Keith W. Michon, P.C. Buyer Representation
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- Review offer to purchase & purchase and sale agreement (P&S);
- Negotiate P&S;
- prepare buyer’s addendum to P&S;
- Review on line condominium documents & plans if applicable;
- Track mortgage contingency date;
- Address and final “walk through inspection” issues; attend closing.
- Review closing documents and HUD-1 settlement statement (now called the Closing Disclosure);
- Coordinate final walk-through inspection issues;
- Attend closing.
Commonly Asked Questions Regarding Real Estate Matters
One way of introducing estate planning is to answer some questions clients frequently ask us. We believe that these questions and answers are important enough to include here, and we hope you find them informative.
- When should a Buyer get an attorney involved?
- What language should be in the Offer?
- Why is the language of the Offer important?
- Why not just skip the Offer?
- Should the Buyer do anything else prior to submitting an offer?
- What is involved in the home inspection?
- What is the next step after the home inspection?
- What additional protections does the Buyer's Attorney add to the P&S?
- What else does the Buyer's attorney do?
- Do you recommend that the Buyer do anything else?
- Are there any decisions to make at closing?
Prior to submitting the Offer to purchase. The Offer in Massachusetts is a binding contract. The terms and conditions of the Offer should contain the essential language of the Purchase contract.
- The amount of the deposit (the less the better)
- The loan terms if money is being borrowed as part of the home purchase
- The amount being borrowed.
- The date of formal financing approval.
- What type of home inspection(s) are being performed
- Closing date and formal financing approval date
- Whether to purchase is contingent on the sale of the Buyer(s) current home
- Items (lighting, blinds, appliances) which are to remain in the home
The terms of the Offer are automatically incorporated into the Purchase Agreement.
The purchase contract is a more detailed agreement between the parties. For instance:
Subsequent to the Offer, the Buyer should perform one or home inspections by a licensed home inspector. Depending on the location, market, and Seller's motivation to sell, the Seller may agree to perform certain repairs of items revealed by the home inspection which are then typically listed in detail in the Purchase Agreement.
The Offer provides for the basic framework of the deal which is spelled out in additional detail in the purchase Agreement. Additional clauses should specify that the title is "insurable" and that the parties will execute a "mutually acceptable" purchase agreement.
If the property is a condominium, the Offer should be subject to a satisfactory review of the condominium documents (which contain the rules and regulations of the condo) and the budget (which details the financial "health" of the complex).
Yes, I strongly recommend that Buyers obtain one or more pre-approvals from a reputable licensed lender. The loan amount combined with the Buyers down payment would establish the Buyer's price range.
Also, a lender pre-approval typically involves some type of credit check which confirms acceptable credit or discloses a problem which may require attention before the Buyer considers a home purchase.
However, a pre-approval is not a formal loan commitment. That comes later.
I also recommend that the Buyer should look around to find the town (and neighborhood) that they may desire to settle down into. School systems should be researched. Buyers should also decide what type of home layout is most desirable to them.
I strongly recommend that all Buyers contract with a licensed home inspector to walk through the premises and, with his or her trained eye, provide a detailed analysis of the home from the roof down to the basement heating system. The cost is well worth it. The Buyer may, depending on the location and/or results of the home inspection, have a radon test and termite inspection.
The next step is to enter into the Purchase & Sale Agreement.
The Agreement, which is based on the Offer, is usually drafted by the Broker or Seller's attorney and involves a form which favors the Seller. It is the job of the Buyer's attorney to "even the playing field" by making approximately a dozen changes to the contract itself while adding additional protections via an Addendum to the Contract.
That the Buyer's deposit will be the worst case financial exposure in the event the Buyer pulls out of the deal unexpectedly (loss of job for instance).
That the Buyer needs only apply for 1 loan and perform only 1 appraisal to attempt to obtain formal financing. If the appraisal is low, the Buyer may be overpaying. If they are denied by their lender, the Buyer should have the option to back away from the deal and receive return of their deposit.
That the Seller will accept funds from the bank attorney (who conducts the closing).
The Buyer attorney continues to monitor the process. An important date is the "mortgage contingency date". This is the date whereby the Buyer must have written confirmation from their lender that they have formally been approved. Depending on the circumstances, the Buyer's attorney must either seek an extension form the Seller or provide notice requesting return of the deposit.
The Buyer's attorney also reviews the Closing figures (in the form of a HUD-1 Settlement Statement) and final terms of the loan to insure compliance with the formal loan commitment.
I highly recommend that the Buyer have his or her attorney attend the closing. It is not unusual for the final inspection (typically performed by the Buyer and Broker the morning of the closing) to reveal a problem which must be resolved at the closing table. At a recent closing, the Seller's moving van plowed into the side of the home, cutting all power to the home.
Yes. Shop around for a good lender. This may be an established bank or a mortgage broker (who shops your loan to several banks). While rate is of critical importance, a lender must also be able to timely process the Buyer's loan application to avoid delays which may place the Buyer's deposit at risk.
Do not over extend yourself. Make sure that the pre-approval monthly payment comfortably fits within your lifestyle. Also, try to realistically budget closing costs so that you are not left short at closing and/or without sufficient funds for home furnishings.
The Buyer will be required to make a few decisions at closing. One involves the one time purchase of title insurance to protect the property. While each closing is different, I typically recommend that the Buyer purchase insurance as title claims to property may be asserted up to 50 years later, which could affect the buyer's ownership. Title insurance protects this interest for the single premium cost.
The preceding is intended for informational purposes only and is expressly not to be considered legal advice. Since every transaction involves unique contingencies, please contact The Law Office of Keith W. Michon, P.C. prior to entering into an Offer to Purchase or Contract to Purchase to ensure you are adequately protected.