The following information is intended for clients and potential clients of JJ Brannon.
Buyers Process: Part 1
Review Working with Real Estate Agents Brochure
Discuss the different forms of representation
Buyers Agency Agreement
Needs to be signed before you make an offer on a home.
Ensures I represent your best interest.
If you make an offer without the agreement, I have to represent seller’s best interest, and give seller information I have learned about you.
Learn about your needs and the things you want in home
Discuss most important features you must have
Location Square Feet (size)
# of bedrooms # of bathrooms
New Construction
School Zone Yard Size
Existing home
Explain Due Diligence Fee (more details below)
Amount the buyer pays for the privilege to cancel the contract for any reason by set date.
The amount buyer pays is negotiable.
If buyer purchases the home, the fee is credited (applied) towards purchase price.
If buyer does not purchase home, the seller keeps the fee.
Discussed in detail below
Explain Earnest Money?
Most sellers require that buyer pays an Earnest Money Deposit.
Insurance for seller if buyer cancels after Due Diligence Period.
If buyer purchases home, the Earnest Money is credited (applied) to sales price.
Buyer gets refund of Earnest Money, if cancels contract BEFORE Due Diligence Period.
Seller keeps Earnest Money, if buyer cancels contract AFTER Due Diligence Period.
An escrow agent holds the earnest money and deposits in a trust account.
Escrow agents signs the OPC, stating they received the money.
Explain how to resolve Buyer and Seller disputes over Earnest Money
Must agree in writing what to do with money.
If cannot agree, parties can go to court.
If process takes over 90 days, escrow agent can send the funds to Clerk of Superior Court.
Begin Loan Process
Begin loan process before beginning property search (saves time during contract)
Get Lender pre-approval
Verify timeframe for loan with lender before signing contract
Lender response
Review choices for different types of loans
Get amount of loan
Get monthly payment amount
Information about down payment
Search for home
MLS and website search.
Schedule appointments to view homes and neighborhoods.
Evaluate and rate each house to find the perfect home.
Focus on homes that have the top 2 features you want.
Think of ways to resolve minor issues you may not like about the home.
Make final decision
Make an Offer
Decide on amount of Earnest Money to offer. (see blog on Explanation of Earnest Money)
Decided on amount of Due Diligence Fee to offer. (See blog on Explantion of Due Diligence Fee)
Write a contract and submit to the seller.
Parties are under contract once agent is told other party signed offer.
Review Counter-Offers (if any)
Counteroffers occur when any changes are made to an offer.
Buyers and Sellers may make multiple counteroffers.
Once a change is made, the previous offer no longer exist.
Alternative Option: Response to Buyer’s Offer
Seller can list more acceptable terms for a buyer to consider.
This form rejects the original offer, but DOES NOT create a counteroffer
Allows seller to be free to accept any new offers
Buyers Process: Part 2
Checklist of things to do during the Due Diligence period: A
Overview
This checklist of items can be found in paragraph 4 of OPC
Investigate Property
Review and Negotiate Changes in Contract Terms
Make a decision to whether or not to purchase the property
Buyer’s Loan
Verify loan is on track for approval
Verify loan fees and down-payment amount
Reasons to TERMINATE the contract BEFORE Due Diligence Period
Loan will not be approved before DDP
Don’t like the loan terms (Interest Rate, Down-payment, Fees)
Property Inspections
There will always be items that show up on the inspection reports.
Focus on major items that need repairs
Most critical things to check
Plumbing HVAC Electric Water damage & leaks
Roof Radon Pest Foundation
Type of Inspectors to hire
General Home inspector Pest-infestation HVAC
Other type of Inspectors
Environmental hazard HVAC Structural engineers
Review Land use documents
Declaration of Restrictive Covenants Bylaws
Articles of Incorporation Rules and Regulations
Check on Home Association Dues or fees
Checklist of things to do during the Due Diligence period: B
Title Insurance (Attorney and Lender do this)
Buyers lender and buyer want assurance of good, marketable, and clean title
If any title defects are found they can by corrected AFTER DPP
Closing attorney and Title Insurance Company will do this
Broker will verify the cost
Homeowner Insurance (lender may require)
Verify cost and availability of homeowners insurance
Flood Hazard Insurance (lender may require)
Look-up in FEMA. Is property in a flood hazard area?
If so, find cost of flood insurance.
Renter Insurance (if necessary)
If buyer possession before closing
Seller need landlord insurance, Buyer need renter insurance
Landlord Insurance (if necessary)
If seller possession after closing
Seller needs renter insurance. Buyer needs landlord insurance
Appraisal (lender may require)
Determine market value of home.
Survey (lender may require)
Verifies property boundaries, encroachments, easements and setback.
Checklist of things to do during the Due Diligence period: C
Zoning
Tells how you can use the property. (Residential, commercial, etc.)
Look-up current and proposed zoning.
Streets and Roads
Planned or Proposed road construction.
Verify if roads are Public or Private.
Verify who pays for maintenance of roads.
School Attendance Zones (subject to change)
Buyer must check with school district
Access to Utilities
Verify company name and phone number
Water, Sewer, Electric
Communication Services Storm-water Gas
Fuel Tank Inspection (if applicable)
Septic system Inspection (if applicable)
Does property have access to central sewage disposal system?
Is there an existing septic system?
Get it inspected.
Find out the last time it was emptied.
Does buyer needs to install a septic system?
Order a soil suitability test, percolation test.
Septic permit issued by county health department
Checklist of things to do during the Due Diligence period: D
Repair/Improvement Negotiation
OPC does not mandate that repairs are required.
Negotiations need to be signed BEFORE DDP expires
DDP Request and Agreement (Form 310-T).
Used as Repair agreement.
Repairs/Improvements can be complete AFTER DPP but before Settlement
If needed, buyer can request an extension of Due Diligence Period
Request extension if buyer needs more time for approval or verification.
Make sure buyer is still interested in purchasing property.
Check on Closing Cost, taxes, etc
Property Tax Special Assessments
Amount that loan does not cover Attorney Fee
Recording Fees Revenue Stamps
Other items
Verify buyer is able to secure funds with a certified check
AT 5 pm on the Due Diligence Date buyer is committed to buy the home
Buyers Process: Part 3
Final Walk-through
Verify completion of all negotiated repairs.
Make sure fixtures not removed and any request personal property is in place.
Obtain building permits for major repairs.
Preparation of Settlement Statement
Prepared by settlement attorney.
Each broker will confirm accuracy.
Broker notifies attorney if errors or omissions.
Attend Settlement Meeting
Face-to-face meeting with both parties.
The Buyers Attorney is normally the Settlement Agent.
Copies of documents are signed and exchanged.
Verify promises in sales contract are fulfilled.
Mortgage funds used to complete purchase.
Parties who owe money must pay with certified check at this time.
What happens if we go beyond the Settlement Date?
14 day grace period allowed to settle AFTER the Settlement Date
On 15th day the non-delaying party MAY terminate the contract.
Non-delaying party can enforce legal remedies for breach.
FINALIZING THE CLOSING
Settlement agent will
Issue final opinion on title
Submit form to IRS
Record documents in County
CLOSING happens when all documents have been recorded.
Disbursement of excess funds to parties AFTER recording of documents.
Buyer is allowed to move in home AFTER documents have been recorded
Home Buying Checklist Written by James "JJ" Brannon
Real Estate Agent at Weichert Realtors Triad Associates.
Winston-Salem, NC
Office: 336-759-0708
Mobile: 336-488-9175