For Buyers

                For most families, this is the biggest purchase of their lives.  Your home is both your biggest asset and your biggest liability.  It is important that you protect your interests every step of the way. 

                The first and easiest way to make sure your interests are protected is to hire a Real Estate broker to represent you.  I use the term “hire” lightly here.  In most circumstances you do not have to pay this broker, they are paid by the sellers at closing.  Think about that… they buyer pays the broker; there’s NO reason not to have one!  People will often become interested in a house after seeing it during an open house – visiting open houses is great, but I advise against using the agent you meet there to represent you in buying that home.  He or she represents the seller.  Get your own buyer’s broker to help you find a home.  Let me emphasize that you do not save any money by using no broker or using the seller’s broker, instead you just gift a bigger commission to a broker who is not exclusively looking out for your interests.

                You should also get pre-approved by a lender.  A mortgage broker can help you figure out what you can afford, and most importantly, what you can afford comfortably.  A good mortgage broker will help you figure out if you’re ready, and if you’re not, he or she will help you get ready!  This step is also helpful because it will make it easier to make an offer when you find that perfect home.  Many sellers require a copy of a pre-approval letter to consider your offer.  Even if they don’t, a pre-approval letter could give you a leg up on an opposing offer.

                Also, work with an attorney… I realize that because I’m a lawyer my objectivity with regards to this piece of advise may be called into question.  However, please refer back to the intro.  This is your biggest asset and your biggest liability.  Get help from someone who can protect your interest and support you every step of the way.   

Let’s walk through the process:

1. You decide you want to buy a house.  The first step is to seek out a Real Estate agent or Broker.  He or she can help put you in contact with the rest of the team you’ll need (a mortgage broker, an attorney).  If you don’t know a good broker, ask me! I can point you to someone who would be a good fit for your situation.

2. Once your family lawyer or your real estate agent has put you in contact with the mortgage lender, get pre-approved.

3. Start looking! This is the best part of course…. Pre-approval in hand, start looking at properties within your budget and your needs with your real estate agent.

4. Once you have found one you like, you’re ready to make an offer.  This is the part of the process where I recommend you involve your lawyer.

a. The offer to purchase is a legally binding contract.  You will usually leave a deposit of $500 – $2,000 at this step of the process.  Legally binding + deposit = talk to your lawyer.

b. In this document, you’ll note what stays with the house and what goes, what the financing and closing deadlines are, and your right to inspect the property before committing.  For example, if you want to do a lead inspection, or pest inspection etc, and make your commitment contingent on the finding of this inspection, you need to do it here. 

5. Offer made and accepted? Next step is to do those inspections.  This will allow you to find any defects that are not easily noticed from just walking around the house. 

6. If everything is great, you move on to the Purchase and Sale Agreement.  If you don’t have a lawyer yet, you must absolutely get one now!

a. At this point a deposit of up to 5% may be required (though your broker or lawyer can negotiate this).  But remember our rule legally binding + money on the line = get a lawyer!

b. The purchase and sale agreement (or as we call it in the biz… the P&S) incorporates the terms of the Offer to Purchase, plus anything else you’ve worked out in connection with the inspections. 

c. The standard forms tend to favor the seller, that’s another reason its important to have a lawyer.  She can negotiate an addendum to the P&S to protect your interests. 

7. Do your homework to have your loan approved.  Even if you have been pre-approved this is the part of the process where you really do some homework.

a. Let your lender know you found something and get them all the documents.  Be timely about getting her any other docs she might need (taxes, account statements).

b. If you’re not approved the Mortgage Contingency in your P&S gets you off the hook, but don’t slack, it doesn’t get you off the hook if its your fault.

c. Do not be creative with the information you give the lender. 

8. Closing… you’re so close you can taste it – First a roll call

a. The bank’s attorney or closing attorney: Her job is to certify the record title (look at the title history of the property and make sure everything is in order), conduct the closing (get everything together, have everything signed and get to the correct parties), and disburse the funds (pay people).  Your own buyer’s attorney can serve this role.  There is no conflict of interest between the bank an you.  You both want good title to pass, and a good binding mortgage.  Even though this is the bank’s lawyer you have to pay for it.  If you have your own lawyer do it, she’ll probably give you a deal.

b. The seller’s lawyer: She has to fix any title problems the closing attorney finds, prepare the deed, and represent the buyer.

9. More on the closing: Here you will be presented with roughly one million pieces of paper to initial and/or sign.  Well it’s not quite a million, but it’s a lot and that’s because rights and responsibilities are being created left and right at the closing.  All the paperwork you sign transfers the property to you, creates your new relationship with your lender, and informs you of your rights. 

 So there it is, buying a home in a nutshell… if you have any questions about this process, please feel free to contact us, we’d love to hear from you!