The Buying Process
- Introduction
- Select a REALTOR® / Attorney
- Select a Lender / Get Preapproved!
- Start Looking!
- Making an Offer
- Negotiations / Accepted Offer
- Inspections
- Mortgage Application
- Appraisal
- Purchase & Sales Agreement (P&S)
- Moving Companies
- Mortgage Commitment
- Insurance
- Homestead
- Utility Companies
- Final Walk-Through of your NEW PROPERTY!
- Closing Day
- B&B Rebate & Bonuses Program
- B&B Charitable Causes
Introduction
Many people are completely in the dark when it comes to the details of the home buying process. The Brackett & Bates Team would like to eliminate the "fear of the unknown" and empower you with as much information as possible. Whether you are a first time buyer or purchasing your 10th investment property, you will be well informed. You will feel confident in both your choice of agent as well as with the purchase process. (Many of the topics touched upon in this section are covered in more detail throughout our web site.)
The first piece of knowledge we would like to pass on to you is that in Massachusetts, any and every part of a real estate transaction needs to be in writing in order to considered a legal and enforceable contract. There are no verbal agreements or gentleman handshakes in real estate. This is not an effort to provide legal advice but an effort to set it straight from the start; any item or condition a Buyer deems important to be included (or not included) in the sales contract of the property they are purchasing must be in writing. Communication with your REALTOR® and attorney needs to be clear, confirmed and understood. If you aren't sure about something, ASK!
We realize there is a lot of information for you to review. Please note no two purchases are exactly alike and there are many variables that can come into play. The following is a general guide to what you can expect during this exciting time!
Select a Realtor® / Attorney
We list this first because your REALTOR® should be able to help you with many of the events that follow. At this point, you may also want to retain an Attorney to look out for your interests. This is strongly encouraged by The Brackett & Bates Team. We know very reputable Attorneys and would be happy to put you in touch with them. There are many details to consider when choosing a REALTOR®. The following are some preliminary questions to ask to determine if the REALTOR® will represent your interests throughout the entire purchase process:
- "Do you offer Buyer Agency, and if so, what are the conditions?"
- "Will you negotiate to get the best terms and price on the property I wish to make an offer?"
- "Can you help to keep me on a schedule and tell me what I need to do in order to be fully prepared to close on the property?"
- "Can you put me in touch with home inspectors, attorneys, lenders, etc. as needed?"
- "Can you help me to identify properties that will suit my needs and are in my price range?
It is at your first face to face meeting with a real estate agent that you will be asked to sign a "Massachusetts Mandatory Licensee-Consumer Relationship Disclosure Form.*" This is not a contract, a financial obligation or an agreement to work with an agent for an unspecified amount of time. According to the new Agency Law, upon a Buyer's first face-to-face meeting with a Real Estate Salesperson (hereafter referred to as "Associate") to discuss a specific property, the Associate will provide the Buyer with the "Massachusetts Mandatory Licensee-Consumer Relationship Disclosure" Form. The Associate will explain to the Buyer that only that Associate represents the Buyer named in the form. The Associate is the Designated Buyer's Agent for that particular property and all other properties viewed by the Buyer and the Associate. Again, please note that by presenting you with this form, your REALTOR® is practicing in accordance with Massachusetts State Law.
The Buyer Brokerage Agreement** is a contract. Our contract allows the Buyer to decide what length of time they would like the Brackett & Bates Team to represent them. There is also an opportunity for termination by either party so there is no confusion about an endless relationship. We have included a copy of the contract on our web site for your review. It is best though to discuss any questions or unclear points in a personal meeting.
* - Please visit our "Mass Agency Law and Forms" sections under the Buyers and Sellers buttons, respectively.
Select a Lender / Get Preapproved!
In this day and age it is unheard of for a potential buyer to make an offer and have it accepted WITHOUT a preapproval. A preapproval letter from a bank or mortgage lender tells the seller that you are a qualified candidate to purchase their property. It is in your best interest to obtain your preapproval letter before you start looking for a property. This serves a couple of purposes:
- It eliminates the chance that you find your ideal property and are unprepared to submit an offer.
- It will give you an accurate price range at which you could comfortably purchase your home.
- First Time Buyer
- FHA
- VA (Veterans Administration)
- No money down/No closing costs
- Sub-Prime Programs (low credit scores)
- Conventional
- Jumbo
- No "PMI"
- Commercial
- Construction
- Land Purchase
- Bridge Loans (Only applicable to property owners when selling a property and purchasing a property.)
Start Looking!
The Brackett & Bates Team can help you find your dream home; your ideal commercial property; your land to develop. Whatever it is, we'll find it! The Brackett & Bates Team offers:
- BUYER'S AGENCY (No retainer fees!) You will have the experienced and
knowledgeable B&B Team in YOUR corner, watching out for YOUR best interests,
not the Sellers.
- FREE E-Mail Property Updates (with addresses!) With a little bit of
information about the type of property that interests you, we can create a
profile. We will then email you daily with EVERY available property that
meets your criteria. These are not just our own listings but also EVERY
listing currently available in Massachusetts that meets your guidelines
(i.e. price, type of home, size, location, etc.) If you are not an
"Internet" person, we would be glad to call you either daily or weekly with
this same information.
- $250 REBATE TOWARDS CLOSING COSTS AND A BONUS FROM OUR A LA CART
MENU OF BONUSES FOR BUYERS. (Please click on our "Rebates & Bonuses
for BUYERS" Link.)
Making an Offer
So you've found "the" property! This is a very exciting but also anxious time for many buyers, particularly first time homebuyers. Believe us when we say "You're Not Alone!" The Brackett & Bates Team is here for you to make this as comfortable and stress-free experience as possible. Here's what happens next. You will meet with The Brackett & Bates Team to prepare an offer in writing. This will involve a number of items. Together, we will determine:
- Your offer price. (You will receive a mini market analysis to determine if the home has or has not been priced appropriately and what is a reasonable offer.)
- The inspections that will be incorporated as part of the offer (i.e. home inspection, lead paint inspection, mold, radon, etc.)
- The date to close on the property. (This is also move-in day.)
- Whether or not you will have any contingencies (i.e. Is your purchase contingent upon you selling your current residence?)
- What amount you will be using as a "good faith deposit" (Generally $500 to $1,000 which is applied to the down-payment as well as the purchase price.)
- The date you can reasonably have your mortgage application completed.
- Your mortgage commitment date.
- The amount you will be putting down as an "Earnest Money Deposit" (varies from 3% - 20%) Again, the Earnest Money Deposit is applied towards the purchase price of the property and is due and payable upon the signing of the Purchase & Sales Agreement.
- What, if anything, you are asking the Seller to convey (i.e. include) with the property.
- How long you are prepared to give the Seller to consider your offer.
Negotiations / Accepted Offer
There are 3 (three) likely outcomes once we submit your offer to the Seller.
- The first outcome (and of course most desirable!) is the Seller accepts
your offer as it has been presented.
- The second outcome is the Seller presents to you a "Counteroffer." This
is when there are parts of your offer that are acceptable but other parts
the Seller wishes to negotiate. The negotiating may be with regard to the
offer price; the closing date; the items that are the seller's personal
belongings which you asked to be included in the sale; etc. It is then
up to you to decide if there are points you wish to concede or if your
offer is firm as submitted. This should not be looked at as a "tennis match"
so to speak. The ultimate goal is for both parties to get what suits them
best, not about "who wins." In the ideal purchase, both parties win.
This is not to say that you should not stand your ground if you feel you
have put forth your absolute best offer. You simply have to be of the
mindset if the seller is also firm on certain points and you can't come to
a mutual agreement, then the offer process ends. Onward and upward as
they say!
- The last possible response to an offer is a rejection. This is rare and is usually the result of an extremely low or unreasonable offer.
- Review the Seller's deed - a standard procedure done by your
attorney.
- Condominium purchase - your offer pertains to a condominium purchase,
you will want to make sure that your attorney collects from the seller their
6-D certificate (which indicates they are current on all condo fees); a copy
of the condo associations "Rules & Regulations;" a copy of the yearly budget
and financial statements.
- Multi-Family Property Purchase - If your offer pertains to a
multi-family property purchase, you will want to make sure your attorney
reviews any leases or agreements currently in place for each unit. If the
tenants do not have leases, your attorney will need to confirm there are
no binding "verbal" agreements between the seller and the tenants. You
will also want your attorney to determine if any deposits are being held
by the seller and how they will convey to you upon closing. You should
also seek advice from your attorney on how to be a landlord.
- New Construction - If you are making on offer on new construction
(whether completed or in construction phase), you will want your attorney
to obtain IN WRITING any and all warranties that are provided by the builder.
There are a number of other considerations pertaining to new construction.
If you are unclear how any of the following may affect you, make sure you
discuss your questions with your REALTOR® and/or attorney as soon as
possible:
- What are the Upgrades?
- What is or is not included in the base price?
- How extensions on the closing date will be handled (if necessary).
Inspections
Once your offer has been accepted, you must act fairly quickly to set up your inspections. Generally, you have 7 days from the acceptance of an offer to have the home inspected and 10 days for a lead paint inspection as well as a possible mold inspection. There are many types of inspections you may wish to have (not all inspections will be relevant to every transaction). The following are examples of inspections that can be completed by the Buyer during the purchase process:
- Home/Building Inspection - As it sounds, the home/building inspector inspects and reviews all components of the property. If a major component such as the roof or furnace (for example) exhibit unusual wear and tear or show substantial defect, then they will recommend the appropriate professional take a look. Before hiring the home/building inspector, you should ask them about their experience and if they belong to the National Association of Home Inspectors.
- Mold
- Title V - The Seller is generally responsible for providing a "Title V" certification. Lenders require properties with a private sewerage system to have a Title V inspection or current Title V certificate to close. This indicates the septic system has been tested and meets required standards and is working properly.
- Survey - To determine or define property boundaries. Not frequently done by Buyers but is the only legal method to clarify possible boundary questions.
- Pest Inspection
- Well water quantity
- Well water quality
- Radon
- Pool inspection
Mortgage Application
The actual Mortgage Application is different than the pre-approval. The pre-approval is generic with regard to the property. The Mortgage Application is specific to both you AND the property. You will want to complete your application quickly as possible after acceptance of the offer so your lender has plenty of time to work on your loan. Time extensions for your mortgage commitment letter or for the closing of the property are legal matters and can have consequences.
Appraisal
Often times this is one of those "behind the scenes" events where you may never realize it has occurred. Consult your lender regarding the cost. The purpose of the appraisal is for the appraiser of the banks choosing to physically go to the property and, based on some pretty specific guidelines, determine its worth. This assures the bank the money they are lending you for this property is a good investment on their part because the property is worth at a minimum what you have offered to pay (and therefore, what the bank will be lending to you).
Purchase & Sales Agreement (P&S)
Woo hoo! You're doing fine! Once we get through all the inspections and any changes made to the offer, it is time to consult your Attorney again (who you have retained by now!). Remember the old saying "Buyer Beware?" Your Attorney will make sure the P&S provides protection to you in the event the transaction cannot proceed as anticipated. The P&S covers everything that was put forth and agreed upon in the offer stage; incorporates anything that has changed since the offer was accepted (ie. home inspection issues that have been worked out, etc.). It is a legally binding document. Generally, it is prepared by either the Seller's Attorney or their REALTOR® and initially presented in draft form. This gives the buyer a chance to review the information with their Attorney and make any necessary changes or fix any errors. When the document is ready to be signed, arrangements will be made to meet with your Attorney and/or REALTOR®. Your "Earnest Money Deposit" is now due. Ok, "Moving" right along...
Moving Companies
Now that the P&S is signed, this is a great time to start contacting moving companies unless you are a "do-it-yourselfer" in which case put your friends on notice! At a minimum, you will want to be packing all non-essentials and getting them in order for the big day!
Mortgage Commitment
This is a biggie! Your Mortgage Commitment "due date" is anywhere from 1-3 weeks from the signing of the Purchase and Sale. Once the P&S has been signed, your lender will want a copy of it so they can proceed to get your commitment ready. This date is EXTREMELY important although it generally comes with no big fanfare; UNLESS there is a problem. To avoid problems, here are a couple of things you the Buyer can do:
- Always be up front with your lender. If you filed bankruptcy 5 years
ago, the lender can probably work with that fact. But it makes it much more
difficult if they have to find out on their own (which they will!) and they
are already 3 weeks into the loan process.
- Be organized! The whole process will go much more smoothly if you
have all your relevant financial documents in one folder (i.e. tax returns,
recent pay stubs, bank statements, etc.).
- Get your lender everything they need as quickly as possible. Even if you don't think something is big a deal; if they ask for it, it IS a big deal.
Insurance
You are going to need a homeowner policy for your new home! You should be consulting your insurance company 1 to 2 weeks prior to closing. You will need to purchase a full year and bring an insurance binder to the closing. There are various types of insurance you may want to review:
- Homeowners insurance - covers fire, theft, and liability - Homeowners
insurance is a MUST! Different insurers offer different coverage beyond the
basics and may include personal property (jewelry, etc.), computers, etc.
Please ask your insurance representative if you have questions about the
policy you are purchasing. (When purchasing a condominium, the "homeowners
insurance" is often included in your monthly condo fee. It would be wise
to continue your "apartment content insurance" or purchase a policy to
protect your personal possessions.)
- Flood insurance - Required by most lenders if you are purchasing a property
in a designated high-risk flood zone. Again, you will need to purchase a
full year and bring the insurance binder to the closing.
- "Home Warranties" - This is an optional insurance. The policy can
cover anything from a broken dishwasher to burst pipes. The policy has a
defined period of time and can be renewed. This would not take the place of
your homeowners insurance but would be an added measure of comfort and
protection in the first months in your new home. A home warranty can be
purchased by either the Buyer or the Seller. You can consult your REALTOR®
for more information.
- Title Insurance - This is also an optional insurance that can be purchased through most attorneys. The Buyer’s lender requires as part of your closing costs a policy purchased by the Buyer but in the Lender’s name. Title Insurance covers the policyholder in the event a problem developed in the chain of ownership for the property you purchased. If a title problem were to develop after you take ownership, your Title Insurance policy would cover your interest in your home. We defer all questions regarding Title Insurance to your attorney.
Homestead
An Estate of Homestead is a type of protection for a person's residence, in the form of a document called a "Declaration of Estate of Homestead." The form is filed at the Registry of Deeds in the county where the property is located, referencing the title/deed to the property. It allows homeowners in Massachusetts to protect their property up to five hundred thousand dollars ($500,000)* of the value per residence, per family.
* - Existing homesteads will get the increased protection automatically after October 26, 2004.
This is not a type of insurance to be purchased. The Massachusetts Homestead Act is a little-known law dating back to colonial times which protects the homeowner from having to sell his property in order to satisfy debts or judgments incurred after filing a Declaration of Homestead at the appropriate Registry of Deeds. This protection does not extend to IRS, DOR, real estate tax liens, or child support judgements.
There are two types of Homesteads:
- The Estate of Homestead (M.G.L. c. 188 sec. 1) may be declared by an owner
of a home for the benefit of himself and his family. This Homestead has a
value of $500,000.
- The Elderly or Disabled Person Homestead (M.G.L. c. 188 sec. 1A) is for elderly persons (age 62 or older) and disabled persons who meet the requirement of the statute. This Homestead has a value of $500,000 per person and may be declared by both spouses.
Utility Companies
You will need to make arrangements about 1 week in advance for the utility companies. This is to avoid a "lag" time between when you close (and move in) and when your utilities are turned on. If you are staying in the same town, you may be able to terminate service at your present residence and schedule service at your new property in the same phone call. Otherwise, be sure to schedule cancellation dates from your current property and new service dates to your new property. Here are the most common utilities:
- Gas
- Electric
- Phone
- Cable
- Oil (when applicable)
- Propane (when applicable)
Final Walk-Through of Your NEW PROPERTY!
You're almost home! You and your REALTOR® will schedule a final walk-through of your new property. This generally takes place the day before or the same day as the closing. The purpose of this is to ensure that once all of the Seller's personal belongings are removed, the property has not been damaged or materially changed prior to signing the closing documents.
Closing Day
You did it! You did great! The bank's attorney will notify you as to the time and location of the closing. Sometimes depending on the circumstances, you may not have a solid time or place until the day before the closing. This isn't the norm but it does happen. Don't panic! There is a lot of paperwork for your lender and the bank Attorney to coordinate. You will also be notified the day before the closing as to the final amount of money the lender requires. The amount of money will be either exactly what you were quoted in the bank's good faith estimate or very close. You must bring this money in the form of a certified bank check. It is also a good idea to bring your personal checkbook to cover incidentals such as paying the seller for the remaining oil in the oil tank or to pay the seller for personal items you purchased from them.
Your closing consists of you signing A LOT of paperwork. Plan to spend anywhere from 1-2 hours at your closing. Once the paperwork has been signed and the deed recorded in your name (generally the same day), you will receive the keys to your new property!!!
B&B Rebates & Bonuses Program
The B&B Team offers our Buyer Clients a very innovative Rebates & Bonuses Program with a total value of over $900 when they buy with us. Please click here for details of this unique program, then click your browsers "Back" button to return to this page.
Note: The Brackett & Bates Team reserves the right to change and modify our "Rebates & Bonuses Program" at any time.
B&B Charitable Causes
We would like to thank you for choosing The Brackett & Bates Team to assist you through your home selling experience. We would like all of our Clients to know that we donate a portion of each and every commission to charity. All donations are made in our Clients' name(s), and are made to the charity or organization of that Clients' choice. If you do not have a particular charity you would like this contribution made to, we will donate to a local food pantry, shelter, etc., courtesy of you, our Client. Again, thank you for your continued support and for helping us to help others. We couldn't do this without you!
CONGRATULATIONS ON THE PURCHASE OF YOUR NEW PROPERTY!!!
