The legal fine points of home buying

[CommunityEditor]

Q: My wife and I are considering purchasing our first home. What should we consider before we actually start shopping around?

A: The purchase of a first home is an exciting experience, but one that should not be undertaken lightly. You should first determine how much money you and your wife will be able to borrow and how much you could comfortably and realistically repay. As the subprime mortgage controversy has made clear, far too many people were loaned far too much money that they realistically had almost no chance to repay; they are now in danger of losing their dream homes to foreclosure. To avoid falling into such a trap, you and your wife should sit down with a credit counselor and/or loan officer from a reputable lender so you can determine how large a mortgage you will be able to handle.

After you have determined the amount of money you are able to borrow, you should interview several realtors to find one that you will be comfortable working with to assist you in your search for your new home. A qualified realtor will be able to guide you concerning neighborhoods, school districts, real estate tax obligations and other considerations that play a roll in finding and enjoying your dream home. Once you have found a home that you are interested in purchasing, a contract will have to be prepared setting forth the terms of your offer.

If the contract is prepared by someone other than your attorney, such as by the realtor, it is extremely important that the contract contain a provision that specifically makes the contract contingent upon the approval of your attorney. I highly recommend that you engage the services of your own attorney to represent you in what is most likely the most significant financial commitment you will undertake. An experienced real estate attorney will be able to review the contract on your behalf, make any changes that are required in order to protect your interests, order and review a title report covering the property to make sure that all liens and encumbrances — such as existing mortgages and judgment liens — are taken care of at the closing, compute the real estate tax pro-rations, and attend the closing with you and explain to you the myriad documents that you will be required to sign at the closing.

Q. I have just signed a contract to purchase my first home. My realtor told me that I can save a lot of money by using the lender’s attorney and not buying title insurance other than what the lender requires for its benefit. I want to save as much money as possible, but I also want to make sure that my interests are protected. Should I follow my realtor’s advice?

A. I would not follow the realtor’s advice. Although it’s true that by following the realtor’s advice you will spend less money at the closing, such savings may pale in comparison to what it may cost you in the end if the tax adjustments are not done correctly, if there is a problem with the title that the lender’s attorney overlooked or was not concerned about from the lender’s point of view, or if the title searcher made a mistake and overlooked a lien.

The lender’s attorney is referred to as the lender’s attorney for a very simple reason — he or she is representing the interests of the lender and not you, the borrower. Some matters that are disclosed by the title report may not concern the lender or its attorney, such as easements or restrictions that may affect how you may use or improve your home. Those might be deal-breakers for you if you learned about them in time to cancel the contract.

As far as not purchasing title insurance, which protects your ownership interest in your home, this could also prove to be a serious omission that could cost you far more than the cost of the insurance itself. The lender’s title insurance protects only the lender, so if a title problem arises after you own the home, whether because the title searcher missed a mortgage, judgment or lien, or if there was a forgery in an earlier deed, your interests would not be covered or protected unless you purchased your own policy.

Q. Should I have the property surveyed?

A. In most cases, having the property surveyed is a very good idea. Without a survey, you will not know exactly where your lot ends and where your neighbor’s lot begins or the location of the house and other structures with respect to the property lines.


Article: http://www.militarytimes.com/communi...awyer_071105w/

[CommunityEditor]

More questions: What you should know before selling your home (http://www.marinecorpstimes.com/comm...awyer_080114w/)


Q. What should we consider before we put our house on the market?

A. There are several things to think about before putting the “for sale” sign on your front lawn. One of the first decisions you’ll have to make is whether to use the services of a real estate agent or try to sell the house on your own.

Even if you decide to try it on your own, it’s a good idea to meet with at least two or three real estate agents from different agencies to get some kind of a feel and consensus for what your home would realistically sell for in the current market. This would also give you an opportunity to evaluate what real estate agent you could engage in the future, in case your efforts to sell the house on your own are not successful.

It would be beneficial for you to go to several open houses in your immediate area to see what other homes in your neighborhood are listed for and how they compare to your home. This will give you a better idea as to what your home should sell for in light of the homes on the market in your area, as well as what homes are in competition with yours.

Whichever way you decide to go, you should consider the “curb appeal” of your home. In other words, do whatever is necessary to spruce up your home as it is seen from the street to make it inviting to prospective buyers and make them want to go inside for a closer look — rather than driving away to look at the next house on their list. The landscaping and lawn should be trimmed and cut and the entranceway clean, bright and inviting. The outside lights should all be in working order and the door freshly painted or stained and easy to open and close.

Once potential buyers are inside, they should be met with uncluttered rooms and, if possible, freshly painted walls. At the very least, any wall colors that would be considered unusual should be repainted using a neutral color.

When someone wants to purchase your home, it will be necessary, of course, for a contract of sale to be executed by you and the buyer. Who should prepare the contract? The answer certainly is not you or the buyer, because laymen could not possibly know all of the essential terms that need to be included.

In some states, the contracts are prepared by the real estate agents. If you have chosen to engage one to sell your home and he prepares the contract, you should not sign it before your attorney has a chance to review it. If the real estate agent does not prepare the contract or if you sold the house on your own, you should engage your own attorney to prepare the contract or to review one that the buyer’s attorney has prepared to ensure that your interests are being protected.

The sale or purchase of a home is one of the largest and most important transactions that most people are ever involved in, and representation by your own attorney is necessary to ensure that everything goes as smoothly as possible and that your rights and interests are protected.


Q. I was recently discharged from the military and have decided to sell my home and start anew somewhere else. My friends tell me that I can save thousands of dollars by selling the house on my own rather than hiring a real estate agent. Are they right?

A. Assuming that you are able to determine what your house should sell for and assuming that the market in your area is a seller’s market — or at least one that doesn’t favor either buyers or sellers — you could indeed save thousands of dollars by selling the house yourself.

If your house was to sell for, say $180,000, avoiding a commission of 6 percent would translate into a savings of $10,800. By selling it on your own, however, you could also be leaving several thousand dollars on the table. For instance, if you erroneously concluded, for whatever reason, that your $180,000 house was worth only $170,000, and the best offer that came along was $165,000, you would be out $15,000.

You should at least consider and interview several real estate agents who will be able to advise you on current market considerations, what improvements should be undertaken in order to facilitate a quick sale, and who will be able to market your home to a much larger group of purchasers through the multiple listing service in your area.