Who
Will Be Involved?
When you buy a home you will come
in contact with a variety of specially-trained people.
In most cases, the real estate agent will be your first
contact, then your lawyer, your banker and, in some cases,
a title officer. It is important to understand the functions
of these people so you can determine whether you are being
treated fairly and properly.
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What
Is The Real Estate Agents Role?
Unless you buy directly from the
owner, the first person you will come into contact with
will be the real estate agent, who is trained to help
you find a home. You should remember that the agent is
a professional salesperson who is generally under contract
and receives a commission from the seller. Therefore,
the agent is representing the seller's interests in selling
the home to you. The circumstances do not change even
if there is more than one agent involved, because they
still receive their share of the commission from the seller
and they will earn it only if the sale takes place.
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Why
Do I Need A Lawyer?
Your lawyer should participate in
all phases of the transaction to help you in dealing with
the other people involved. Your lawyer will explain the
different phases of the transaction. There are many times
when legal documents are prepared by the real estate agent.
Remember the real estate agent does not represent you.
Any document requiring your signature should be reviewed
by your attorney. This is true regardless of what the
document is or how it is described to you. In some instances,
your lawyer may also provide additional services.
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What
Is The Agreement Of Sale?
The foundation for the purchase
of a home is a document called the Agreement of Sale.
It is a very important document that you will sign, in
that it sets forth all of the terms and conditions of
your purchase. Frequently a preprinted form is used for
the agreement by the seller's realtor, and the precise
terms are added by completing blanks on the form. Agreements
of sale contain detailed language which is often hard
to understand. Your lawyer is specially trained to provide
you with the explanation you need, and will be able to
point out other factors you might wish to consider.
For example you should be
aware of the kind of deed you will receive. A deed is
the evidence of your title to the property. You will also
want to be sure that your obligation to buy is conditioned
upon the type and amount of financing you want, with terms
you are sure you can afford. Your lawyer can make sure
that unnecessary charges are eliminated from the transaction
and can also help you avoid the problem of having to move
out of your present residence before your are able to
move into the new one. Other terms which your lawyer will
assist you in providing for in the agreement include:
-
The dates and amount
of payment required.
-
The settlement date.
-
A list of household
items to be included in the sale.
-
A statement about what
happens if the property is damaged or destroyed before
settlement.
This list is not complete, but it does show
how important it is to be thorough before the agreement
is signed. Remember, once you sign a document, it is too
late. Unfortunately, many times a buyer will sign without
fully understanding the terms of the agreement. Before signing,
make sure you understand everything!
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How
Should I Obtain A Mortgage?
A mortgage is a loan, which is usually
made to you by a bank, savings and loan association or
other financial institution. Unless you are going to pay
cash for your home without borrowing, a financial institution
will help you obtain a mortgage to fit your needs.
In general, the mortgage
market is competitive. This means that by shopping around
for a mortgage, you may be able to save money. Your lawyer
will be able to explain the procedures for obtaining a
mortgage, as well as different types an rates of interest,
" points," and the legal documents involved.
You may want to ask your lawyer or financial institution
about alternative means of financing or retaining seller's
current financing.
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Why
Is A Title Examination Necessary?
Before settlement, the title should
be examined to determine whether there are any liens,
encumbrances or other potential clouds on the title. Also
most institutions providing a mortgage will require that
you purchase title insurance at the time of final settlement.
In some areas, the title
examination or title search is done by your lawyer. In
other areas, the search is done by a title insurance company.
The buyer pays for the title search and for the title
insurance. Your lawyer will examine it to determine that
you will receive proper and legal title to the property.
Only a lawyer is qualified to evaluate the legal implications
which may arise as a result of the title examination.
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What
Does A Title Officer Do?
In many parts of Pennsylvania, the title officer, who
works for a title insurance company, is the person who
will conduct the closing or settlement for your new home.
It is the practice in other areas, however, for your attorney
to handle the settlement for you.
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What
Does The Seller Have To Disclose?
The Real Estate Seller Disclosure Law took effect Aug.
30,1996. Intended to make potential buyers aware of any
material defects, this law requires a seller to complete
a detailed disclosure form regarding the condition and
structural soundness of the property which is for sale.
The law also stipulates that sellers can be held liable
for related damages if they fail to disclose defects they
know about. This law applies to properties that are for
sale both through a real estate agent and by the owner.
On the form, sellers are
asked to provide detailed information about such areas
as the installation and repair of the roof, gutters and
downspouts; water leakage; termites,dry rot; shifting
or movement of walls and foundations; additions and remodeling
jobs; water, sewage and plumbing; heating and air conditioning;
the electrical system; all appliances included in the
sale and many other things including condominium or association
assessments and mine subsidence, if applicable.
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When
Do I Receive Title To The Property?
The final stage in the purchase of property is called
the closing or settlement. The closing may be held in
the office of the title insurance company, in your attorney's
office, or at the bank or financial institution which
provided the mortgage. At closing, the terms of the agreement
of sale will be carried out, the mortgage documents will
be signed, the title, in the form of a deed, will be transferred
to you, and the seller will be paid.
There are many documents
to be signed and many others to be reviewed. Your lawyer
will attend the settlement with you to help you understand
exactly what takes place and to protect your interests
should any problems arise prior to or at the settlement.
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What
Expenses Are Involved?
Your lawyer can explain to you what expenses are involved,
in addition to the purchase price. Among them are:
- Cost of title examination and title
insurance.
- State and local transfer taxes.
- Adjustments for property taxes already
paid for by the seller.
- Your lawyer's fees.
- Charges imposed by the institution
providing the mortgage, including "points"
(a percentage charge for mortgage) and fire and home
owner's insurance.
- Recording costs for the deed, mortgage
and my other required filing
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