LIFECYCLE OF A DEAL
OFFER TO PURCHASE
Once you have decided on the house you wish to buy, you must submit an Offer to Purchase stating the price that you are willing to pay for the property and the terms and conditions upon which you will purchase, such as:
a) Mortgage Financing
b) Satisfactory Building Inspection
c) Satisfactory Termite Inspection
d) Good and clear record, marketable title
e) Total amount of deposit (usually 10% of purchase price)
f) Time for execution of Purchase & Sale Agreement
g) Time for closing
The Offer to Purchase is accompanied by an earnest money deposit, usually $1,000.00.
PURCHASE and SALE AGREEMENT
When the Offer and the terms thereof have been accepted by the Seller, the Seller has a Purchase and Sale Agreement (P&S) prepared which includes the term of the offer and becomes the Agreement between you and Seller. You and the Seller should each consult an attorney as early as possible to insure that the P&S clearly represents the agreed upon terms and con¬ditions of the sale. At the execution of the Agreement, you must increase your deposit. All deposit money is held in escrow until the Agreement is either performed or terminated.
You should discuss mortgage financing with a banker prior to looking for a new home. This is important so that you know, in advance, the amount and cost of mortgage financing that will be available to you. Immediately upon executing the P&S, you should file an application (s) for mortgage financing as the mortgage contingency clause in the P&S usually gives you only 21—30 days within which to terminate the Agreement if you are unable to obtain the required financing.
Once a mortgage commitment is issued and is accepted by you, the bank’s attorney examines the record title and obtains a mortgage survey plan,; a statement with regard to real estate taxes and other municipal liens; title insurance commitment. All of these items are paid for by the Buyer. The approximate cost of these services is usually about 1% of the mortgage amount. Points and other bank fees are additional Buyers costs.
Assuming all of the contingencies set forth in the P&S have been met or waived, the closing is held at the time agreed upon and indicated in the Agreement. At the closing, the deed is delivered; the balance of the purchase price paid; adjustments for taxes and other matters are made: and the mortgage papers signed.
The Buyer must have the following at the closing:
a) Prepaid Homeowner’s Insurance Policy
b) Certified check for the balance of the monies due under the Agreement
c) Such other matters as either the bank attorney or the Buyer’s attorney require
Just prior to the closing, you should inspect the property with the Seller’s real estate broker to be assured that the condition of the property conforms to the terms of the Purchase and Sale Agreement.