CHOOSING A REALTOR
Here is a link to the National Association of Realtors website that can best explain what a REALTOR can do for you:
http://www.realtor.com/basics/allabout/realtors/why.asp?source=web
A Buyer's agent works exclusively for you and anything that you tell your Buyer's agent is confidential. They are generally paid by the Seller, but his/her loyalty is to you.
If you are a Seller, your agent is called the Listing Agent and also works exclusively for you. When you contract with a REALTOR (list your home) to sell your home, you will agree to pay a fee for his/her services and that will generally include money to be paid to any REALTOR who sells your home, including a Buyer's Agent. Only your agent works for you and holds your information confidential, so you might want to be cautious about what you tell an agent showing your home.
Your REALTOR will want to know things about your finances to assess your ability to buy a home and determine the price range of homes to show you. Then the REALTOR will ask about your lifestyle, the number of bedrooms you want, do you want a yard, what kind of commute will you have, and other questions to help filter through the available homes to be able to show you the ones that best fit your needs. The more that you have thought about what is really important to you, the better able your REALTOR will be to help you find the best home.
What a REALTOR can, and cannot tell you.
A REALTOR will not tell you what school your child will go to if you buy this house. Why? Because school districts change. If your child is young, a new school might even be built before he or she begins school! By law, a REALTOR cannot tell you if someone has died in a property. BUT a REALTOR can give you websites that will have lots of information about the community and schools. They can give you comparables -- the prices that similar houses have sold for to help you determine what price you want to pay. A REALTOR will know about loan programs that fit your needs and the specifics of the home you like and can help you find lenders who will work with you. A REALTOR working for the seller cannot tell you why the seller is selling, unless the seller gives them permission, just as your buyer agent cannot tell the seller just how much you are willing to spend on house, they will only tell your seller what your current offer is. A REALTOR cannot tell you the condition of the house, but can help you find a home inspector that will go through the house with you and tell you about the condition of things such as the roof, the HVAC system, the plumbing, and the appliances.
FINDING A HOME
There are many homes to look at and it may become confusing. Take notes after each property about what is important to you. This may be the number of bedrooms or it may be that you love the colors that the owner has painted each room. List things that you would want to come with the home, washer-dryer, curtains, a second refrigerator in the game room. And then write down the drawbacks of each home. Ask your REALTOR about taking pictures of the home to help you remember each property, but understand if a Seller does not want pictures taken of the interior of their home. Be realistic in what you want. Some things might be beyond your price range. You may need to compromise, for instance a larger home but a longer commute.
YOU HAVE FOUND A HOME, NOW WHAT?
WRITE AN OFFER
You and your REALTOR will sit down and write an offer to purchase the home. The REALTOR will use the state or regional contract form that you have already seen and fill in all the blanks and addendum. There will be many, so make sure that you allow several hours for this process, especially if this is your first home. While there are many important parts of the offer ( as attorneys we think that each part is important!) here are some key terms that you will encounter when writing the offer.
Purchase Price -- this is what you are offering to pay for the property.
Deposit (also known as Earnest Money or EMD). This is the amount of money (in the form of cash or a check) that you are giving to secure the offer. This money will be held by one of the REALTORS or FCT in an escrow account until settlement. You do this because a contract needs consideration, ie, something given, in order to be complete. You also do this to show your seller that you are sincere about going forward with your offer and completing the transaction. This money may be returned to you OR may be kept by the seller if you do not settle. If the deposit is too small the seller may feel that you are not as committed to the transaction, you might walk away and lose $500 but you might not do the same if $5,000 is at risk. You will get credit for the deposit at settlement on the HUD 1 settlement statement.
Down Payment -- this is the purchase price minus your loan, the amount of money that you will be paying for the property out of your pocket. This is not the entire cost of settlement, though, remember that there will be loan fees, recording costs and attorney fees.
Financing -- this is the money that you are getting from a lender. In the financing section of the contract you will spell out the amount of your loan, the type of loan you are getting, and the interest rate. Most contracts are contingent on financing, so it is important that you know the details of your loan when writing an offer. For this reason, most REALTORS will ask you to meet with your lender before writing an offer.
Seller Concession or Credit -- money credited to you at settlement from the seller. This may be used to cover all or part of your closing costs. A seller may also agree to pay points to reduce your interest rate.
Settlement Date -- the day that you actually will be purchasing your home. At the time settlement ends, the property must be vacant (unless you agree otherwise in the contract). You will be able to move it at this time. While the Date of settlement in written in the contract, the time is not. Since Sellers are often moving out on this day, they frequently want settlement to occur later in the day, so work with your REALTOR to schedule the time early in the contract period so that everyone can make plans.
Contingency -- A contingency is something that must be fulfilled or eliminated in a certain time period or the contract may end. For example, if the property you are purchasing is in a homeowner's association or a condominium, by law you have a certain period to review the HOA/Condo docs and the contract is contingent until that time expires. During the contingency you may ask for a modification of the contract and if that is not acceptable to the Seller you may void the contract. Home Inspection contingencies have lots of variations, so feel free to call FIRST CLASS TITLE to ask about your specific situation and how best to handle it.
House Location Survey- a drawing showing the boundaries of the property with improvements- the house, sheds, fence, etc. Many lenders do not require a survey, so please contact FIRST CLASS TITLE if you do want a survey. The house location survey is the basic survey, it does not establish the actual corners of the property. That is done by a Staked Survey, where the surveyor actually puts wooden stakes in the corners. This is much more expensive and takes longer, so please contact FIRST CLASS TITLE immediately if you want this kind of survey.
Property Condition- most contracts call for the property to be in substantially the same condition on the day of settlement as the property was on the date of the contract. If there are things that you want repaired, they must be included in the contract. And, if you want specific things removed (the old swingset in the backyard, for example) you must put this into the contract.
Home Inspection- you may ask for time to have the home inspected. A home inspector (some states have licensing procedures, some do not, and there are two professional organizations that home inspectors join). The inspection will take several hours and you should be there with the inspector. The inspector will check the operating systems (HVAC, electric, plumbing), the structure (roof and deck) and appliances. This will let you know not only that things are working, but how long each item is expected to last.
YOUR REALTOR PRESENTS THE OFFER
Once you have completed the offer, signed it and tendered a check for the earnest money deposit to your REALTOR, your REALTOR will present the offer to the seller. In some areas your REALTOR will sit down with the Seller and his/her REALTOR and go over the offer, in others, your REALTOR give the offer to the Listing Agent and waits while the Listing Agent and the seller go over things. The seller may accept the offer (sign it just as it is without any changes), reject the offer (just write "rejected" on it and return it) or counter your offer (return it signed, but with changes that the seller has initialed and you must also initial before the offer is a contract). Sellers rarely reject offers outright, but they do frequently counter. They may want a different sales price, settlement date or to change the seller concession that you have requested. An offer may go back and forth between the parties several times before all terms are agreeable. Once everything is acceptable, the last person will also put the date and time at the end of the contract to indicate the Date of Acceptance. Any contingencies will run from this date, unless otherwise specified.
YOUR CONTRACT IS ACCEPTED, NOW WHAT?
If you have not applied for your loan, do this immediately. Your REALTOR can help you find a lender with loan programs suited to your needs. Your lender will want copies of pay stubs and tax returns and bank statements. They will need account numbers for all credit accounts you have along with information on any loans that you have, such as car or student loans. At the time you apply for the loan the lender typically will collect about $500 to cover the cost of the credit report and the property appraisal.
Cooperate promptly with all lender requests.
Perform all inspections in a timely manner as required by the contract.
Get ready to move.
Decide how you want to take title. When the deed is signed by the seller and ownership of the property is transferred to you it is said that you have taken title. If there is more than one purchaser you will need to decide on the Tenancy, how you own the property and is not to be confused with being a tenant. If you are a single person buying on by yourself you will take title as a sole owner. Two or more people can take title as Joint Tenants (equal, undivided ownership of the property. When one Joint Tenant dies, the survivor or survivors automatically own the deceased person's share. Multiple owners can also take title as Tenants in Common. In that case, the percentage ownership does not need to be the same and when one owner dies his/her estate inherits the percentage ownership in the property. If you are married, you and your spouse may choose to take title as Tenants by the Entireties, a special joint tenancy for married people. Please call FIRST CLASS TITLE with your specific questions on how to take title.
Arrange for Homeowner's Insurance and get your receipt to your lender.
Call all utilities (water, gas, electric, phone, cable) to set up accounts in your name.
Get your certified or cashier's check. Call FIRST CLASS TITLE for the amount. We will give you the exact amount when possible, but often we do not have finalized lender information until the day of settlement, so you may prefer to use our estimate.
SETTLEMENT (I.E. MOVING) DAY
Before coming to settlement you will do your final walk-through of the property. Your contract will generally allow one inspection of the property prior to settlement. This is your last chance to confirm that everything is in substantially the same condition as when you finalized the contract of sale. Your REALTOR will be there to let you into the property. You should allow enough time to check that all appliances work and that things look as they should. Remember that the Sellers may still be in the process of moving out while you are inspecting it. If there are any property condition issues, your REALTOR will call us and together we will make sure that you do get what you contracted for.
Settlement itself should take about 45 minutes and consists of signing many documents, turning over your check and getting the keys to your new home. Among the documents you will sign will be the HUD 1 settlement statement that details your loan fees, escrows for taxes and insurance if your lender requires, title search and exam fees, the cost of title insurance, state and county recording costs and the pro-ration of taxes and any HOA/Condo fees. You will pay taxes and any HOA/Condo fees starting the day of settlement. Your seller may have already paid those, in which case the seller will be reimbursed for that portion of the fees that cover your ownership. If the seller has not paid these fees, you will be given a credit to cover the seller's time of ownership. Taxes are collected differently in different jurisdictions, so call FIRST CLASS TITLE for the specifics of your property.
If you are getting a loan, you will also sign a Note (your personal obligation to repay the loan), a Deed of Trust (the lender's security interest in your property which is recorded among the Land Records to show that your cannot sell the property without paying the lender back), and many other forms. At FIRST CLASS TITLE we are here to explain these to you and want to make sure that you understand all that you have signed.
AFTER SETTLEMENT
Move in!
Make sure that all utilities are in your name. In parts of Maryland you will need to call the water meter reading in to WSSC.
We recommend that you change the locks on the property.
You may need to get a new mailbox key, if your property is served by a cluster mailbox. Take your HUD 1 to the post office for that.
Look into appealing your property tax assessment. In Maryland you have a limited period of time to appeal as a new homeowner, but in most counties you can fill out the paperwork online. |
