The Offer and Acceptance

Assuming that you are working with a real estate agent or realtor, after you find a property that you like, your agent or realtor can help you write up an offer on the house or condo. Typically a buyer provides $1000.00 in earnest money to accompany the offer. An important point to remember is if you make an offer and it is accepted by the seller, you now have a binding contract, so make sure that you are actually willing to buy the property before making an offer. If you change your mind later and want to terminate the contract, you can only do so if the terms of the contract allow it, and by following the procedures that the contract provides for termination. Typically it’s best to consult a lawyer if you are thinking of terminating the contract.

Attorney Modification and Home Inspection

Typically a contract will contain a provision allowing your attorney to review the contract and make suggestions or changes to the contract by a certain deadline, usually five business days after the seller has accepted the contract. During that time, you can review the contract with your attorney and he/she can let you know of any important issues. If you do not provide the contract to the attorney before the deadline has passed, your attorney will not be able to make any changes. Typically before the deadline passes, a buyer may terminate the contract if a buyer changes his/her mind, but once again, it has to be terminated properly.

One important note regarding new construction contracts. In some cases, a buyer does not bring his/her contract to an attorney until after the attorney review deadline has passed. Typically this happens when the buyer has gone straight to the developer and signed a contract without being aware of the attorney review period. A developer may or may not allow an attorney to modify the contract, after the deadline has passed, and in some limited cases, a buyer may unknowingly waive the attorney review period. If the review period has passed, the developer is normally acting within its rights to not allow any changes. New construction contracts should particularly be reviewed by an attorney for several reasons: 1) Buying new construction often means the building does not exist. If a property is not built yet, there are more “unknowns” involved; 2) Construction, labor and permitting problems, may cause a significant delay in the building process and may greatly delay closing, which can have an adverse effect on the timing of the sale of your current property, or effect your career or family plans; 3) Tax credits need to be reviewed to make sure that buyers will be properly compensated for unbilled or undivided taxes.

For existing properties, the attorney modification period normally runs concurrently with a home inspection period. I always recommend that a buyer hire a home inspector. While some repairs and problems may be easily spotted, a home inspector has certain expertise and experience to know for example, whether electrical wiring complies with local codes or whether a roof has been surfaced properly. It is better to know before you buy a property what repairs may need to be done. The price you contracted for may not be as good if major repairs are needed. In some cases, you may ask the seller to repair the defective items, or give you a credit for the cost of the repairs.

Mortgage Contingency

Unless you are paying cash for a property, you will need to make sure you qualify for a loan. Normally, 30 to 45 days from acceptance of the contract is the time frame given to buyers to find financing. When you have a signed contract, you should provide it along with your tax returns, bank statements and other financial documents to a mortgage broker or bank who will evaluate your credit history along with your loan application and let you know the interest rate and other loan options.

Final Walkthrough

It is a good idea to take a final walkthrough the property to make sure that no changes have occurred or other repairs have arisen. You want to make sure that appliances, furnace and air conditioning are still in working order. The walkthrough is not as in-depth as the initial inspection, but is still a good idea.

Closing

The closing location and time are coordinated between the buyer’s and seller’s attorneys which if all goes according to plan, occurs on the date written in the contract. The buyer must also have his or her loan ready to fund. The closing typically takes place at a title company. The title company acts as title insurer and as escrowee. As title insurer, the title company conducts a search of the property to make sure that there are no liens on the property such as unpaid taxes or boundary issues. As escrowee, the title company also takes in all funds from the closing such as the lender’s funds and the buyer’s funds. The title company closer makes sure that all lender requirements are met and that both the buyer and seller have provided all documentation and funds to complete the transaction. The buyer’s attorney reviews the loan documents, deed and title with the buyer. If everyone has met their obligations, the closer releases the funds to the appropriate parties and the closing is completed.

The only thing left is to move in (and of course pay your mortgage and property taxes on time).