Home/Condo/Vacant
Land: Buying Process
There is often more to the buying
process than meets the eye. Here are a few things that might help.
The Real Estate Agent (REA) and
Buyer meet. The REA will counsel the Buyer. There will be a
qualifying interview to find out the Buyer’s wants and needs. The
REA will provide disclose the brokerage relationship that
s/he has with the Buyer. It will usually be a buyer’s
agency or a transaction brokerage.
After discussing the Buyer’s
wants and needs, the REA will select properties (on paper)
that s/he feels the Buyer might be interested in viewing. The REA
will set up showings of these.
The REA and the Buyer will
view the properties together.
If the Buyer finds a property
that is acceptable then the REA and the Buyer will plan their
negotiation strategies. What is negotiable? Things that will
be discussed include what the local traditions are; who
usually pays what; is there a 1% transfer tax; what are the costs
associated with the closing. A multiple offer strategy is developed
if needed. The REA will explain what an Improvement Location
Certificate (ILC) is; what the HOA (Home Owner’s Association)
requirements are; what earnest money is required; what the tax
consequences might be; if a 1031 exchange might be appropriate; and
what the price, terms, dates, deadlines, and time of possession will
be. Extra title coverage for the Buyer is always recommended, but
to obtain it, an ILC may be required. Any inclusions and/or
exclusions are discussed.
The REA will put together a
written offer and go over it with the Buyer. The REA will answer
questions if any, recommend tax or legal counsel if appropriate, and
determine if the offer includes the payment of earnest money.
The REA will notify the
Listing Agent.
The REA and the Buyer will
negotiate an offer or other scenarios such as:
If the contract is accepted, the
listing agent will deposit the earnest money within 24 hours
of acceptance of the contract.
The REA will order the title work
to be done and check to see if an Improvement Location Certificate (ILC)
is required.
The Buyer’s #1 Priority is
to apply for a loan in a timely matter. This is the Buyer’s
responsibility. The mortgage application must be done by the
contract deadline. The Lender will order an appraisal. The Buyer
will give the loan contact info to the REA who will notify the title
company. The REA will supply a loan application letter to the
listing agent and any 1031 contact info. The Buyer will need to
keep the REA in the loop.
The Buyer’s # 2 Priority
is to call inspectors and order the inspection.
The REA and the Buyer’s # 3
Priority is to order a survey or an ILC if required for extra
title coverage.
The Buyer needs to take care of
any contingencies such as delivering the earnest money by the
specified date, getting any loans, and selling any other property.
The Buyer also must exercise
due diligence. The Buyer has the responsibility to investigate
any Homeowner Association, any governing documents and/or any
covenants. The Buyer may wish to call neighbors with any questions
as well as call the county. If necessary, the Buyer should contact
well drillers. If the land is vacant and being built on, the Buyer
may wish to get the builder and excavator to look at the site.
The REA and the Buyer will
consider what to do once the inspections are done. They have
several options.
Inspection Options:
-
1. the property is acceptable
“as is”
-
2. negotiate for fixes or
credits to fix
-
3. make a written notice to
terminate the contract by the deadline
The REA will then schedule the
closing. If done by mail, it will be necessary to determine
where the documents are to be delivered. A Power of Attorney will
be necessary if one person is not available. The closing may be
done in person with the parties present. It will be necessary to
have signatures notarized.
The REA will verify that all work
contracted by the buyer has either been paid by closing or that the
contractor has given his bill to the title company to pay at
closing. (There will be an affidavit signed to this effect at
closing.)
The REA will check on the
transfer of utilities.
The REA will notify the Buyer to
bring a Cashier’s Check to the closing for the amount to be
determined by the lender and the title company or else to supply
wire instructions to wire funds to the title company. The Buyer
MUST bring his/her driver’s license to the closing.
If there is personal property
included in the sale, it will be settled at closing with a county
questionnaire about the value of the personal property. This may
affect the loan as lenders do not want this amount included in the
real estate loan. It may also affect the property appraisal or
valuation. Hint: go for garage sale value, aim low, unless you are
paying cash.
The REA and Buyer will make a
final walk through before closing.
The REA and the Buyer will both
attend if the closing in done in person. Otherwise the REA will
contact the Buyer when all funds are received and the transaction is
closed.
The REA will supply the Buyer
with a moving kit and closing contact information. |
REAL ESTATE INFORMATION
8
