Starting The Home Search Process
The realtor may work
with you as a Buyer's Agent or as a Sub-agent of the
Seller; be sure to discuss these agency relationships
with your agent(s) at your first substantive meeting as
you will be required by law to sign an Agency Disclosure
Agreement at that time.
Know how much you can spend. Determine how
much you want to pay for a new home.
If financing will be required, it is recommended that
you obtain mortgage pre-approval from a qualified lender
prior to beginning your home search. Often attached with
a written offer, a pre-approval letter will give your
offer merit in the eyes of a seller, and may allow you
to be more flexible if a quick closing is in both
parties' best interest.
Choosing legal counsel You should also select
an attorney at this time.
It is recommended that you choose an attorney who is
experienced in representing purchasers of real estate.
If you don't have an attorney already for this purpose,
your agent(s) can usually give you names of several
highly regarded real estate attorneys that you can
Now that you have found the home you want, how
do you structure and offer to purchase?
Once you have found a home you wish to purchase, your
agent will submit an offer on your behalf. Offers and
counter-offers may be submitted verbally or in writing.
The initial offer is usually submitted in writing
(especially in a multiple-offer situation) as an
"Offer to Purchase" prepared by your agent.
of your offer usually include:
property to be included,
and contingencies (inspections, financing, etc.)
counter-offers are often presented verbally. When you
have reached an agreement with the seller on all terms
you now have an Acceptable Offer (A.O.).
happens after you have an Acceptable Offer? Once
an A.O. is reached, a written Memorandum of Agreement is
usually drafted by the seller's agent, stating the terms
of the agreement; copies are distributed to the seller,
the seller's attorney, the buyer, the buyer's attorney,
and both real estate agents. No earnest money deposit is
exchanged at this time. The typical time frame from
agreement to closing is approximately 60 days. Of
course, many factors can affect this time frame,
including specific needs of the buyer and/or seller.
an Acceptable Offer to Contract
After reaching an A.O., you (the buyer) are given a
limited time period during which to conduct an
engineer's inspection and other desired and/or required
inspections (assuming that an inspection contingency is
part of the agreed-upon offer). This period is usually
10 days or less. During this period, the seller has only
a verbal, non-binding agreement to sell the property to
the buyer; the seller, in the meantime, is free to
listen to, negotiate, and/or accept other offers. It is,
therefore, imperative that you (the buyer) conduct all
inspections in good faith and in a timely fashion. A
binding contract will generally not be written until
after inspections have been completed.
Home Inspections do you need them?
An engineer's inspection is very strongly recommended
for every home purchase. The purpose of an inspection is
to identify the condition of the home and allow the
buyer to make informed decisions. Even with newly
constructed homes and with condominiums, it is possible
that something could have been overlooked or poorly
designed. An engineer's inspection will typically take
2-4 hours. If at all possible, you should plan to be
there with the engineer during the inspection. This is
an opportunity for you to learn a lot about your new
home, ask questions of the engineer, and receive
suggestions. Subsequent to the inspection, the engineer
will provide you with a detailed written report covering
his/her findings. Most mortgage lenders require a
termite inspection and stipulate that it's to be done by
a licensed termite inspector. Your engineer may or may
not be licensed to do termite inspections; if not, you
will need to hire a termite inspector. Other optional
inspections you may wish to perform include a fuel oil
tank test (for oil tanks buried in the ground), a radon
test, a septic dye test (if applicable), a water
potability test and water recovery test (for private
wells), asbestos testing, and lead paint tests.
From Contract to Closing
Once inspections are completed and deemed satisfactory,
the seller's attorney will draft a contract of sale and
deliver it, along with the seller's title insurance
policy and copy of any existing survey, to your (the
purchaser's) attorney. You should review and discuss the
contract with your attorney. If any changes are
requested, the seller must agree to these changes.
contracts are then returned to the seller's attorney
with a 10% contract deposit, also called a "down
payment" (this down payment amount can be
negotiable but is typically 10%). The contract deposit
check is made payable to the seller's attorney who holds
it in an escrow account until the closing. Once the
contract is signed by the seller, your attorney will
receive two fully executed copies of the contract, one
of which will be given to you for submission with your
mortgage loan application.
completed mortgage loan application with all supporting
documentation should be submitted to your chosen lender
promptly upon receipt of the fully signed contracts.
Your attorney will also provide you with an estimate of
closing costs at this time.
to closing, your attorney will arrange for a title
search of the property. The title company will issue a
title report certifying clear title, and a title
insurance policy to protect the lender (required) and
the buyer (optional) in the event a title problem arises
in the future. The title company will also perform a
property tax search and a violations search (required by
the lender), and a survey inspection. If the existing
survey is unacceptable, or if no survey exists, it is
typically the buyer's responsibility to pay for a new
From contracts to the closing table
Once all conditions of the contract have been
satisfied, the closing date is scheduled. This involves
getting together all parties including the seller, the
seller's attorney, the buyer, the buyer's attorney, the
lender's attorney, the title company representative, and
usually one or both real estate agents. Once the closing
should be made to confirm with your movers,
contact utility companies to transfer service
arrange for a homeowners insurance policy (proof of
an insurance policy and paid receipt for one year's
premium paid in advance must be brought to the
to transfer any funds necessary for closing.
attorney will advise you in advance as to the amount(s)
of any certified checks required at closing. You will
also be required to bring a supply of blank personal
checks for assorted closing costs, as well as two forms
of identification, one of which must be a photo I.D.
Inspecting the property for the final
A final "walk-through" of the property is
performed just prior to closing, usually within a few
hours or not sooner than the previous day. This is
scheduled with your real estate agent, or the seller's
purpose of the walk-through is threefold:
confirm that no damage has been done to the home
since the time of the engineering inspection;
confirm that the major systems and appliances are in
working order; and
confirm that the home is "vacant and broom
clean", as stipulated in every sales contract.
For additional information or clarification of any
information provided herein, please consult one of the
professionals identified in the disclaimer.
Disclaimer Please keep
in mind that this is not intended to be a comprehensive
discussion of the home purchase process. It is intended
to give the reader a general overview of the process,
and to allow a prospective purchaser to plan ahead.
Information contained herein should not take the place
of the expert advice of professional advisors such as an
attorney, a real estate agent, an engineer, a mortgage
counselor, an accountant, and an insurance agent, all of
whom you may have to consult with and rely upon in
connection with your home purchase.