Buying a home

Working with a Realtor® is the most common and preferred approach to home buying and selling. A Realtor® will be familiar with the available housing inventory in the location, size and price range you desire. Through the Metropolitan Regional Information System (“MRIS”), the Realtor® will have virtually unlimited access to information about homes listed for sale in your region. The Realtor® is also in a position to provide you with valuable information on other resources that can assist you in successfully consummating a transaction for purchase of a new home.

The selection of a real estate professional can be one of the most important factors in finding your perfect home. This individual will understand your needs and will hone your search to those properties that fall within your personal requirements, while recognizing the reality of your financial qualifications. In most cases a prospective Buyer establishes a “Buyer Broker Agreement” with a Realtor®. In that event the Buyer Broker (or Realtor®) represents the Buyer exclusively, and the Seller’s Realtor® represents the Seller. Where there is no Buyer Broker Agreement, the Realtors® are both agents of the Seller, but always have a duty to treat you honestly and fairly. Whatever the representation may be, your Realtor® is always in the best possible position to help you find your perfect home and to guide you through the entire homebuying process.

Once you have found your “Dream Home,” it will be necessary to make an “offer” in writing to purchase the property. Generally, contracts for the purchase and sale of real estate must be in writing to be valid and enforceable. The offer will usually be in the form of a contract presented through the Realtor®. The preferred standard form is pre-printed and provided by the local Association of Realtors® in your city or county. Most Realtors® and attorneys are familiar with the “fine print,” and the Realtor® will be knowledgeable about completing the forms. Ask the Realtor® for the Standard Resale Contract Form used in your jurisdiction so you can become familiar with its standard provisions before submitting an offer. Specific forms are available for resale properties. The KEY elements of the offer, which will become your contract when “ratified,” are highlighted below.

The Purchase Price is the amount that you offer to buy the property.

The Deposit is the amount of money submitted with the contract as a good faith offer to purchase the property. These funds will be held by the Realtor® or the settlement company and credited to you at the settlement.

The Down Payment is the amount of your own money, including the deposit, that you will be using to pay the purchase price. This amount, together with your mortgage loan amount, will equal the Purchase Price.

The Financing section of the contract/offer sets out the amount of money to be borrowed, the type of loan product (e.g. 30-yr. Fixed), the acceptable rate of interest, monthly payments and points (see glossary) associated with the mortgage loan. It will also indicate whether you are asking the Seller to pay any of the points associated with the loan. Most residential contracts contain a financing contingency. This clause normally provides that if you do not obtain a written loan approval or “commitment” from a lender within a “specified time period,” the contract may be declared “null and void.” The clause normally provides that if you have been declined approval for a mortgage loan, despite your good faith efforts to obtain it, your earnest money deposit will be refunded. This contingency, however, generally has very specific notice provisions that must be followed.

The section of Examination Of Title And Costs specifies how title will be taken (see glossary) and who will conduct settlement. It is always your right to select Capitol Title as your settlement services provider. This section usually provides that the transfer and recordation taxes, which are paid to the state and local governments, are shared equally between you and the seller, unless otherwise specified.

After contract ratification you are generally entitled to only one inspection of the premises prior to settlement. The purpose of this “walk-through” is to determine that, at the time of settlement, the property meets the standards established by your agreement. Under the typical “Property Condition” paragraph, all mechanical, electrical, plumbing, heating and air conditioning systems must be in “working order.” This paragraph also normally requires that the property be delivered “broom clean” and substantially in the same condition as the time the contract was ratified. Other general and specific inspections or repair requirements can be negotiated with the Seller and added to the contract in a “contract addendum.”

This is the date on which the transfer and loan documents will be signed, and the parties will meet to exchange the title and keys for your funds. Taxes, assessments and homeowner/condo fees, if any, will be adjusted as of this date. In scheduling your settlement, it is wise to consider the time necessary for loan approval, processing and circumstances special to your transaction. A settlement is typically scheduled for 30-45 days after contract ratification. The time-frame may be shorter on a cash transaction.

Once a written offer has been completed by you, the offer will be presented through the Realtor® to the seller. The seller may accept the terms, reject them or counter-offer new terms. Once the terms have been agreed upon, both the buyer and the seller must sign the written contract. Unless special arrangements have been otherwise agreed to in writing by the parties, the earnest money deposit must be tendered with the signed contract. When these conditions have been met, the contract will be said to have been “ratified.” Copies of the ratified contract will be provided to all parties.

Once the contract has been ratified you are ready to schedule any home inspections agreed to in the contract and to instruct Capitol Title to begin preparations for settlement. You must also select a lender and complete the appropriate applications for financing as specified in your contract.