Buying a home - tips for the first time home buyer - PHASE 1
For most people, the purchase of a home is their biggest and most important investment. The process can be overwhelming and intimidating. Hopefully, this will help you know what to expect and let you work with your attorney more efficiently.
ContractsThe first phase of the process is agreeing to terms. Even though you may have signed a realtor prepared contract, there is a very good chance (at least in NJ), that your attorney will "cancel" the contract and propose additional or different terms to the seller.
This proposal must be done during the "attorney review process", which ends three business days after the contracts are signed and delivered to all parties. However, once attorney review begins, it is not over until all terms have been agreed to. Technically, during this time, the seller is free to accept another offer and the buyer is free to walk away.
While this may make you apprehensive, trust your attorney, since the changes proposed are usually made to protect you.
In addition, this is the time to tell the attorney of any agreements between you and the sellers regarding personal property, repairs, change of closing dates, or other matters not in the contract.
Ordering InspectionsDo not order any inspections until you confirm with your attorney that attorney review has concluded. However, you should exercise due diligence and have a qualified home inspector lined up and ready to go. Your attorney, realtor or friends can assist you with recommendations. Once the contract has been signed, arrange to have all the required inspections done within the time specified by the contract. Diary all contingency dates, such as the pest inspection, home inspection, septic inspection, well inspection and/or underground storage tank inspection.
Communicate with your real estate agent regarding the scheduling of all inspections and mortgage applications so that the inspectors may access the home. Make every effort to personally attend the inspections. If any of the dates cannot be met, contact your attorney immediately so that an extension may be requested on your behalf. Failure to meet these deadlines may result in a waiver of the contingency, which means that should the inspection reveal a material defect, you may not be able to cancel the contract or seek reimbursement or contribution from the seller
Mortgage applicationThe mortgage process often begins even before a house is selected. However, once a contract has been signed, things need to be stepped up and an actual mortgage applied for. There is often many, many documents required by your lender, such as pay stubs, tax returns, bank statements, etc. You should have your lender also lined up prior to signing a contract, so that you will know exactly what they need. Like the inspections, there is usually a mortgage contingency date. Diary this date, since failure to meet this contingency date for obtaining your financing, without obtaining an extension, could lead to the seller cancelling the contract, or worse yet, you being obligated to purchase the home without having a mortgage.
Reviewing inspection reportsIf any of the inspections reveal defects, communicate with your attorney immediately. Attempt to obtain written estimates for repair of the defective condition. Your realtor may be helpful in obtaining estimates. Promptly submit these written estimates to your attorney, so that your attorney may communicate them to the seller's attorney and attempt to resolve how much is to be contributed by each party. Your realtor can assist you in negotiating disputed repairs.
Title insurance / SurveyTitle insurance is extremely important to obtain. However, the good news is that your attorney will usually undertake this on your behalf. The area that buyers are most often involved with in the title insurance process is to determine whether to order a survey, and if so, whether to stake the property. While a survey may be expensive, I believe it to be valuable. It can advise you of conditions you were not aware of, like a misplaced fence, that can create much stress down the road. It makes sure that the property your are buying actually is the property you think you are buying. Also, if you have any plans to add a fence, a pool, or an addition, strongly consider having the surveyor lay stakes, so that your contractor has a guide to where everything goes. Some sellers may have their old surveys handy, and if so, you may consider having the seller supply you with a survey affidavit. Consult your attorney about this.