Purchasing Your Home
This section goes into more detail about the contract to purchase real estate and the ultimate goal…the real estate closing! Again, you know we have to say it, “this skinny information was compiled from various sources and is deemed reliable. While it is believed to be accurate, it can not be guaranteed.” Please contact us directly with any real estate question regarding the purchase process. Consult your lender, accountant, attorney and other professionals as appropriate for their advice and opinions.

Understanding Agency

Before you submit an offer, it’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company.

1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
    
2. Subagent. A subagent owes the same fiduciary duties to the agent's principal as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer’s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
    
3. Buyer's representative  (also known as a buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.
    
4. Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.
    
5. Designated agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
    
6. Nonagency relationship (called, among other things, a transaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

[ back to top of page ]

5 Property Tax Questions You Need to Ask

Before you submit an offer, one thing to consider is the taxes for property in question.

1. What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill or the tax record to help you determine this information.
    
2. How often are properties reassessed and when was the last reassessment done? Generally taxes jump most significantly when a property is reassessed.
    
3. Will the sale of the property trigger a tax increase? Often the assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.
    
4. Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate?
    
5. Does the current tax bill reflect any special exemptions that you might not qualify for? For example, many tax districts offer reductions to those 65 or over.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

[ back to top of page ]

Submitting an Offer

Once you find the property that meets your needs, consider several things before submitting an offer to purchase.

1. COMPLETE THE ARI BUYER’S CHECKLIST! We will explain this comprehensive ARI checklist to you. It should be completed before an offer to purchase is executed.
    
2. Review the South Carolina Property Disclosure form and Lead Based Paint form (prior to 1978) completed by the seller. These disclosures tell the buyer about the house and should indicate if the seller knows of any problems with the home.
    
3. What payment can I afford? Consult with you lender! The monthly mortgage payment usually includes principal, interest, mortgage insurance and tax and insurance escrows. Again, these items are variable based on the type of loan you choose and the amount of the loan and down payment.
    
4. What sales price should I offer? We will provide you with comparables to help you make your decision on what price to offer. If you understand the comparables and know what payment you can afford, you can determine the sales price amount to offer. We can help you with strategies but will not usually recommend a specific sales amount.
    
5. Should I ask for Closing Cost? We can provide you with an estimate on your closing cost. Our closing cost estimator has different formulas to help calculate your closing cost as close as possible. Your lender will also be able to explain the various cost involved with closing your loan.
    
6. What contingencies are associated with my offer? Do you have another home that you need to sell before you can purchase this one? We will discuss contract contingencies with you as we fill out the contract to purchase.

[ back to top of page ]

After the Contract is Accepted: the Loan Application

There are several timelines involved in your contract to purchase real estate. One of the first “milestones” involves the loan. Per the Contract of Sale the purchaser has 5 business days to make loan application. Once a loan application is made, the lender works to verify the information given by the purchaser(s) on the loan application. The lender also orders credit reports, the appraisal on the property and coordinates with the attorney and homeowners insurance agent. See the Mortgage and Financing section of our site for more information on mortgages.

Once the lender receives the various pieces of information, they put it all together and forward to an underwriter to approve the loan. The loan package usually will not be forwarded to the underwriter until all information requested has been returned to the lender.

If all information is returned promptly, a lender can have a loan ready to go to the underwriter in two or three weeks. Ask your lender about their timeframes for processing a loan. We keep in touch with lenders as well to monitor the progress of your loan.

[ back to top of page ]

Selecting an Attorney

[ back to top of page ]

Home Inspections

Check your specific contract, but most contracts give the purchasers 10 business days to have the home inspected by qualified professionals and an addendum submitted to the sellers. The 10 business days are measured from the date the contract was accepted by both parties. This timeline is very important.

Schedule the home inspection as soon as possible. We will help you coordinate this. Choosing the Home Inspector is YOUR CHOICE. If you do not have an inspector of preference, consult your local phone book, ask friends, call us for a few inspectors used by us and our past clients or call Carolina Inspection Services, ARI’s preferred partner. Remember, the CHOICE IS YOURS and we can not guarantee or be held liable for the actions of any professionals linked to our web site or mentioned by us.

Keep in mind, there are companies which routinely do complete home inspections from roof to crawl space. However, they may not be qualified to do some specialized inspections such as for septic tanks, wells, swimming pools or foundations. The same 10-day rules apply to these inspections. Schedule these inspections as quick as possible. Make sure you stay in touch with us during this time.

This “Home Inspection Phase” is another round of negotiations. Once you receive the home inspection from the inspector, review it with us. Unless a home is being sold “as is” or the contract does not allow it, the buyer can ask for the seller to remedy certain items or for more time to have certain inspections performed. The seller might agree to the request or could modify the requested items. Consult the section on Home Inspections in your contract of sale for details on the timeline involved for home inspections.

[ back to top of page ]

10 Questions to Ask a Home Inspector

1. What are your qualifications? Are you a member of the American Association of Home Inspectors?
    
2. Do you have a current license? Inspectors are not required to be licensed in every state.
    
3. How many inspections of properties such as this do you do each year?
    
4. Do you have a list of past clients I can contact?
    
5. Do you carry professional errors and omission insurance? May I have a copy of the policy?
    
6. Do you provide any guarantees of your work?
    
7. What specifically will the inspection cover?
    
8. What type of report will I receive after the inspection?
    
9. How long will the inspection take and how long will it take to receive the report?
    
10. How much will the inspection cost?

Portions adapted from Real Estate Checklists and Systems and used with permission (www.realestatechecklists.com).

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

[ back to top of page ]

What Your Home Inspection Should Cover

This is a sampling of what your inspection should cover. If not, ask your inspector about these specific areas:

• Siding: Look for dents or buckling
• Foundations: Look for cracks or water seepage
• Exterior Brick: Look for cracked bricks or mortar pulling away from bricks
• Insulation: Look for condition, adequate rating for climate
• Doors and Windows: Look for loose or tight fits, condition of locks, condition of weather stripping
• Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts
• Ceilings, walls, and moldings: Look for loose pieces, drywall that is pulling away
• Porch/Deck: Loose railings or step, rot
• Electrical: Look for condition of fuse box/circuit breakers, number of outlets in each room
• Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation
• Water Heater: Look for age, size adequate for house, speed of recovery, energy rating
• Furnace/Air Conditioning: Look for age, energy rating; Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, other factors such as payback period and other operating costs, such as electricity to operate motors.
• Garage: Look for exterior in good repair; condition of floor—cracks, stains, etc.; condition of door mechanism
• Basement: Look for water leakage, musty smell
• Attic: Look for adequate ventilation, water leaks from roof
• Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your area and the size of your family
• Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

[ back to top of page ]

Wood Infestation Report /CL-100 (Termite Letter)

A CL-100 form must be “clear” to be acceptable to the mortgage company. “Clear” means that any recommended repairs have been made prior to closing. Most mortgage companies require that a licensed contractor complete major repairs. Refer to your contract of sale to determine if the buyer or seller is responsible for repairs.

If you are to order your termite letter, it should be done within 30 days of closing. (Call us for access to the property.) A copy of the termite letter, the invoice and any repair invoices should be given to the attorney 3 business days before closing. The original, clear termite letter should be given to the attorney at closing. Of course we will help you through this process and go over the CL-100 letter with you!

[ back to top of page ]

Heating & Air Conditioning

Most real estate Contracts of Sale will request a satisfactory heating and air conditioning inspection letter. Refer to your contract to see who will pay for the this inspection letter. Generally, the party paying for the inspection has the right to select the company to perform the inspection.

The inspection letter is generally performed within 15 days of closing. The inspection letter secured prior to closing is not a guarantee or warranty of any kind. It only states that the unit was working at the time of inspection.

If you ordering the heating and air letter, coordinate the time with us as the inspector will need to go inside the house. We ask the inspection company to notify us if repairs are necessary to obtain a clear letter. Fax a copy of this inspection letter to the attorney around 3 days before closing. Either a bill to be deducted at closing or a paid receipt must accompany the letter. Please ask us if you have any questions regarding the CL-100 or HVAC Letters.

[ back to top of page ]  

Homeowners Insurance

About two weeks before closing, seek quotes for homeowners insurance. Sometimes, the company insuring your automobiles will give you a discount on your homeowners insurance. After you chose which company you wish to use, you will need to give the insurance company your attorney’s name and your lender’s name.

Most buyers choose to have their first year’s premium deducted at closing. The attorney will usually collect also a few months premium to set up your escrow account each month. If you pay your insurance via escrow each month, there should be sufficient funds in your escrow account for the mortgage company to pay the next year’s premium. You are in essence putting money away ahead of time for your insurance premiums.

You must have proof of insurance before closing unless you have a cash transaction. Even if you are buying the home without financing, it is still a good idea to have the home insured prior to closing!

If you need names of companies that offer homeowners insurance, look in your local phone book, ask friends, or call us for companies used by us or our clients. Remember, it is YOUR CHOICE and we can not guarantee or be held liable for the actions of any professionals linked to our web site or mentioned by us.

[ back to top of page ]

5 Things to Understand About Homeowners Insurance

• Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverages must be bought separately.
   
• Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
   
• Understand replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.
   
• Understand actual cash value. If you choose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.
   
• Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

[ back to top of page ]

10 Ways to Lower Your Homeowners Insurance Costs

1. Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower.
    
2. Buy your homeowners and auto policies from the same company. You’ll usually qualify for a discount. But make sure that the savings really yields the lowest price.
    
3. Make your home less susceptible to damage. Keep roofs and drains in good repair. Retrofit your house to protect against natural disasters common to your area.
    
4. Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.
    
5. Be sure you insure your house for the correct amount. Remember, you’re covering replacement cost, not market value.
    
6. Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.
    
7. Stay with the same insurer. Especially in today’s tight insurance market, your current vendor is more likely to give you a good price.
    
8. See if you belong to any groups—associations, alumni groups—that offer lower insurance rates.
    
9. Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
    
10. See if there’s a government-backed insurance plan. In some high-risk areas, such as the coasts, federal or state governments may back plans to lower rates. Ask your agent.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag

[ back to top of page ]

Do You Need a Survey?

In our opinion, you should have the property you are purchasing surveyed. A survey should show the property boundaries and any encroachments or utility easements. Some lenders require a survey be less than 10 years old and often times the attorney will need a current survey to underwrite the title insurance. Most surveys are straight forward, but if any questions arise, your attorney should be able to explain your survey.

[ back to top of page ]

Occupancy & Moving

Your Contract of Sale will address the terms negotiated between the purchaser and seller as to when occupancy will be given over to the purchaser. Most contracts state that occupancy will be given to the buyer 24 hours after closing. However, in some instances this can vary. Please review the occupancy portion of the contract to determine the terms of your particular situation.

Please be aware that some things may come up which would prevent the closing from taking place on the agreed upon date. Attorneys usually order title work as close to the closing as possible so the information will be up to date. Most of the time, there is a built in 5 day extension agreement in the contract. Please check your contract if it appears that the closing will not take place as planned.

It is a good idea to go ahead and contact a moving company if need be to get on their schedule. Ask them about their cancellation and rescheduling policy. At the busy times of the year, some moving companies are booked up weeks in advance.

[ back to top of page ]

Tips for Packing Like a Pro

1. Develop a master “to do” list so you won’t forget something critical.
    
2. Sort and get rid of things you no longer want or need. Have a garage sale, donate to a charity, or recycle.
    
3. Don’t throw out everything. If your inclination is to just toss it, ask yourself how frequently you use an item and how you’d feel if you no longer had it.
    
4. Pack like items together. Put toys with toys, kitchen utensils with kitchen utensils.
    
5. Decide what if anything you plan to move yourself. Precious items, such as family photos, valuable breakables, or must-haves during the move, should probably stay with you.
    
6. Use the right box for the item. Loose items encourage breakage.
    
7. Put heavy items in small boxes so they’re easier to lift. Keep weight under 50 lbs. if possible.
    
8. Don’t over-pack boxes and increase the chances they will break.
    
9. Wrap every fragile item separately and pad bottom and sides of boxes.
    
10. Label every box on all sides. You never know how they’ll be stacked and you don’t want to have to move other boxes aside to find out what’s there.
     
11. Use color-coded labels to indicate which room each item should go in. Color-code a floor plan for your new house to help movers.
     
12. Keep your moving documents together, including phone numbers, driver’s name, and van number. Also keep your address book handy.
     
13. Back up your computer files before moving your computer.
     
14. Inspect each box and all furniture for damage as soon as it arrives.
     
15. Remember, most movers won’t take plants.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

[ back to top of page ]

Power of Attorney

All parties, (purchasers and sellers) whose names are on either the mortgage or deed must attend the closing of a property unless prior arrangements have been made to have a specific Power of Attorney prepared. An attorney will usually charge $100 to $150 to prepare a specific Power of Attorney. Consult with your lender and attorney if a Power of Attorney is needed. Remember, not all mortgage companies will allow a closing to take place with a buyer using a Power of Attorney. The attorney you chose to handle your real estate closing should be able to answer your questions about the Power of Attorney process.

[ back to top of page ]

What Not to Overlook on a Final Walk-through

Most contracts allow for a final walk-through 24 hours prior to closing. You may also want to get a “Re-Inspection” performed by your home inspector if there were repairs made. Be sure that:

• Repairs you’ve requested have been made. Obtain copies of paid bills and any related warranties.
   
• All items that were included in the sale price—draperies, lighting fixtures—are still there.
   
• Screens and storm windows are in place or stored.
   
• All appliances are operating.
   
• Intercom, doorbell, and alarm are operational.
   
• Hot water heater is working.
   
• HVAC is working.
   
• No plants or shrubs have been removed from the yard.
   
• Garage door opener and other remotes are available.
   
• Instruction books and warranties on appliances and fixtures are there.
   
• All personal items of the sellers and all debris have been removed.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

[ back to top of page ]