Purchacing Your New Home




 

The Negotiating Process

Once you have found the home and/or property you want to purchase, it is important that you are prepared to make the best deal you can.

To negotiate the price, you need to know and assess your negotiating position. Know the facts and plan your negotiating strategy.

The most important factor is knowing the market prices. Ask your Accredited Buyer’s Representative to provide you with a Comparative Market Analysis prior to making an offer.

Also, you will be in a strong negotiating position if:

You are an all cash buyer or have a good size down payment.

You are Pre-Approved or at least Pre-Qualified for a loan

You do not have a house to sell or other contingencies to add to the contract.

You can put down substantial Earnest Money at the time of the offer.

It is also helpful for your negotiating position if you can find out and the answers to these questions:

Why is the house is being sold?

Is the seller under any pressure to close a deal as quickly as possible?

How long has the house been vacant? (Every month a house is vacant and unsold causes more expense to the seller).

Is it a Buyer or a Seller’s market?

 


Disclosures a Seller Must Provide

Any seller who is selling one or two dwelling units who is 1) represented by a Licensed Real Estate Agent; or 2) not represented by a licensed real estate agent but who receives a written request from a prospective buyer, must complete and make available to the buyer a “Residential Property Condition Disclosure Statement.”

The purpose of the Disclosure form is for the seller to inform a prospective buyer about the condition of the home/property. It is only good for 180 days. After 180 days the seller is required to complete a new form.

The disclosure form identifies items and improvements in the home which are included in the sale and whether or not these items and/or improvements are in normal working order.

A Disclaimer Statement is presented if 1) the Seller has never occupied the home; 2) makes no disclosures relating to the properties’ condition; and 3) the seller has no actual knowledge of any defect concerning the property.

If a house was built before 1978, the seller must provide you with a Lead-Based Paint Disclosure.

As a buyer, do not sign an offer to purchase a home until you have received all of the disclosures that should be made available to you.

 


Property Disclosures Checklist

The following list outlines numerous issues buyers should consider when purchasing property. Some are addressed by sellers’ disclosure documents, others are not. Your buyer’s rep can counsel you on the specifics in the lake area and discuss appropriate steps to discover and remedy potential property concerns.

 

HOME CONDITION

STRUCTURAL

Roof

Foundation

Interior/Exterior Walls

Fireplace/Chimney

Floors

Windows/Doors

Ceilings

Garage

Patio/Deck

 

MECHANICAL

Plumbing System

Electrical System

Heating and/or Air Conditioning


Sewer and/or Septic System

Built-in Appliances

Other Systems and Fixtures

 


ENVIRONMENTAL HAZARDS

Asbestos

Lead-based Paint

Meth Lab

Mold

Radon

 


OFF-SITE CONDITIONS

Odor, Smoke, & Hazards affecting property due to proximity

Highways

Railroads

Commercial/Industrial Facilities

Military Installations

Superfund Sites

Toxic Waste Dumps

Neighborhood Noise (e.g., barking dogs)

Traffic

Safety

Availability of or Consequences from Public Parking

Zoning impact how nearby property will be used for future

 


OTHER CONDITIONS

Termite or Other Pest Infestation

Flooding (including federally designated flood plain)

Utility or Other Easements

Adjoining Private Roads (and obligation to maintain)

Shared Driveways, Walls, or Encroachments from or on Adjacent Property

Stigmas (including registered sex offenders)

 


LEGAL/FINANCIAL CONSIDERATIONS

Possible or Probable Short Sale or Foreclosure

Building Code Violations, Zoning Ordinances, or Other Restrictions

Zoning (restricting buyer's intended use for the property)

Homeowners Associate Obligations

Tenancies, Judgements, or Tax Liens

Proposed Assessments or Zoning Changes

Mechanics' or Materialmens' Liens

 


Typical Home Purchase Procedure


STEP 1
In negotiating the purchase of your new home, the initial step will be to instruct your REALTOR® to make an offer to purchase. This offer should be in writing and accompanied by an “Earnest Money” check to show “good faith.” (This should also be done AFTER the Buyer has procured a “Pre-Qualification Letter” from the lender of their choice to accompany their offer.)


STEP 2

The offer should include:

  • Disclosure of the type of financing you will use.
  • Your name(s) exactly how you would want them on the deed.
  • Correct legal description
  • The amount you are willing to pay.
  • The amount of your Earnest Money check
  • Where you would like to close this transaction (Title Company, Attorney’s Office, etc.)
  • When you would like to close on this transaction (the process usually takes approximately 6 weeks in this area)
  • The date of possession.
  • Any additional accessories, equipment & systems not already listed in the contract.
  • The date when you want your inspection period to begin and how long you want for your inspections.
  • Amount you are asking the seller to pay for any repairs needed found in the inspection(s) reports.
  • Whether or not you want Title Insurance or an Attorney’s Title Opinion.
  • Whether or not you are asking the Seller to provide a “Mortgage Inspection Certificate” or you want a pin survey and who will pay for this.
  • How long Seller will have to correct any Title Issues, if any.
  • If you want a Home Warranty and who will pay for this.
  • Any other Additional Provisions.
  • The Contract is reviewed by the Buyer and his/her REALTOR® and the Buyer’s Agent then proceeds with presenting the Contract Offer as soon as possible.


STEP 3
When your offer is presented, the Seller’s options are to:

Accept – if the seller signs the contract YOU WILL BE IN A BINDING CONTRACT as soon as you are notified of the acceptance.

Reject – If the seller rejects your offer, you will be released from any obligation of that contract. Make sure you get the rejection in writing.

Counteroffer - If the offer is not accepted, further negotiations may take place to attempt to reach terms agreeable to both buyer and seller.

Withdraw – You can withdraw your offer right up until you’re your offer is accepted. However, if you want to withdraw your offer AFTER acceptance, be sure and consult an attorney before doing this. Loss of earnest money and a lawsuit for damages may be at risk because of your actions.


STEP 4
When the buyer and seller agree on the terms of the contract,

The Buyer immediately follows up with their lender and proceeds with the process to acquire their loan. (The Lender will need a copy of the signed contract.)

The REALTOR® proceeds with arrangements with a Title/Closing Company.

STEP 5
Inspection Period:

The Buyer chooses the inspectors of his/her choice and schedules all inspections to be completed within the time frame designated in the contract.

A Treatment, Repair and Replacement request form is delivered to the Seller’s Agent within the allotted time period and the Seller decides whether or not to approve the repairs.

If the repairs are approved, the process moves forward.

If the repairs are not approved, and exceed the repair cap, the contract must be renegotiated between the Buyer & the Seller.

STEP 6
Once the Appraisal has been completed and all other contingencies satisfied and removed from the contract, all parties will move towards closing. (Buyer and Seller may agree to start Abstract and Title work prior to the appraisal and other contingencies being completed. However, all parties must be aware that fees will be incurred that will have to be paid by respective parties should the transaction not close. Buyer must sign a Buyer’s Authorization form agreeing to pay bills incurred on their behalf during this process.”

STEP 7
When the Abstract has been brought up to date, an Attorney will look it over and make sure the Buyer is receiving “clear Title.” Once this is completed, a Title Insurance Commitment (if purchased) will be issued.

STEP 8
A final closing date will be scheduled.

STEP 9
Review the Documents – A Settlement Statement will be prepared (no later than 24 hours prior to closing) called a “HUD” for all parties to review prior to closing. You may request to review any other closing documents prior to closing such as your lender’s documents, Title Insurance Commitment, etc.

STEP 10
Make arrangements for a Certified Check, wiring of funds or a Cashier’s Check for payments due at closing. The check should be made out to the Closing Company.

STEP 11
Buyers will perform a “Final Walk Through” of the property

STEP 12
Make sure the utilities have been transferred into your name and your Home Owner’s Insurance Policy is in effect the day of closing.

STEP 13
After all documentation is signed and all monies paid, possession is usually transferred. You will receive the keys to your new home! Congratulations! You are a new Home Owner!

 


What is a TRD & TRR?

When you write an offer on a property, you will have a specified time period to perform and complete all inspections, investigations and reviews of the property (10 days if left blank in contract).

The date the “time period” starts for you to conduct these inspections, investigations and reviews is called the “Time Reference Date” (TRD). The day after the TRD is counted as day one (1). If the TRD is left blank, it will be the third (3rd) day after the last date of signatures of the parties on the contract. Be sure and know when your TRD is and make sure you complete ALL inspections, investigations and reviews of the property within this time frame. IF YOU DO NOT, YOU WILL BE ACCEPTING THE PROPERTY AS IS after this time period!

TRR stands for “Treatment, Repairs and Replacements.” After your inspections are completed within the time reference period your REALTOR® will help you complete a TRR form to be signed and dated and then presented to the seller with any requested treatments, repairs and/or replacements.

Make sure your REALTOR® provides you with a ‘Flow Chart for Inspections, Investigations and Reviews and Buyer’s Request to Seller to Make Treatments, Repairs or Replacements.”

 


What is an Abstract?

A property abstract is a collection of legal documents which chronicles activities associated with a particular parcel of land. Generally included are references to deeds, mortgages, wills, probate records, court litigations and tax sales. Basically, an abstract includes all essential legal documents that affect the property.

The abstract will also show the names of all property owners and how long a particular holder owned it for as well as showing the price the land was exchanged for when it changed owners.

 


What is Title Insurance?

When you buy a home, you receive a deed to the property, meaning you are now the full legal owner of that property. Title insurance for real estate provides protection against loss if a covered defect is found in the title to real property. It is insurance for clear title from the day of closing backwards to the time of Statehood. You can purchase it for a one-time premium, paid in most cases at closing.

Title insurance usually covers four types of “hidden” risks: errors, liens, ownership claims, and invalid deeds. If a claim is made against your property, the title insurance company will negotiate with the other party to settle the claim, defend you in court if necessary, pay any incurred legal costs, and satisfy any covered claims. Having title insurance can save you time, money, even your home.

There are two types of title insurance policies available: an “owner’s policy” and a “lender’s policy.” A mortgage lender usually will require a borrower to pay for a lender’s policy of title insurance, to protect the lender against financial loss in case of title defect or failure of title to the property covered by its mortgage.

A lender’s policy does not protect the buyer, who must take out a separate owner’s policy of title insurance if owner wants title insurance protection in case the title to the property is defective. You should ask for an owner’s policy, or an owner’s attorney title opinion to protect you. When the lender requires a lender’s title insurance policy to insure title for its mortgage, an owner’s policy is available for an additional charge. The premium will be based on the higher amount that is insured.

"Title insurance policy" includes a preliminary report, binder, or commitment. For purposes of this definition, a commitment or binder means any written instrument, or verbal representation which creates an obligation (whether conditional or not) to issue a title insurance policy.

It may pay to shop for Title Insurance. Insurance rates are not regulated in Oklahoma. This means that Title Insurance rates may vary with Title Insurance Companies.

 


Final Walkthrough Checklist

 

GENERAL

  • Have all agreed-upon repairs been completed?
  • Has the associated paperwork been submitted?
  • Have the sellers removed any contents that are supposed to stay?
  • Is the home relatively clean and ready for new occupants?

WALLS, CEILINGS, AND FLOORS

  • Are there signs of new damage? (water damage, gouges, stains, etc.)

ELECTRICAL

  • Do all light fixtures work?
  • Does every outlet have power?

PLUMBING

  • Test each faucet. (On/off? Water pressure? Hot/cold water?)
  • Check under sinks for leaks
  • Do all toilets flush properly?
  • Are any drains clogged?

WINDOWS/DOORS

  • Do all windows open, close and lock properly?
  • Do they all have screens (if applicable)?
  • Do all exterior and interior doors open and close property?
  • Do the locks work?
  • If there’s an electric garage door, is it operational?
  • Do all cabinet doors/drawers open/close?

APPLIANCES

  • Do all appliances included in the home operate correctly?
  • Refrigerator
  • Dishwasher
  • Stove, cook-top, oven, microwave
  • Garbage disposal
  • Other specialized kitchen appliances (e.g., warming drawers, wine coolers, trash compactors)
  • Exhaust fans (kitchen and bath)
  • Heaters (bath)
  • Ceilings fans

HVAC

  • Test the furnace and/or air conditioning system
  • Are any vents blocked?

EXTERIOR

Has there been any damage to:

  • Exterior walls or roof?
  • Driveway?
  • Landscaping?
  • Other structures on the property?
  • Boat dock/slip?

 


Common Closing Costs For Buyers

You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs within 3 business days of your application. The title company or other entity conducting the closing will tell you the required amount for:

  • Down payment
  • Loan origination Fee (Lenders such as Bank of Oklahoma don’t charge an “origination fee”; borrowers need to be leery of excessive origination and lender “junk fees”)
  • Points, or loan discount fees, which you pay to receive a lower interest rate
  • Home inspection & Termite Inspection
  • Appraisal
  • Credit report
  • Private mortgage insurance premium (if applicable)
  • Underwriting Fee
  • Document Processing Fee
  • Insurance escrow for homeowner’s insurance, if being paid as part of the mortgage
  • Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
  • Deed recording
  • Title insurance policy premiums and Binder
  • Attorney Fees
  • Final Title Search
  • Land survey
  • Notary fees
  • Gap Fee
  • Mortgage Tax Fee/Certification
  • Prorations for your share of costs, such as Home Owners’ and Dock Associations and property taxes*
*If you purchase a mobile home, you will have to pay for the current year taxes up front at closing. This will be prorated with the Seller. Also required on a mobile home/manufactured home is a structural inspection on the foundation.


A NOTE ABOUT PRORATIONS

Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance.

 


Closing Documents You Should Keep

On closing day, expect to sign a lot of documents and walk away with a big stack of papers. Here’s a list of the most important documents you should file away for future reference.

HUD-1 settlement statement.
Itemizes all the costs — commissions, loan fees, points, and hazard insurance —associated with the closing. (You may need it for income purposes.)

Truth in Lending Statement
Summarizes the terms of your mortgage loan, including the annual percentage rate and recision period.

Mortgage and Note
Spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.Deed
Transfers ownership to you.

Affidavits
Binding statements by either party. For example, the sellers will often sign an affidavit stating that they haven’t incurred any liens.

Riders
Amendments to the sales contract that affect your rights. Example: The sellers won’t move out until two weeks after closing but will pay rent to the buyers during that period.

Insurance Policies
Provide a record and proof of your coverage.

Boat Dock/Slip Bill of Sale
Provides proof of ownership of boat dock/slip.

Home Warranty Confirmation
You will need the confirmation number should you need to use the Home Warranty Policy.