorney or notary will advise you in advance as to the amount(s) of any certified checks required at closing. You will also be required to bring a supply of blank personal checks for assorted closing costs, as well as two forms of identification, one of which must be a photo I.D.
If a final “walk-through” of the property is in your contract, it would be performed prior to closing, usually within 3 business days of the completion date. This is scheduled with your real estate agent, or the seller’s agent. The purpose of the walk-through is twofold: to confirm that no damage has been done to the home since the time of the engineering inspection; to confirm that the major systems and appliances are in working order; as stipulated in the sales contract.