Location
Decide on the type of housing to purchase and the general location to live. Although needs differ from family to family, there are certain general guidelines which every potential home buyer should consider. The following represents some of the items to consider:
– Availability and quality of schools in the area
– How close you are to work
– Availability of shopping centers, churches and recreational facilities
– General condition of homes in the neighborhood
– Property taxes compared to similar house in other neighborhoods
– Utility rates (gas, electricity, water, and telephone)
– Police, fire protection, and garbage collection
– Availability of public transportation
– Quiet neighborhood or on an arterial street
– Rural, suburban or urban
Price
Give some thought into the approximate price range of the house, and how the monthly payments will be made once the house is occupied. During the qualifying interview, the real estate licensee helps determine the price range and/or payment that will be comfortable.
STOP BEFORE BUYING
Once the prospective purchaser has found the house that seems to be “just perfect”, the tendency is to want to close the transaction right away and move in. STOP! Before getting swept away with the excitement of the moment, there are a number of things to check. The time to ask questions and check facts is before buying.
Condition of the house – A Seller’s Property Condition Disclosure form, completed by the seller, is required on most residential real property. This form can be utilized during the inspection of the property as a “checklist” of items to review. A person qualified to perform inspections can point out any concerns or problem areas. The money spent for an inspection may be a very wise investment. If obtaining a loan, most lenders will require a survey. Whether or not a loan is obtained, it may be wise to have a survey done prior to closing.
Zoning Restrictions – Ask how the area is zoned. Zoning is established by local government and designates the type of buildings and how they may be used, such as: residential, commercial, and industrial.
Restrictive Covenants – These are private agreements that restrict the use and occupancy of real property. Such things as the purpose of the structure to be built, architectural requirements, setbacks, size of structure and aesthetics are only some examples. The consumer or real estate licensee can contact the Register of Deeds to obtain further information.
Taxes – Find out the cost of property tax and if there are any special assessments regarding roads, streets, sewers, electrical, etc. Also check if there are any property tax reduction programs affecting the current year’s taxes.
Easements – An easement is a right or privilege one party has to the use of another’s land for a special purpose consistent with the general use of the land. Easements are commonly given to telephone and electric companies to erect poles and run lines, as well as gas and water companies. Other easements can be given to people to drive or walk across someone else’s land. The consumer or real estate licensee can find what easements exist on the property by contacting the Register of Deeds.
Homeowner’s Associations– Many homes in Northeast Pennsylvania are located in developments subject to a homeowner’s associations. The associations act like local governments by collecting yearly dues for road maintenance and regulating the uses and activities that home owners may engage in. Dues can run anywhere between $200.00 per year to several thousands of dollars. Home owners must also pay local property taxes.
Making the Offer
Most real estate licensees use standard forms (purchase agreement) for offers. The terms of the offer will be the terms of the sale, when accepted. BE SURE THE OFFER IS EXPLAINED TO YOU ITEM BY ITEM BEFORE SIGNING THE CONTRACT. The real estate licensee can assist with writing the offer. Most real estate licensees are not attorneys, and cannot give legal advice. You should consult an attorney if there are any concerns.
Some Items Included in the Contract
– The sale price
– Method of payment including earnest money, deposits, and amount paid at closing.
– Personal property (appliances, curtains, etc.) staying with the property is generally sold by bill of sale.
– Date and time of the signatures of the buyer(s) and seller(s).
– Contingencies.
Earnest Money Deposit
It is normal procedure for the buyer to pay a reasonable cash deposit (earnest money) to bind the buyer and show the seller that this is a sincere offer by the buyer. The earnest money is usually held by the broker in his/her trust account, and is deposited by the next legal banking day after the offer is accepted. If the sale “closes”, the earnest money is applied to the total price of the property.
If the offer is not accepted, or if the seller refuses to complete the transaction, or if the sale is not completed through no fault of the buyer, the earnest money will be refunded to the buyer. If the buyer does not follow through with the transaction after the offer is accepted by the seller, the earnest money may be forfeited, in addition to other possible legal remedies. By law, if a transaction is not consummated, a broker may not disburse any funds held in the trust account, except pursuant to a written instruction of all parties to the transaction or pursuant to a court order.
Once the contract has been prepared (by the seller’s attorney in New York) the salesperson or broker will take the offer to the buyer’s attorney as soon as possible. If the seller accepts the offer, the contract becomes binding upon both parties. If the seller rejects the offer, modifies the offer, or makes a counter-offer, the original offer that was presented becomes null and void. However, should the buyer accept in writing the modifications or counter-offer, the offer is considered valid. After acceptance, the offer becomes legally binding on both parties.
Title Insurance
Title insurance protects the buyer against title defects. The insurance is a one-time expense and covers the period up to the time the buyer takes possession. The lending agency often requires title insurance to be taken out to insure their interests in the property. In Pennsylvania it is often the buyer’s attorney acting as a title agency that procures the title insurance for the buyer. In New York most attorneys will employ an independent title company to secure title insurance.
Contingencies
A contingency is a provision placed in a contract that requires the completion of a certain act or the happening of a particular event before that contract is binding. Often a buyer will submit an offer to purchase contingent upon his or her obtaining financing. Contingencies must be written clearly and concisely.
Closing
When all the inspections and contingencies are completed, the transaction can be closed. Closing can take place at the attorney’s office, the title company, or the lending agency. The paperwork is signed. The buyer will usually have to pay money to cover closing costs. The lender will notify the buyer in advance what is required, to allow time to obtain a check or money order. A closing statement detailing receipts and disbursements in the transaction is furnished to the buyer and the seller. The buyer and seller should review the closing statement for accuracy and completeness. Any questions about the statement should be asked of the attorneys, real estate licensee, the title company representative, or the lending agency representative.
Recording
To establish clear title to the property, the deed must be recorded in the county where the property is located. Recording of the deed is done by the title company as soon as possible. The buyer however, may not receive the original recorded deed back from the county office for several weeks or months because of a paper work log jam.