Real Estate
Is a verbal offer binding?
Agreements to buy and sell real estate must be written to be enforceable. A real estate agent is obliged to convey a verbal offer to the seller. However, if the offer isn't written, it's not legally binding on either the buyer or the seller.
Even though a seller may be negotiating with one buyer, this doesn't stop him from entertaining offers from other buyers. Until the purchase contract and any counteroffers are accepted in writing by both the buyers and the sellers, the property is still available for sale.
Facsimile signatures are usually binding as long as the intent is to sign the original documents at a later date. Make sure, if you're using facsimile copies, that the text is legible and that you know and understand what you're signing. If you are not going to be available (you may be out of town) you may want to give your power of attorney to a trusted friend or relative. To be legally binding, the power of attorney should be on the proper form and it should be notarized. Your attorney can help you with this.
What Happens After an Offer is Accepted?
Usually what occurs next is the buyer's good faith deposit check (also called earnest money deposit) is deposited. The deposit money may be held in a trust account, an escrow account, or by an attorney, depending on where you're buying. The buyer's deposit check is cashed, so make sure you have sufficient money in your account to cover the check.The buyer's deposit money will apply to the purchase price if the sale goes through. If contract contingencies can't be satisfied, the deposit is usually returned to the buyers. But if the buyers back out of the deal, for a reason not provided for in the contract, the sellers might be entitled to the deposit.
After dispensing with the deposit, the time period between acceptance and closing is spent carrying out the terms of the purchase contract. The terms of every purchase contract differ. However, most contracts include a financing contingency, an inspection contingency and a provision for the buyer to confirm that title to the property is free of defects.
The inspection contingency, which allows the buyer to have the property professionally inspected, is usually completed soon after acceptance. Inspections can cause deals to fall apart. It's in both the buyer's and seller's best interest to get this contingency out of the way quickly.
Thirty days isn't a generous amount of time to secure mortgage approval. In a busy real estate market, it can take 2 weeks to get the property appraisal report. After the lender has a complete financial package from the buyer, including the appraisal report, the package is sent to underwriting for review and final approval. So get to work lining up your financing as soon as your offer is accepted.
How do I prevent my real estate transaction from falling apart?
Deals can often fall apart because of problems with the buyer getting financing. This can be avoided if the buyer gets preapproved for the financing. A preapproved buyer has already been approved for a mortgage by the lender. His credit has been checked and his employment and down payment funds have been verified. Sellers who receive an offer they like from a buyer who hasn't been preapproved should include a provision in the contract for the buyer to be preapproved within short, specified period of acceptance of the contract.
Even with a preapproved buyer, there's always a chance that the property won't appraise for the purchase price. A low appraisal can put a transaction in jeopardy. It's a good idea for the buyer's agent to meet the appraiser at the property armed with recent comparable sales. This helps to insure that the property does appraise for the sale price.
The most common reason that real estate transactions fall apart is inspections. Buyers should include an inspection contingency in any home purchase contract. A home inspection will almost certainly reveal defects. Even brand new homes have defects. If defects are discovered that the buyer can't live with, and that the sellers are unwilling or unable to correct, the transaction can collapse.
Sellers are wise to disclose any known defects to the buyers before an offer is made. For example if the roof leaks, disclose it. Then take the next step and find out what it will cost to repair it, and make the estimate available to the buyers before they make their offer.
What should I consider when buying a Condo or townhouse?
When you buy a single family detached residence, you become the exclusive owner of the structure and the property it's located on. The property boundaries distinguish what is yours from what belongs to your neighbors. When you purchase an attached dwelling such as a townhouse or condominium, you obtain exclusive ownership rights to the interior space of your particular unit. The common area-grounds, fences, shared walls and facilities- are owned jointly with other owners in the condo or townhouse (also called a planned unit development or PUD).
As a condo or townhouse owner, you automatically become a part of a homeowner's association to which you pay dues, usually on a monthly basis. Homeowner's dues usually cover the cost of maintaining and insuring the common areas. Precisely what the homeowner’s dues cover varies from one complex to the next, so make sure you find out what's covered before buying. The dues may also fund a reserve account to cover major expenses like resurfacing tennis courts or replacing homeowner's roofs.
Buying a condominium involves some of the same issues that are involved in buying a detached home. The unit should minimally meet your housing needs, be within your price range, be reasonably priced and be thoroughly inspected by a professional home inspector. But additional issues come into play when you buy into a PUD.
Be sure to read the bylaws and articles of incorporation of the Home Owner's Association and review a current financial statement. It's also advisable to obtain copies of the minutes from the last several homeowners’ association meetings.
Find out if the homeowner's association is involved in any litigation. Perhaps you've heard horror stories about condo owners suing the developer for shoddy construction. If a condo seems under priced, there may be a reason for this. If the association loses the case and does not have sufficient reserves, the condo owners might have to pay to repair the defects.
One of the best ways to get information about a PUD is to talk with current owners. Be sure to ask what they like and dislike about living there. How is the soundproofing? Are there any parking problems? Is there ample storage space? Are the current owners satisfied with the homeowner association management?
