Tips on getting through the process of buying a home.
Buying a home is a major undertaking, yet I continue to be amazed by how casually this process is treated by many. We often meet these buyers after their transaction closes and something has gone wrong. What might have been handled before close of escrow has now become a major and potentially expensive problem. The excitement of a new home purchase has been destroyed and turned into a stressful situation. Here are some steps that we recommend a buyer consider to make this process as trouble free as possible.
- Hire an experienced realtor. It seems that everyone has a friend, relative or neighbor who holds a real estate license. Don’t hire them. Hire an independent and experienced professional realtor. Sign a buyer broker agreement so you know that your realtor represents only you and is loyal only to you. Avoid a dual agency situation where the agent represents both buyer and seller. A dual agency is a common arrangement and can work fine so long as no problems arise. But if a problem develops it is good to know that you can rely upon an agent whose loyalty is to you alone.
- Shop for a loan before shopping for a home. Meet with several lenders. Assemble a package of information for your lenders and make multiple copies. Become pre-qualified and learn how large a loan you can obtain. Also determine how large a loan you are comfortable with. Sometimes the two are not the same.
- Shop the areas you are interested in yourselves to get an idea of home values. Don’t depend only upon your realtor to educate you as to home values.
- When you have found a home you like, your realtor will prepare a purchase offer. Read this document carefully and ask questions about the portions that you do not understand. If there are any special terms that are important to you—such as a contingency for the sale of your existing home—these must be in writing and in your purchase offer. It is a good idea to expand the window of time to obtain a good inspection of this home. Do not sign the purchase offer until you are satisfied with all of its terms. Once signed by you it will be presented to the seller. When the seller signs the document is binding upon both of you. There is no cooling off period and no right to cancel or rescind in Arizona.
- You will receive a title commitment from your title company. Read this document carefully and ask questions about the portions that you do not understand. If title problems exist, they should be revealed by the title commitment. If the seller cannot convey clear, insurable title you may have the right to cancel the purchase or attempt to renegotiate the terms of your contract. If the home is in a homeowner’s association, read the CC&R’s and make sure you can live with these rules. The CC&R’s are a contract and you are deemed to agree to all of the terms by purchasing the home
- Hire an inspector, attend the inspection and ask questions of the inspector. Read his report asap. If the inspector identifies problem areas, hire specialty contractors such as a roofer or plumber to give you more information about the problem and the cost of repair. If items are identified that you do not accept and want the seller to fix, these must be specifically identified and communicated to the seller. Then the seller will decide if he will repair the items or negotiate a price concession. If the defects are serious and the seller refuses to repair them, the buyer may have a right to cancel the purchase.
- Conduct a thorough walk through inspection prior to close of escrow. Now is the time that all seller repairs should have been completed by a licensed contractor. Do not close until all seller repairs are done. If you must close prior to the seller’s completion of agreed upon repairs, we usually recommend entering into a separate agreement with the seller that the specified repairs are to be done after close of escrow by licensed contractors and are to be completed by a specific date acceptable to you. It is often a good idea to enter into joint instructions with the seller to have the title company hold back a portion of the seller’s funds at close of escrow to be released to the seller upon the satisfactory completion of all repairs.
- Do you need a lawyer during this process? Yes, you do. A lawyer should be consulted prior to signing a purchase contract and the lawyer should review the contract before you sign. Be sure to communicate to your lawyer everything that is important to you and every term that you have discussed with your agent so he or she can make sure that all of the important terms have found their way into the written contract. Once signed, the contract is the only agreement that exists. If something is important to you, it must be in your contract. Your lawyer is your only advisor whose compensation does not depend upon the successful closing of your purchase. He or she can be relied upon to provide objective advice.
The lawyers at Platt and Westby, P.C. have been practicing in the area of Real Estate Law for over 40 years. Our partners are experienced real estate investors and landlords. Contact any of our Phoenix Real Estate lawyers at 602-277-4441 or use the e-mail contact utility on our website at www.plattwestby.com to schedule a no-fee initial conference concerning any matter involving Real Estate. We will answer your questions and, where appropriate, suggest potential solutions.
Platt and Westby, P.C. has offices in Phoenix, Arrowhead, Avondale, Scottsdale and Gilbert, Arizona.