Buying A Home - Terms of Sale
Buying a Home -Terms of the Agreement of Sale
If you read this
before you sign an agreement of sale, here are some important points to
consider.
The real estate broker probably will give you a preprinted form
of agreement of sale. You may make changes or additions to the form
agreement, but the seller must agree to every change you make.
You should
also agree with the seller on when you will move in and what appliances
and personal property will be sold with the home.
Sales
Price.
For most homebuyers, the sales price is the most important term.
Recognize that other non-monetary terms of the agreement are also
important.
Title.
"Title" refers to the legal ownership of your new home. The
seller should provide title, free and clear of all claims by others
against your new home. Claims by others against your new home are
sometimes known as "liens" or "encumbrances." You may
negotiate who will pay for the title search which will tell you whether
the title is "clear."
Mortgage
Clause.
The agreement of sale should provide that your deposit will be refunded if
the sale has to be canceled because you are unable to get a mortgage loan.
For example, your agreement of sale could allow the purchase to be
canceled if you cannot obtain mortgage financing at an interest rate at or
below a rate you specify in the agreement.
Pests. Your
lender will require a certificate from a qualified inspector stating that
the home is free from termites and other pests and pest damage. You may
want to reserve the right to cancel the agreement or seek immediate
treatment and repairs by the seller if pest damage is found.
Home
Inspection.
It is a good idea to have the home inspected. An inspection should
determine the condition of the plumbing, heating, cooling and electrical
systems. The structure should also be examined to assure it is sound and
to determine the condition of the roof, siding, windows and doors. The lot
should be graded away from the house so that water does not drain toward
the house and into the basement.
Most
homebuyers prefer to pay for these inspections so that the inspector is
working for them, not the seller. You may wish to include in your
agreement of sale the right to cancel, if you are not satisfied with the
inspection results. In that case, you may want to re-negotiate for a lower
sale price or require the seller to make repairs.
Lead-Based
Paint Hazards in Housing Built Before 1978.
If you buy a home built before 1978, you have certain rights concerning
lead-based paint and lead poisoning hazards. The seller or real estate agent
must give you the EPA pamphlet "Protect Your Family From Lead in Your
Home" or other EPA-approved lead hazard information. The seller or
real estate agent must tell you what the seller actually knows about the home's
lead-based paint or lead-based paint hazards and give you any relevant
records or reports.
You
have at least ten (10) days to do an inspection or risk assessment for
lead-based paint or lead-based paint hazards. However, to have the right
to cancel the sale based on the results of an inspection or risk
assessment, you will need to negotiate this condition with the seller.
Finally,
the seller must attach a disclosure form to the agreement of sale which
will include a Lead Warning Statement. You, the seller, and the real
estate agent will sign an acknowledgment that these notification requirements
have been satisfied.
Other
Environmental Concerns.
Your city or state may have laws requiring buyers or sellers to test for
environmental hazards such as leaking underground oil tanks, the presence
of radon or asbestos, lead water pipes, and other such hazards, and to
take the steps to clean-up any such hazards. You may negotiate who will
pay for the costs of any required testing and/or clean-up.
Sharing
of Expenses.
You need to agree with the seller about how expenses related to the
property such as taxes, water and sewer charges, condominium fees, and
utility bills, are to be divided on the date of settlement. Unless you
agree otherwise, you should only be responsible for the portion of these
expenses owed after the date of sale.
Settlement
Agent/Escrow Agent. Depending on local practices, you may have an option to select the
settlement agent or escrow agent or company. For states where an escrow
agent or company will handle the settlement, the buyer, seller and lender
will provide instructions.
Settlement
Costs.
You can negotiate which settlement costs you will pay and which will be
paid by the seller.
>> Find out what
what your settlement cost will be
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