- Meet with your banker or mortgage broker so you can get pre-approved.
- Visit communities so you can narrow your focus to the one that suits you best.
- Look online and remember that Everything looks different in person and there are plenty of things to discover and know that cannot be discerned online.
Advance Work with Your Agent
- Discuss the differences among your priorities, needs and wants.
- Discover how your goals will be impacted by current market conditions.
- Learn about the process of buying a home in your chosen community.
- Let the agent know your goals, availability and time frame.
- Advance work will allow you to jump on an opportunity, make a competitive offer and execute quickly so as not to lose out on a great opportunity.
- Start to build a real estate team. Your agent can provide some recommendations, including a local real estate attorney, architect, inspector etc.
Finding a Home
- Work through your agent to find prospective homes.
- Sometimes a desirable home will present itself right away, so your preparation will give you an advantage over others who are not ready to make a timely and solid offer.
- Give your agent feedback. The more she knows the better she can help you.
- There are several phases to the home search, learn how to maneuver in each.
Once you find a home that suits your needs your preparation and advance work with your agent will come in handy. You will find things begin to move quickly.
Some due diligence will be done in advance of making an offer, while other due diligence will only be available to you once the parties have agreed to terms or the contract has been signed. Your agent can help you navigate the process and parties involved.
Real estate is not a commodity. Each parcel is unique. The listing agent will provide limited information in order to sell the property. Although not an expert in related fields, your agent may be able to help you identify some risks and opportunities. You may need to request more information, research public records or discover information either by yourself or through an expert in the field.
Building regulations, zoning restrictions and guidelines are established at the local level and include any state or federal requirements. If you aren’t an expert in local building codes, flood regulations, conservation easements, under ground storage tanks, lead paint and more, then you will benefit from working with an agent and utilizing experts in each field. The more you know, the more likely you are to save or make money.
Some things are discoverable upfront, and depending on the current state of the property, may or may not require additional due diligence.
Use your real estate agent to help you find experts. Your agent is not an attorney, real estate inspector or architect and cannot provide you advice in a professional or an expert field unless otherwise licensed to do so.
Property with structures built prior to 1978 may have lead paint. Prior to considering purchasing a property with any construction prior to 1978, read the mandated lead paint disclosure booklet “Protect Your Family From Lead in Your Home”. During negotiations and prior to signing contracts, you will receive a lead paint disclosure filled in by the seller that you will need to acknowledge by signing and dating as required. Lead Booklet – Protect Your Family
Property Disclosure Report
Prior to making an offer on a property, a purchaser should obtain from the seller the standardized property disclosure form that is required for all residential properties, provided that the owner is or has been a resident of the property (probate or bank owned, etc are exempt), as described in “Rights of Purchaser of Residential Real Property”. If the seller does not provide the property disclosure then the seller must credit the purchaser $500 at closing. Property Condition Disclosure Report CT 2015
Flood Zones | FEMA
It is customary for a seller to disclosure whether a property is in a flood hazard area and the type of hazard. Buyers should do their own due diligence on all material matters, including flood hazards. The Federal Emergency Management Agency (FEMA) publishes maps identifying areas prone to flooding. Be sure to verify information and make sure you have an understanding of the definitions and what the risks involve. Consult the appropriate experts. An agent is not an expert in the field but can help direct you to appropriate parties. Go to: www.fema.gov.
Be sure to talk with your agent about other resources for conducting due diligence on properties. Your agent can be a great resource for finding you a team of experts including attorneys, engineers, inspectors and others. If something is material to you, then find an expert to help you before you buy. If you are interested in knowing more about Megan’s Law and the presence of any convicted pedophiles in a particular community, then visit the State of Connecticut website for disclosure.
Making an offer
The buyer’s agent will prepare the offer the buyer would like to make and present it to the seller’s agent, who will forward it on to the seller. The terms of the offer generally address:
- Purchase price
- Down payment
- Contingencies (mortgage, inspections, etc)
- Closing date
- Name of attorney (in order to avoid conflict of interest)
Offers should be accompanied with proof of funds or mortgage pre-approval to give the seller confidence that the buyer will perform. Cash offers are considered better offers as they remove the risk of financing.
Coming to an agreement
- Buyers discusses the offer and terms with their agent. The buyer’s agent submits the offer to the listing agent.
- The listing agent forwards the offer to the seller, and they discuss it.
- Negotiations go back and forth, if necessary, until agreed upon terms are reached.
- The listing agent will send a memorandum of the accepted offer to the seller, buyer’s agent, seller’s attorney and buyer’s attorney.
- The buyer will complete any due diligence in accordance with the agreed upon terms and as recommended by their attorney.
- Generally, once an offer has been accepted, then the sellers will allow an inspection, which should be done promptly. After any inspection and any follow on negotiations, the sellers will have their attorney forward the contract of sale to the buyer’s attorney.
Negotiations can take several forms. It is important to work with your agent in forming the strategy best for the particular situation. Listen carefully to your agent’s advice. Some homes may be competitively bid and negotiations will move quite quickly while others will go back and forth several times. It depends on the market and the parties involved. And it can change as time goes on, especially if there is an intervening competitive bid – or more.
Once an offer is made, be prepared to move quickly. An acknowledgement of acceptable terms is not a firm contract. Another party can come in and outbid an agreed upon offer at any time until contracts are signed and the deposit is received. Buyers should be sure to be available, responsive, perform inspections as soon as possible and turn around contracts expeditiously in order to avoid or trump any intervening bids.
Importance of Inspections
Real property is complex. Not everything is visible or apparent to a layman and so often an offer is subject to customary building inspection. If agreed, it should be done as soon as practically possible (within three days or less). The purpose is to assure the prospective purchaser that there isn’t anything of concern not readily apparent that would materially affect the value of the property. Buyers who use it as a means of trying to retrade price based on every item that could be fixed or upgraded may find the seller does not want to work with them and will reject the offer. The duration of a basic property inspection is a few hours, with some tests needing a follow up visit. Inspections may include:
- Engineering: structural integrity, and operation of systems, including heating and cooling, plumbing, electrical, windows and doors.
- Environmental: asbestos, lead paint, carbon monoxide, underground storage tanks and radon.
- Field: structural integrity of outbuildings, pools (seasonal), septic, and well.
- The seller’s attorney will prepare the contracts, typically delivered within three business days to the purchaser’s attorney.
- The purchaser will review contract with their attorney and make modifications, if any. Items that may be addressed in the contract include:
- Purchase price, credits at closing, escrow amounts, provisions for deposit.
- Contingencies of sale and other terms and conditions.
- Targeted date of closing and deadlines for contingencies to be met or forfeited.
- Legal description of property and personal property to be included.
- Provisions for clear title.
- Once the contract is agreed to, the buyer will sign the contract and it will be returned, along with the predetermined deposit, to the seller’s attorney, who will keep the deposit until closing.
- The seller will sign the contract and return a copy to the buyer’s attorney.
- The buyer’s attorney will order a title search and guide you through the process. Your attorney may also represent your chosen financing institution.
- The parties to the contract will then satisfy any contingencies (any additional due diligence, mortgage approval, curing of outstanding permits etc).
- The buyer will prepare to take ownership by obtaining title insurance, property insurance, utilities etc. and schedule a final walk-through to ensure agreed upon condition just prior to closing.
Consult you attorney, bank and accountant for your needs and requirements and plan on discussing or knowing about:
- Funding of remaining purchase price
- Adjustments (prepaid property taxes, remaining fuel in tank, homeowners association fees, propane, service contracts, tenant rents, etc)
- Mortgage related costs as disclosed in Good Faith Estimate (points, escrow accounts, prorated payment) as required.
- Title insurance as determined by the state Estimate rate here and survey
- Attorney’s fee and municipal search
- Government fees (recording taxes)
Keep in mind that markets change, laws change and regulations are updated. Buyers should work with an agent and get referrals to professionals. Your home is a big investment and deserves expert attention.