BUYING A HOUSE STEP-BY-STEP

1)  EVERY REAL ESTATE TRANSACTION HAS AT LEAST TWO PARTIES.

The Seller wants:

• To sell at the highest price possible
• To sell the property "as is"
• To incur the fewest expenses possible
• To have a "hassle free" transaction

The Buyer wants:

• To buy for the lowest price possible
• To buy a home in good condition
• To buy a home that will not lose value
• To have a "hassle free" transaction

REAL ESTATE CAN BE AN EMOTIONAL PROCESS

Try to remember that:

• You will be most successful if you avoid letting your emotions interfere with your goals
• There are other properties
• You need to trust your instincts
• Take the time to thoroughly check the property - physically and legally
• Find an agent you trust, than use his/her expertise to educate and guide you

YOU WILL NEED THE SERVICES OF AN ATTORNEY

• Confirm that your attorney is a Real Estate expert (particularly for a condo)
• Ask questions about the process Your Attorney will:
• Draft and/or revise the Purchase &: Sale Agreement to protect your interests
• May assist you with any problem areas in the mortgage process
• Prepare you for the financial accounting portion of the closing
• Attend the closing, if you decide he/she is needed If you are getting a mortgage, the lender will require that you pay for the lender's attorney

2 - TYPICAL TIME FRAME In the Home Buying Process

Click Graphic for Information

3 - SHOPPING FOR A HOME WHERE DO YOU WANT TO LIVE?

• Think about commute, schools, area amenities
• Drive or walk around neighborhoods to get a feel for the area
• Determine the city/town/areas you would like to concentrate your search

WHAT DO YOU NEED/WANT

• Think about what you need/want in terms of space/style/physical amenities
• Condo vs. Single Family; number of bedrooms; number of baths

WHAT CAN YOU AFFORD

• Speak to a mortgage officer to see what you qualify for in terms of a mortgage/purchase price
• Many buyers start searching on the Internet, but nothing beats seeing them in person
• Ask your agent to set-up an automatic e-mail search for you or register at: SEARCH FOR CAMBRIDGE & SOMERVILLE HOMES at www.JaimeKidston.com

WHEN YOU LOOK AT PROPERTIES

• How do you feel about the property? Does it meet your needs? Could you see yourself living there? If not - move on.

  - very few Buyers find/can afford everything they want in a given property

  - Listing Agents are required to disclose any known defects. Your Buyers' Agent will help you through this due diligence process.
• Look at as many properties as you can, searching for real estate is as much a process of elimination as selection - that way you will be ready when you see something you like
• When you do see a property you like, think about it. Drive by at different times of day.

A BUYER'S MARKET OR A SELLER'S MARKET?
Ask your Buyer's Agent to tell you about current market conditions for the type of property you are interested in, in the area you are interested in - not all "markets are the same, even at he same time. Ask your Buyer's Agent how the market conditions affect how you should structure your offer and how you should negotiate. 4-

4)  WHAT IS THIS HOUSE WORTH? LOOK AT OTHER PROPERTIES THAT HAVE SOLD IN THE AREA OVER THE LAST SEVERAL MONTHS

• Ask your Buyer's Agent to do a Competitive Market Analysis on the property
• The more recent the "comparable sale" the better, as it indicates current value
• Keep in mind that markets do change

SHOULD I EXPECT TO PAY MORE OR LESS THAN THE TAX ASSESSMENT

• While tax assessments should reflect current value, they often do not. They are the way a city or town apportions it's tax burden
• You may want to check the history of tax assessments - how prices have compared in past years and for other recently sold properties relative to their sale prices

CONSIDER YOUR FEELINGS ABOUT THE PROPERTY AND ITS VALUE TO YOU

• How much do you want the house?
• How will you feel if you do not get the house?
• How long do you plan to live there?
• Are you willing to pay more than everyone else to get this house? -

5) MAKING AN OFFER OFFERS TO PURCHASE REAL ESTATE

• When you find the property you want, ask your Buyers' agent to provide a Competitive Market Analysis to help determine the price you want to offer
• The purchase process then begins with a written Offer to Purchase
• Verbal offers are not valid in Massachusetts
• There is a standard "Offer to Purchase Real Estate" form that most agents use, with contingency forms attached

YOU ARE IN CONTROL OF THE OFFER

• Your agent is here to help you make an informed decision, but it is your choice as to offer price & terms
• Ask your Buyers' agent what common timetables are and make sure they fit your schedule and needs
• Determine the offer price and deposit amount; in this area $1,000 down with the offer and 5% down with the Purchase & Sale Agreement is typical
• Discuss strategy with your Buyers' agent

DEADLINES ARE IMPORTANT

• Time is of the essence in real estate transactions
• Make sure you allow yourself enough time to have an inspection, negotiate the Purchase & Sale Agreement, make applications, obtain mortgage financing and plan for the closing
• Deadlines are real, make sure you keep track of your commitments and the transaction or your deposit may be jeopardized
• Your Buyers' agent is familiar with common deadlines and can help guide you

THE OFFER IS A LEGALLY BINDING CONTRACT

• When the Buyer and Seller sign an Offer to Purchase and a deposit check is attached, it is a bona fide, legally binding, contract to purchase
• An offer contains all the details of the transaction and courts have upheld the validity time and again

6)  INSPECTING THE HOUSE
It is important to hire a Licensed Expert to conduct a home and pest inspection of the property after the offer has been signed but before you sign the Purchase & Sale Agreement

HOW DO I FIND AN INSPECTOR

• Your agent is required to give you a copy of the "Home Inspectors Consumer Fact Sheet" provided by the Office of Consumer Affairs of Massachusetts
• Ask friends, neighbors and business acquaintances who they have used for their inspections
• Get referrals from your Buyers' agent and/or attorney (only Buyers' agents can refer Home Inspectors)
• Make sure you schedule the inspection in advance of the inspection notification date in your offer. This is necessary to insure you have time to consider the results carefully prior to proceeding to the Purchase &: Sale Agreement

WHAT CAN I EXPECT DURING THE INSPECTION?

• It is highly recommended that the Buyer(s) and their agent attend the inspection
• It is important that safe access and sufficient light be available so that an inspector can inspect all areas (even common) of the property
• The inspector should examine all of the home's major systems - plumbing, electrical, heating and the structural integrity
• At the end of the inspection the Buyer should be well informed as to the condition of the property, whether or not there are any visible, apparent problems; if repairs need to be made; whether there is any risk of concealed damage and whether further investigation is recommended and/or required
• The cost and time of an inspection varies given the type and size of the property
• You should expect to receive a full written report at the time of, or shortly thereafter, the inspection

OTHER INSPECTIONS TO CONSIDER Some Home Inspectors are qualified to offer these services, some are not (you would need to ask). Most of the following are not considered part of a basic home inspection:

• Lead Paint
• Wood destroying insects (including termites)
• Other pests
• Asbestos
• Air quality (including radon)
• Fungi, mold &: allergens
• Underground oil tanks
• Pesticide usage
• Water quality/quantity (well)

7)   PURCHASE & SALE AGREEMENT WHAT IS A PURCHASE & SALE AGREEMENT?

• A Purchase &: Sale Agreement usually contains a standard form agreement along with various riders agreed upon by the Buyers' and Sellers' attorneys
• A fully executed Purchase &: Sale Agreement most likely supersedes the Offer to Purchase and becomes the legally binding agreement to purchase
• It is vital that Buyers receive legal advice prior to signing this document
• An additional deposit is generally required at the time of the signing of the Purchase and Sale Agreement

CAN THIS DOCUMENT BE NEGOTIATED?

• Yes, there is generally a negotiation process between the Buyers' and Sellers' attorneys to draft a document acceptable to both sides of the transaction
• It is important to discuss the Purchase &: Sale Agreement with your attorney to make sure you understand the terms of the agreement and the consequences and protections it provides relative to the transaction and deposit monies

WHAT PROTECTIONS SHOULD I HAVE IN THIS CONTRACT? Your attorney will address:

• Mortgage details
• Title issues
• Deposit details
• Repairs to be completed
• Access to the property prior to closing
• Notices to the parties prior to closing
• Preparations and adjustments for the closing
• Condition of the property at closing
• Inclusion of any modified terms after the accepted offer There is no "meeting" of the parties. Typically the Buyers' sign first and provide (4) originals and a check to their Buyers' agent or attorney who arranges delivery to the Sellers' agent or attorney for the Sellers' signature. Fully executed copies are then distributed to all parties.

WHERE WILL THE SIGNING TAKE PLACE?
If the closing is to be within 2 weeks of the signing of the Purchase & Sale Agreement then the funds must be by bank check, certified check or wire transfer. If the closing is to be later, than a personal check will often suffice - ask your Buyers' agent to be sure.

8)  FINAL INSPECTION WHAT IS A FINAL INSPECTION OF THE PROPERTY?

• This is the Buyers' last chance to check the condition of the property before the purchase
• The final inspection is generally arranged through your Buyers' agent, you should expect the property to be vacant and clean
• The Buyer "walks through" the property and examines the exterior and interior of the property to verify that it is in the same condition as it was at the time the Purchase &: Sale Agreement was signed, normal wear and tear excluded
• If there was an agreement relative to repairs being completed, they too should be inspected
• If the property was incomplete at the time of the Purchase &: Sale Agreement, it should be inspected for completeness per plans and specifications

IF THE INSPECTION REVEALS ISSUES, CAN I BACK OUT OF THE CLOSING AND GET MY DEPOSIT BACK
Maybe. If the condition is significantly different, you want to bring this to the attention of your attorney immediately.

• Most of the time Buyers will want the problem cured by the Seller or the cost of fixing the problem paid by the seller. Again, you will want to speak to your attorney.
• Monies can be deducted from the closing or an escrow account/agreement set-up to handle repairs/completions

WHAT IF I DON'T' HAVE TIME TO DO A FINAL INSPECTION?
Make the Time. If a problem is discovered after the closing you may have no recourse.

9 - THE CLOSING WHAT IS A REAL ESTATE CLOSING

• It is a meeting of various parties to facilitate the transfer of ownership of the property from the Seller to the Buyer
• This meeting generally takes place at the Registry of Deeds for the counting which the property is located, at the office of th4 Buyers Bank's attorney or at the Buyers' agent's office.

WHO ATTENDS THE CLOSING? Any or all of the following individuals:

• The Buyer(s)
• The Bank's attorney, who will prepare the closing documents
• The Buyer's attorney (if you choose to have him/her there)
• The Buyers' agent
• The Seller(s) mayor may not attend. If they do not, the deed and other paperwork will have been provided to their attorney or the bank's attorney prior to closing
• The Sellers' attorney (if the seller chooses to have him/her there)
• The Sellers' agent

WHAT HAPPENS AT THE CLOSING?

• At or before the closing the Sellers) will execute a Deed of Transfer to the Buyers) along with several documents affirming that the closing is taking part as planned by all parties
• The Buyer(s) will sign a number of documents, including but not limited to: o The Promissory Note, which obligates the Buyer(s) to pay back to the lender the loan amount agreed upon at the terms agreed upon o Mortgage, which attaches the Buyer(s) promise to repay the debt onto the property so that if the lender does not receive payment as agreed they may foreclose on the property. Essentially the property collateralizes the Promissory Note.