Real Estate – Buyer Guidelines

Transaction Overview – Checklist for Buyers

A Real Estate Agent does more than just showing houses!

A Real Estate Agent is a licensed professional who works closely with their Client/Customers to find property to purchase. While on the surface this may appear to be a routine task, there are many behind-the-scenes activities that agents provide buyers information that protects and makes the purchase process easier. The better the agent, the smoother the transaction appears to the buyer.

Agents begin the sales process by helping their clients identify property amenities, locations and budgets. Often these change throughout the transaction process, but that is also part of the skill necessary to keep a search moving smoothly. A talented Real Estate agent recognizes a potential issue before the buyer and usually can adjust things before they become major problems.  <More>

Once a client has tours properties and determined a property they want to purchase:

Necessary Real Estate Forms

• Mass Mandatory Disclosure Form
  Sign at first face-to-face meeting at a specific property

Not a contract. The purpose of this disclosure is to enable the potential buyer to
make informed choices before working with an agent from The Vineyard Life brokered by eXp Realty. It also provides both parties with a clear indication who the agent is representing during the home purchase process.

Homebuyer does not need to sign, but it is the law for all Real Estate companies to show at first face-to-face meeting with potential client.

• Buyer Representation Form (Optional)

By signing, the agent becomes the Buyer’s Agent. This is a contract between homebuyer and an individual Agent. (TVL is a Traditional Agency – all agents within the agency represent the seller).  The Buyer’s Agent owes the buyer a fiduciary responsibility throughout entire home buying experience – undivided loyalty, utmost care, disclosure, and obedience to lawful instruction, confidentiality and accountability. Please see the TVL Why Buyer’s Need Representation During a Transaction Page.

The Buyer’s Agent must put the buyer’s interest first and negotiate for the best price and terms for their client, the home buyer.

• Wire Transfer Fraud Notification Form

Wire Fraud is a very serious problem that Buyers and Sellers need to be extremely careful about. This form provides information about actions that  Buyers and Sellers need to do to protect themselves.

Offer to Purchase – Preparation
This is a legal document that outlines parties, price, timeline and contingencies. This would be a good time to hire an attorney. What’s in the Offer to Purchase.

• • Financing – Prior to finding a property, we recommend that you should contact your financial institution to get a Pre-Approval Letter. The financial institution uses information that buyer provides to create an estimate of what amount the buyer would qualify. This is not a loan, but rather just an estimate of what you may be able to borrow. Sellers are also becoming more selective with potential buyer’s ability to obtain financing.Necessary Documentation:
    • Paystubs: Your last two pay stubs will suffice. Make copies and don’t hand out your originals.
    • W2 Forms: Last two years for each person that will be purchasing home.
    • Federal Tax Returns: If you haven’t yet filed your tax return for last year, then find the two previous years of tax returns. Make copies. Include all schedules.
    • Bank Statements: At least two months. Make a copy from each lending institution.
    • Copy of Current Driver’s License: For identification
  • Home Inspection – (Paid by Buyer)
    Usually done prior to the Purchase and Sales Agreement. Getting the Inspection Report prior to the P&S, allows the Buyer to have a better understanding of the condition prior to submitting second deposit.We advise our clients to use the information from the Home Inspection Report to gain knowledge about the house, not as a bargaining tool to negotiate a lower price unless there is a major structural issue. If such issues are found, the Home Inspection provides the Buyer an option to negotiate a repair at the Seller’s expense or withdraw from the transaction.

• • • Optional Inspections
      1. 1. Radon – (Optional) There are several area around the Island that have shown elevated levels of radon. Home Inspection companies can run radon tests during their regular inspection. Remediation of elevated radon is relatively inexpensive in most cases.
         2. Water – There is a water testing facility on Island.
         3. Pest – Buyers often want to make sure there are not termites or ant infestations around a house. There are a few pest firms that will provide an inspection service.
         4. Engineering/Flood Insurance – If you are purchasing a property near the water or an existing wet land, purchasing flood insurance can be difficult and expensive. Our agency has access to FEMA Flood maps, which can be helpful in the decision to purchase.

Purchase and Sales Agreement

• • Timeline – Usually done within 2-3 weeks after the Offer to Purchase is signed.
  • Legal – Seller’s Attorney will work with your Attorney to finalize the Agreement language. When signing the P&S Agreement, a second deposit is required at signing – usually 10% (minus the $1000 initial deposit) of the sales price is required.
  • Mortgage – During the process, you should be working (and providing documentation) with your mortgage company to secure the necessary information and get approval for your mortgage. During the mortgage process, it’s important not to make any major purchases that may affect your credit score. (I have seen deals fall apart because the buyer bought a car or opened another credit card. Hold off till after the closing).
  • Title Search – The Attorneys do a title search on the property.
  • Other Inspections – The Sellers will need to provide the Buyer with a septic inspection report. This report needs to be done within 18 months of the transaction or up to 6-month after the closing (in case of winter closing). Paid by Seller.
  • Other Inspections – The Sellers will also need to provide a fire/smoke alarm certification from the local fire chief. Paid by the Seller.

Closing
This can be done locally or remotely through your attorney. This is when all the final paperwork is completed and recorded

• • Final Inspection – A day before closing, we should do a walk-through of the house to make sure everything is okay within the property.
  • Mortgage – The mortgage paperwork will need to be complete before the Closing. This is where the final money is paid for the property.
  • Recording of Deed – This is where all the transaction documents are signed, and the deed is recorded with the local Registry of Deeds. Handled by Attorneys.

Deposits/Payments

• • Initial Deposit – Usually $1000 – made with offer (once accepted). Check usually made out to listing agency.
  • Second deposit – Usually 10% of purchase price (minus the initial deposit amount) although can be less if agreed upon by both parties. Payment made at signing of Purchase and Sales Agreement.
  • Final payment at Closing – Remaining amount (around 90%) plus any additional costs associated with closing.
    1. Land Bank Fee – 2% of transaction price
    2. Lawyers Fees – either a flat fee or hourly rate depending on lawyer
    3. Recording fees for Registry of Deeds
    4. Pro-rated taxes, HOA Fees and utilities
    5. Special Assessment and Community Fees