Assemble The Team

So now as a buyer, you have your “Pre-Approval” in hand. The next step is to assemble your team. It is very important to hire all of your team in advance. Since there is a possibility that you may want to bid on a property on which there are multiple offers, you have to have your team pre-assembled in order to make sure you can work quickly and efficiently. If not, you may have to try to search for a member of your team during the purchasing process, which will lengthen the time needed to put your deal together. Always remember, the longer it takes for the deal to be executed, the more at risk you are of losing the house to another buyer! So, who must you line up to have on your team?

MANDATORY-IMMEDIATELY:

1. Realtor (Coordinator)

2. Home Inspector/Engineer

3. Mortgage Broker/Banker

4. Real Estate Attorney

5. Non-profit financial aid consultant for some first time home buyers (if necessary/applicable)

OPTIONAL:

6. Appraiser (usually supplied from the Mortgage Representative)

7. Accountant

8. Financial Planner

9. Decorator

10. Architect

11. General Contractor AFTER SIGNED CONTRACTS:

12. Insurance Company

13. Surveyor

14. Title Company (usually supplied by the Real Estate Attorney)

If you already know and trust someone who is on any of these lists, then start with that team member and ask that person to give you recommendations or referrals for the others. If you don’t know anyone well enough from the list, then you can find any of these team members from many different sources, including, but certainly not limited to, your Realtor .

The Realtor will be the coordinator for this team. At every phase of the transaction, the Realtor will ensure that the proper “team member” completes his task appropriately and in a timely manner, until the final day of closing.

Representation by a Realtor®

When you work with a Realtor , please note that some agents work with buyers as “buyer’s agents,” thereby representing the buyer, while others work as “seller’s agents,” thereby representing the seller. As a buyer, if you work with a buyer’s agent, any and all information about your personal situation and what you are willing to spend on a particular property is confidential. With a seller’s agent, any personal information or any statement you make on how much you will spend on a property, by law, will be disclosed to the seller! So, when you hire a Realtor , please ensure that the Realtor presents you with a “Disclosure Form 443” that defines and states to you whether he/she represents the buyer or the seller. You will sign the form so there is written disclosure as to whom the Realtor represents. This signed disclosure protects you! You must understand how the verbal and written information you provide to that Realtor will be used, as it could be used in your best interest or, believe it or not, against your best interest. Please understand, by signing this form, it does not obligate you to use this agent, nor does it mean you have to pay a commission. It is only a disclosure that defines who the Realtor represents during your real estate search and transaction.

Shopping for the Property

For a buyer, finding a property can be tedious. It may be found by the Realtor on “multiple listing,” by you driving by a “for sale” sign, searching the internet, reading a newspaper ad, going to an “open house,” talking to a friend, finding a “For Sale by Owner,” and on and on... But, no matter where you find that property you want to see, CALL YOUR REALTOR . You should not have more than one agent in any specific area. It will get very confusing for both you and the agents and is not in your best interest. Even though you may see a sign in front of a house or an ad in the newspaper that is with another Real Estate agency, it is not necessarily in your best interest to call that other agency. CALL YOUR REALTOR . Your agent can show you everything!!! Remember, that agent is your “Team Coordinator” for the entire purchasing process. If you want to see houses in an area outside of your Realtor’s “area of expertise,” then ask your Realtor to “refer” you to another Realtor in that new area. This way, you can be assured that you get someone you can trust, since your current Realtor recommended that agent.

Putting in a Bid — The Negotiation Process

After buyers find the property they want to purchase, the Realtor will discuss with the buyer the terms needed to place or take a bid. The bid is not just the price the buyer submits, but consists of six (6) key components. The buyer will need to have answers to these questions:

1. “Current property status” examples: a. Do you have to sell anything in order to purchase? Do you rent? b. Do you have to be out of where you are living at a certain time?

2. “Financing” examples: a. Do you have to sell any other property to purchase this one? b. Do you need a mortgage (“contingency”) to buy the property? c. How much cash are you putting down in total as cash (equity)? d. How much are you financing? e. Are you pre-approved? (Provide a written “pre-approval”) f. Who is your lending representative? g. How much do you have to put down at contract? Is it 10%? Is it liquid?

3. “Possession” examples: a. When do you want to close on the property?

Please remember, in NY State, the date placed in the contract will most likely read “On or About.” This means that whatever date you agree upon, the seller or the buyer can postpone the closing date for up to about 30 days after that date, with No legal penalty. So, when negotiating an offer, please remember that there is a good chance it may not close on that date and to ensure that you can close within that “30 day window.”

4. “Inclusions and Exclusions” examples: a. Is the washer/dryer included, what light fixtures are excluded, etc.? b. Is the playground included, etc.?

5. “Other Terms” examples: a. Is there an occupancy agreement? b. Are there penalties for closing after a certain date? c. Is there going to be a property inspection? d. If it’s a multi-family property, are any of the tenants staying, or does the property have to be free of tenants? e. Are there “C of O’s” (Certificates of Occupancy) for everything on/in the property? f. And there are many others...

6. “Price” examples: a. How much are you willing to pay for the property?

Buyers, please note: Just because a property is “listed for a certain price,” it most likely will not sell for exactly that price. If there are no other buyers other than you for a certain property, it may sell below the listing price. But, please understand, if there are other offers from other buyers for the property you desire, the final sales price may well be over the stated listing price. This is not uncommon in this marketplace. Please realize that the “listing price” is just a number that the owner and the Realtor thought was their “best estimate as a market price” and so they used that number as a starting point. But, “the market,” not the seller, the buyer or any Realtor sets the market selling price. If there are multiple bids on a property and buyers are willing to pay more than listing price for that property, then that is the market selling price for that house, no matter what was written as the “listing price.” Therefore, a buyer may be able to buy the house for under the “list price,” but you must always be prepared to accept the “market selling price,” no matter if that is below or above any listed price.

Acceptable Offer

After the buyer and the seller agree on a price and all the terms, you will now have something called an “acceptable offer.” However, please understand, this “verbal agreement” is not legally binding the buyer or the seller. Moreover, the property will continue to be shown for sale to other buyers, and offers will be presented to the seller until a “contract-of-sale” is signed by both a buyer AND the seller (executed contracts). Until contracts are executed, the buyer may withdraw the offer at any time to buy something else, and the seller may withdraw the acceptance at any time and sell to someone else. Therefore, after an acceptable offer is negotiated, the longer it takes to have a property-inspection and proceed to an executed contract, the more opportunity the seller has to sell at a higher price or better terms to another buyer.

The property will continue to be shown for sale. Any agent requesting to show the home will now be told there is an “Acceptable Offer” on the property, but that all showings are encouraged and that the seller will consider all offers.

All applicable disclosures will be distributed to the buyers and sellers for signatures and execution. These disclosures may include some or all of the following: a. NY State Property Condition Disclosure (for one to four family homes). b. Federal “Title X” lead disclosure (for houses, condos, co-ops and multi-family homes up to four-family, that are built pre-1978). c. “Dual Agency” disclosures, if applicable.

A pre-approval will be faxed to the listing agent. (This was probably already completed during the negotiation process, but if not, then it will definitely be sent now). This pre-approval indicates that the lending institution completed a credit report on all the buyers on this transaction.

Property Inspection

Once you have an “acceptable offer,” the buyer will proceed with a property inspection. This is usually scheduled to be completed within 48 hours of the accepted offer. It is highly recommended that the purchasers be present at the inspection so they can experience and see first hand any deficiencies the property may have. The buyer should receive a written report at the inspection, but no later than 48 hours after the inspection. This is not the time to try to renegotiate just to get the property at a lower price. However, if there are any items that the purchaser feels are important enough that the seller needs to repair and/or replace, then your Realtor will negotiate those items for you. But remember, the longer the repair list and/or how trivial the item, the seller may refuse and just sell to another buyer. In addition, depending on the situation, a specialist (example: a plumber for a plumbing issue) may be called in to supply additional information. As a rule of thumb, if wood-destroying insects are found, the seller is usually responsible for all extermination. Or, if there is a buried oil tank and the tank fails an inspection, by federal law, the seller is responsible to “cure” the failure. Therefore, please make sure that you only attempt to negotiate items very important to you in order to keep the transaction flowing quickly and efficiently.

The inspections usually take two to four hours to complete. The inspections may include some or all of the following: a. General inspection (structural, basements, water leaks, roofs, heat & air conditioning, plumbing, electric, mechanical, etc.) b. Wood-destroying insect inspection c. Radon test, (if applicable - this may take 5-7 days to procure results) d. Septic inspection, (if applicable) e. Buried oil tank test, (if applicable) f. Well water test, (if applicable). In Westchester County, the seller is responsible to take this test and provide the results to any purchaser. (This may take 5-7 days to procure results) g. Other, if applicable: Mold, lead paint, formaldehyde insulation, asbestos, lead pipes, etc.