Buying A Home

The first step in purchasing a home is to decide how much you are willing and able to spend. Unless you have the assets to pay cash for a home, you will need to speak to a bank, mortgage company or other lender to find out how much they are willing to lend you on a mortgage. It is a good idea to obtain pre-approval on a mortgage before making an offer to purchase a home. Most banks and mortgage companies provide this service free of charge. In the present real estate market where many properties are selling above their asking price within a few days of being on the market, sellers are looking for pre-approval letters to insure that any prospective purchaser will be able to close the deal. Invariably, if there are two buyers with the same or similar bids, the buyer who has financing in place will get the property. Furthermore, a pre-approval letter ensures that you know exactly how much you can afford to spend and may eliminate the need to make an offer conditional on financing. However, unless you are absolutely certain that you have funds available without any contingencies, your offer should be contingent on financing. Prior to making a final approval of any loan, a conventional lender will require that the property appraise out at a certain value. While you may have a commitment from a lender for loan of a certain value, the lender may not be willing to loan that amount if it believes the property is not worth what you have agreed to pay for the property.

Once you have arranged your financing, you can start looking for a home in your price range. If you are looking for a new home, you will probably deal directly with the builder or developer. If you are looking for a resale home, you will most likely need a real estate agent to help you to find a suitable home. You should be aware that in most cases your real estate agent will earn a commission which is payable by the seller on your purchase of a home. You must remember that the real estate broker, even the co-broker or so-called "buyer's broker" make their fee when the house is sold. Therefore, the broker's interests and your interests may conflict and you should not accept legal advice from a real estate broker or accept any promises regarding the property which are not in writing and signed by the actual seller.

When you have decided to make an offer on a home, you should consult an attorney. The offer form, when accepted, will set the terms of the deal. There are minor changes that should be made to the standard offer form to protect your rights. Please feel free to call LeClair & LeClair, P.C. prior to making an offer to insure that your offer is in acceptable form. At this point, a brief telephone consultation with an attorney will not only insure that your rights are protected but will also help alleviate any concerns you may have. Once an offer has been accepted, a purchase and sales agreement will be prepared. This agreement sets out the description of the property, the selling price, the amount of deposit, any fixtures or chattels included, all contingencies and the closing date for the transaction, along with a number of other legally significant clauses. In most cases for resale homes a standard form contract printed by the Greater Boston Real Estate Board will be used. While this form provides a good starting point, there are a number of additional clauses which should be added to the agreement to protect your rights. When buying a new home, the builder may have their own standard form agreement or may add an addendum to a GBREB form. The contracts for the purchase and sale of a new home or a home to be custom built can be very complex and should contain warranties and extensive default clauses. Whether you are buying a new home or a resale, you should have the agreement reviewed by your lawyer before signing it. There are innumerable potential issues that may arise during the purchase and sale of a home that an experienced attorney is aware of and can anticipate. With the assistance of an experienced attorney, you can assure that your transaction goes as smoothly as possible.

The deposit you pay is negotiable between you and the vendor, but is commonly around 5%-6%. In the event that you are unable to complete the purchase you may forfeit the deposit to the seller. You may also be liable for damages in addition to the deposit if the vendor is unable to sell the house for the same price you had offered. Although, you should be able negotiate a clause in the purchase and sales agreement that limits your exposure to your deposit.

If you are buying raw land or are contemplating adding on to an existing home, you should obtain a survey before signing the agreement and have an attorney review the applicable zoning, conservation and building codes for the location of the property to insure that you will be able to build as planned. Ideally, if you intend to build on a parcel of land, you should make your purchase contingent upon you receiving a building permit prior to closing.

Once the purchase and sale agreement has been signed by both you and the seller, you should take a copy of it to your lawyer as soon as possible. Typically, your lender will assign your loan to an attorney who will handle the transaction for the bank, i.e. searching the title, obtaining a plot plan, obtaining a municipal lien certificate, and preparing and recording the loan documents. Most lenders will allow you to choose your own attorney to handle the loan transaction and some of the e-commerce lenders will require that you find an attorney to handle the transaction. LeClair & LeClair, P.C. is on the approved conveyancer list of a number of lenders and continually closes transactions for new and different lenders. The closing attorney will need as much time as possible to conduct searches on such matters as title, zoning, building code compliance, and taxes. In addition to lawyer's fees, you will have to pay for the cost of these searches, as well as the cost of registering your deed and mortgage. A significant additional cost will be for title insurance for the bank. You will also have the right to purchase an owner's title insurance policy to protect your rights. Your attorney will fully explain to you the benefits and costs of obtaining an owner's title insurance policy.

A closing date will be scheduled according to the date set in the purchase and sale agreement. At the closing, the seller will deliver a deed to you. In turn, you will deliver the purchase price to the seller and grant a mortgage to your lender. The purchase money will only be delivered to the seller after the deed has been recorded with the appropriate registry of deeds. After the purchase has been completed, your lawyer will usually contact you and turn the keys to your new house over to you. This will most often be in the afternoon of the day set for completion of the purchase, so you should not plan on moving in until late afternoon or evening on the day of closing.