Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We had no problem foregoing a buyer's agent and doing it ourselves on our recent first-time home purchase, but my SO's father is an attorney and provided lots of free legal guidance along the way. He was a great resource to have, and it would have been a different story, likely, had we done it totally without any experienced support. Regardless, we found that we didn't need a Realtor or agent to represent our interests, we did fine on our own with some advising from an attorney in the family.
Location: where the moss is taking over the villages
2,184 posts, read 5,552,769 times
Reputation: 1270
Quote:
Originally Posted by linicx
If the house is for sale by owner, you need a lawyer to handle the contract, the paper work and the closing. If the house is listed with a real estate company, the owner cannot show you the house or talk about it with you. You cannot offer a contract to this owner. A realtor cannot show you, or sell you a house that is not LISTED with a real estate agency.
You can have escrow handle all the paperwork. I've done this many times. But then I didn't have any construction or health issues (roof, foundation or mold). Those issues are supposed to come up during inspection anyway, which the mortgage company requires.
Chain of title, surveyor marks/reports & finding about liens are very important issues before commmitting to buying.
The escrow company is liable for all their paperwork. I guess if I were buying a million dollar property, I'd think about an attorney, though.
I've bought a house without any agents involved, before I was an agent. I've bought a house with agents involved on both sides, before I became an agent. Both went fine. I've been involved in many transactions since becoming an agent, obviously, and now that I have, I thank my lucky stars that the first one went well, and the agents that the second one did, because I am in a position to know just how many things CAN go wrong with a seemingly simple transaction.
You don't need the agent until you need them, and then you REALLY need them! Sometimes you need both the agent AND the attorney- but the attorney gets paid up front whether the deal closes or not, and the agent only gets paid if the deal is concluded successfully, and they take a big chunk of the liability, too.
By Gosh you are giving people some amazingly wrong info. my additions/corrections in bold below apologies in advance for the LOOONG post.
Quote:
Originally Posted by linicx
If the house is for sale by owner, you need a lawyer to handle the contract, the paper work and the closing. If the house is listed with a real estate company, the owner cannot show you the house or talk about it with you. You cannot offer a contract to this owner. A realtor cannot show you, or sell you a house that is not LISTED with a real estate agency. Like said before, completely wrong, an agent can show and sell ANY real property whether listed or not.
All Realtors must be licensed to sell property. All realtors are either the Broker-Owner, a Broker, or a Sales Agent. All realtors are Listing Agents or Sales Agents. Some realtors are able to act as a "Dual Agents" and represent both the buyer and the seller of the same house. Kind of right, but not complete info. And will vary from state to state. Many states make dual agents illegal.
IF this house has a FOR SALE BY "Widget Realty" call a realtor and tell them you want to make an OFFER on a house located at 127000 Main Street in Oak Park . It is listed by Widget Realty. You can do this, just know the agent is working solely for the seller not you, and isn't under much obligation to help you anymore than it takes to get you to buy the sellers home. Also know that if the seller is represented by an agent, don't think you will get a better deal because the seller doesn't have to pay both agent's commissions. The seller pays the listing agent a set commission and the listing agent pays an agent you have representing you out of those proceeds. If you don't have an agent, that just means the listing agent gets a bigger payday.
Your realtor, Jane Doe, will bring a contract and meet with you to sign the contract. The contracts are long Jane will ask you if you want a Home Inspection, Mold Inspection or RAdon Inspection. The answer is YES to the first two. If your contract does not include the first two questions, INSIST the be included as CONTINGENCIES. I will tell you why.
Standard contracts will vary state to state, and there is no laws that say a contract must be standard, it could be custom written, and even standard contracts have MANY options that you should know how they affect you. Do not sign a contract/offer you do not fully read and understand.
[1] Mold is the #2 killer in Illinois. You do not want to live in a house with mold, and you do not want children or pets in a house with mold. Mold can be removed if you do not mind paying up to $30k per room to remove it The problem with mold is this. If you have it in one room, you may have it in every room of the house, which is why it is not wise to buy any house that has been empty for more than 90 days.
[2] You do not want to buy a house that needs extensive repairs as soon as you buy it - unless you know this well in advance. Roof and truses, whole house rewire, whole re-plumb. basement flooding, and total floor replacement and joists are NOT do-it-yourself weekend projects unless you are a building contractor. They are expensive repairs and they are very time consuming.
Once you sign the contract is called the OFFER. You will give Jane a down payemnt called EARNEST MONEY. Your money will go into a bank account called ESCROW. It will not be used until CLOSING when you get the keys to your house. The Earnest money is applied to the down payment** on the house. Good Job here, you are correct...to add earnest money should be made out to a title company, attorney, or Real Estate Agency
Never ever make a down payment larger than what you can afford to light a match and watch burn. Seriously. This is why. Deals go bad. If something should happen before the house deal is closed, and you decide to NOT take the house, your Earnest money sitting in Escrow will go to the seller. Completely FALSE, escrow money is frequently returned to a buyer and cannot be released to the seller just because a deal doesn't close. The only reason you would not receive escrow deposits back is if you breach the terms of the offer/contract. If the home does not pass inspection to your satisfaction, if the seller cannot provide clear title, or your loan get's denied you are entitled to receive your $ back (this is given you make sure these contingencies are written into the offer/contract) There are also many other reasons you would receive your deposit back, and many in which you would not...this is why it is so important to UNDERSTAND the contract/offer you are making.
The last house I bought I told the realtor I was giving her X dollars for down payment. She says, "we usually ask for XX dollars". I picked up the contract, stood up, and said "Fine. I will find a realtor who will." She says :I'm sorry." "Me too" and I tore the contract in half and started to walk out the door. She changed her mind. It's a game.
Jane will then call Widget Realty and she will them she has a SIGNED OFFER and deposit on their house on Main Street in Oak Park. This information is forwarded to the Listing Agent. - the person who listed the house. The LA will call the owners and tell them she has an OFFER on their house. She tells them the PRICE - the amount of money you agreed to PAY for the house on Main Street in Oak Park. If the owner does NOT agree, then Jane will call you and ask if you want to Make a COUNTER OFFER. The Offer-Counter Offer can go back and forth several times until one or two things happen. Both parties (Buyer an Seller) agree on a selling price, OR the parties cannot reach a agreement. In which case you start over and look for another house. IF there is an agreement on price, the SELLER will sign your OFFER. This is the easy part. Close enough, except while price is a big determining factor there are numerous other conditions and terms in the offer/contract that can make or break a deal for you and the seller.
The next step is for you to get financing. arranging financing should be the first step you do before you even look at your first house, if you are just looking into financing after you have an accepted contract you could likely be wasting your time, and everybody elses time...in fact many sellers won't even consider an offer unless you have a pre-approval from a lender
If you are ex-military you can probably get a VA Loan. IF the house is in the county you may be eligible for an RD Loan. If your FICO score is good and you have 15-20% down payment you can get a long from your local bank. Or you can apply for a FHA Loan. You do not need 15-20% down to get a loan, as little as 3.5% down and you may qualify for an FHA loan....your credit score is important but you would be surprised at how low a credit score you can have and still be approved. There are MANY factors that go into a home loan approvalOr you can pay cash. Once your loan is approved, and Jane is told, she will call the Sellers agent. The Sellers Agent arranges for a Termite Inspection. Incorrect, at least here in FL. The buyer arranges for all inspections, only if you are getting a VA loan is the seller required to pay for the Termite inspection, and usually the buyer pays upfront and the seller re-imburses at closing...in either event the termite inspection should be done at the time of all the other inspections BEFORE your inspection contingency period runs out. Again state and contract specificThe MORTGAGOR (your lender) will arrange for an independent Home Appraisal (You pay for both). This reassures the mortgagor the value of your house is worth as or more than the amount you are asking to borrow. The next step the HOUSE and MOLD INSPECTIONs. Both are done by Illinois licensed persons. I think mine cost $700. but I do not live in Chicago.
If the house does NOT pass both inspections, you do NOT want this house. Take your Escrow money and find another house. There is no pass/fail to a home inspection. The inspection is meant to discover flaws or problems iwth the home you may not be aware of. Depending on the contract terms you may be able to cancel the whole deal if the stove doesn't work, other contracts will require a seller to fix anything under a certain $ amount and not allow you to back out of the contract, many contracts have specific criteria as to what is considered to be a problem that a seller will have to fix, in any event after inspections you may or may not have the ability to re-negotiate terms and price based on the outcome...again know your contract
If the house does pass inspection the next thing that happens is the lawyer is called. There is a name for this process where the lawyer reads the title to the property and looks for DEFECTS -such as a LIEN - unpaid debt against the property, or a problem with the property line description - oh what a mess that is. Then the Title Company issues a Warranty Deed that warrants the house on Main Street to be good and free of defects in the legal description. Defects have to be "CURED" (fixed) before a CLEAR Title can be issued to you the buyer. Reading the legal description, writing the opinion, and then getting the getting the Warranty issued takes longer than any part of the process. Actually here in FL it usually only takes a week or two if there are no major title issues, it is the waiting on a loan that takes the most amount of time. Also, getting a full Warranty Deed isn't always a given on ALL properties. Know your contract.
Once the Warranty comes back the closing date is set. Closing date is set forth in the contract actually. If for some reason the title isn't ready by that date you can extend the date, if your loan is late, you may be able to extend the date, but in either case it will take written agreement by both parties. and the Buyers Final Settlement and the Sellers Final Settlement is prepared. Closing costs to YOU can range from $2500 to $5000 or more. Here in FL it is better to estimate in terms of % of purchase price. Most of your closing costs are usually related to getting your loan, however be sure the contract states who pays what in closing costs, the seller usually pays for title insurance and county transfer taxes but this isn't a given....know your contract/offer termsIt includes everything from loan origination costs to tax stamps and registering the property at the court house. Some realtors suggest you pay half of the closing costs. Look carefully for the sellers closing costs are usually greater than the buyers. DO NOT agree to anything you do not understand and cannot read.
It is very unlikely Jane can tell you the exact amount of closing costs before she sees any paperwork. Guestimates in real estate are usually wrong. Your loan officer should be able to give you a Good faith Estimate that is usually within a few hundred dollars of actual
Be patient. Depending upon the type of loan you get, your house may not close for 45 days or even later. It is NOT that unusual in an area as large as Cook County. This will only depend from lender to lender, I have closed on loans as quickly as 10 days, some have taken 60. If going FHA or VA expect a minimum of 30 days preferably get 45 days. Remember your closing date is set forth in your contract/offer which is another reason to get your financing in order beforehand so you know how much time to give your lender to have the loan ready before your contract expires and places your escow or home purchase in jeapordy
The last thing you need to know is how much house you can afford. You pay rate is most likely based on 4-1/3 weeks in a month. Your projected house payment cannot exceed one week salary. How much you can afford should be your FIRST step, this is something you should be able to figure our without the aid of a lender, it's simply how much you can comfortably spend a month. The lender simply tells you how much they would be willing to lend you which is usually higher than you would feel comfortable with. Not sure where this poster go their payment rules from, but lenders can approve you sometimes up to 50%+ of your gross pay, again many factors go into what they will approve you for, if you have many debts they will qualify you for much less. Know how much you are good with, and stick to it, just because a bank approves you for 500K does not mean you should spend 500K
If it does you are in financial trouble before you move in. NO honest banker will let you buy a house he knows you cannot afford. In other words, if you make $14k a year, your salary will not support an $80K house. A house is the most expensive wife you ever owned.
Can't beleive I just wrote all that, but I couldn't let the mis-information and incomplete info mislead others.
To the OP, either hire a lawyer or get yourself a highly recommended Buyer's agent. The attorney you pay for upfront, the agent you don't. Either party takes on quite a bit of liability should something go wrong and is a good safety net for you to have. The forums cannot help you through the complications and details that will be and can be different in every transaction. You need a local expert there with you.
By Gosh you are giving people some amazingly wrong info. my additions/corrections in bold below apologies in advance for the LOOONG post.
Can't beleive I just wrote all that, but I couldn't let the mis-information and incomplete info mislead others.
To the OP, either hire a lawyer or get yourself a highly recommended Buyer's agent. The attorney you pay for upfront, the agent you don't. Either party takes on quite a bit of liability should something go wrong and is a good safety net for you to have. The forums cannot help you through the complications and details that will be and can be different in every transaction. You need a local expert there with you.
Wow Greg!! Kudos to you. I barely had the patience to read it, let alone try to correct ALL the inaccuracies.
To the original poster, based on your own admission that you are clueless, PLEASE get your own buyers agent. Not only will they do all the above for and with you, they will help you shape your offer to make sure you are not "over" paying for the home.
If you do not know a good buyers agent, please ask your friends, family or any agent on this board to help you. We all know agents in other places.
good luck and keep us posted!! I love to hear the good stories!!
shelly
Last edited by shellytc; 08-29-2009 at 08:56 PM..
Reason: edited for typo
To the original poster, based on your own admission that you are clueless, PLEASE get your own buyers agent. Not only will they do all the above for and with you, they will help you shape your offer to make sure you are not "over" paying for the home.
They'll also pat your hand and tell you it's alright when your nerves get frazzled and you start second guessing all the decisions you're making. Mine did anyway.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
