By: Fred Leff

Associate Broker

Prudential Preferred Realty

412-731-5300

Summer market of 2016 is not to far away…..what should we expect?

  

     As to the summer market, rates have not been better, which usually translates to a great market of buying. Our neighborhood includes lots of old homes which are just now coming to the point where major repairs need to be done. Wiring, roofing, structure, heating units, ac units, and if these are not brought up to code prices will reflect that. My advice is to do those repairs before you list, or you will pay twice. Once when you negotiate the sale price and again when you negotiate the inspections. Invite you realtor over before you do these items to find out which one will bring you the best return on investment.
Many of our neighbors have called me and asked if I would stop over before listing their homes witch has stopped them from making some common mistakes. If I can help you give me a call at 412-731-5300 or email me at fred@regentsquare.com.

 

Since we are talking about Real Estate and I have been questioned on subjects from what should I do to get my home ready for sale, to the other side, how do I buy a home and what are processes should I expect,  we should define the terms of a Real Estate transaction from both sides:

 

Important terms and individuals

Buyer or Buyers-individual, couple, family, groups, wanting to purchase real estate

Seller or Sellers- Individual, couple, family, groups, wanting to sell real estate

Agent- represents either or both parties depending on contract terms.

Subject property- the property or real estate to be passed or sold.

Home Inspector- professional usually hired by the buyer to go over property “with a fine tooth comb,” representing and paid by Buyer to find items which may be defective or needing repair with subject property e.g. dwelling and land. These items may include but not limited to: plumbing, roofing, foundation items, wiring, infestation, water issues, radon and much more.

Appraiser- A practitioner who has the knowledge and expertise necessary to estimate the value of an asset, or the likelihood of an event occurring, and the cost of such an occurrence. Ideally, an appraiser acts independently of the buying and selling parties in a transaction in order to arrive at the fair value of an asset without bias, usually acts on behalf of the bank to be sure that if the buyer defaults or there is a loss that the bank is protected on their part of the investment.

 Example: Buyer borrows $80,000 on a home sold for $100,000.00. The banks part of equity is the $80,000. If the buyer or borrower loses their job and can’t pay, the bank hopefully could sell the home and have their $80,000 or close to that number retrieved.

Closing – time and place where buyer and seller meet and sign bank documents, if there is a bank or lending institution involved. Deed and note as well as other documents are read, explained if needed, and signed by all parties, and transfer money, officer hands out a check to seller net of costs, if there are proceeds left, (Realtors are paid from proceeds of buyer or on exception paid by buyer (all is negotiable), keys are given, warranties if any are given to buyer, niceties are exchange and each goes on their way. Buyer owns a new piece of Real Estate and Seller is relieved of the property they once owned.

Real Estate Agent: A licensed person by the state who is able to sell Real Estate and therefore represent a Seller or a Buyer or both (Dual Agency) in a Real Estate transaction.

Associate Broker: A real estate person holding a broker license that chooses to associate or affiliate with another sponsoring broker rather than opening their own brokerage office. They want the added knowledge and status of a broker, but do not desire to operate an independent office

Broker of Record: A Broker that normally owns and is responsible for all workings of that Real Estate business. All real estate agents and associate brokers report to and work for the Broker of Record. Without a Broker of Record there would be no real estate agents or associate brokers!

Real Estate Transaction: This event for example could continue from a week to months or years. It entails the listing of a property e.g. filling out about 26 pages of legal and binding (if signed) paperwork having to do with (normally) the sale of the subject property. What do these papers encompass?

  

Documents generally included with the listing of the property

 

·         Listing Contract: (Different in each state and even counties or municipalities)  but encompasses paperwork usually 3 or 4 pages detailing the legal location of the property, the owner (s), their addresses and contact information,  the price it will be placed for sale to the public, terms of the contract or how long it will last, inclusions that will stay when the property is transferred to the new owner, and, possibly exclusions that will not stay with the property, e.g. items that are not affixed to the walls that the seller will take away prior to closing date, the time period of the listing contract and finally signatures of all parties at the time of the listing, agreeing to the terms in the contract.

·         Residential input sheet: Usually 3 pages or so of information detailing the property itself. The age if the Selling party has the knowledge, the number of bedrooms, the number of baths, other rooms including but not limited to living room, dining room, kitchen, family room if one exists, basement, and sizes of each; the type of heating and cooling, roofing-approximate age and material, parking if available and the number of spaces and type of garages. At the end of the document, signatures of owner (s) and agent (s) are required.

Making the decision to buy based on the buyers’ ability to obtain information the buyer could deduct or obtain by their own best abilities. That has all changed in the last 20 or so years! In recent years the term is “Seller takes care”, meaning with the addition of the disclosure and the Home Inspector as part of the transaction the onus has now transferred mostly to the seller. The seller must disclose in a 6 or 7 page document as part of the transaction all of the defects and negative leaning items to the subject property, and having a Home Inspector to spend about 3 to 5 hours going over the property, again looking for defects, giving the buyers a one up.

This document is signed by the buyer and seller. The seller by law may not leave out any pertinent information about the subject property.

 

·         Oil, Gas, and Mineral rights disclosure and addendum: a form explaining who owns the oil, gas, and mineral rights of the property. In Pennsylvania most buyers sign away the rights beneath the home away when they purchased, but there are always exceptions, this has become more relevant since the inception of local drilling, of the Marcellus Shale and fracking. This document speaks of sellers’ reservation of gas, oil and mineral rights, domestic free gas, surface damage (s). This document is always signed by all parties, but not very prevalent in the city of Pittsburgh, and more prevalent in Jefferson County

 

 

·         Estimated Seller (or, if working on behalf of the buyer) Cost Sheet – Breaks down each of the costs that most transactions will charge the party, and gives an estimated net that will be paid (if done for buyer), or what total proceeds will be paid to the seller at closing.

  

After a Seller has a Buyer willing to purchase

 

Documents generally included with the sale of the property

  

·         Standard Sales Agreement- stating the terms of the sale, price, hand money, detailed description of the property and the personal inclusions that go with the sale of the property. The information about the agents and whom each represent, when the seller must get back to buyer or buyers’ agent with their counter or acceptance, inspection information, e.g. home inspection, lead inspection, infestation inspection, radon inspection, just to name a few, and of those (and possibly) more, which ones the buyer is electing to have. Also the mortgage information of the buyer, what rate they will accept if a mortgage is involved be it private or public, or even government, and the time they will make this mortgage application and the time the buyer will have mortgage commitment on same, which is the time the lender has looked over all of the buyers’ information and approves it all, granting a loan to the buyer. This is most important because without this commitment there would be no money to pay the seller.

Again, the Standard Sales Agreement is about 25 pages or so, therefore there is much more included which I have not mentioned.

 

·         A check from buyer, for the hand money or sometimes called the deposit. Normally held and made out to the listing company, but negotiable on who holds it. The hand money is held in escrow for the Seller and is paper transferred to seller at the time of the closing.

 

·         Controlled business arrangement disclosure statement: Brokers buyers’ business relationship with buyer: A form explain the relationship between the agent representing buyer, the time period, the terms of payment if buyer does purchase, explains and speaks to title insurance.

 

·         Consumer Notice: short form that explains to all parties to the transaction the definition of Agency law and what each term means.

 

·         Buyers’ reading, understanding and accepting (by signature) Sellers’ Disclosure: this is the document that the seller filled out during the listing session explaining what was have mentioned in the sellers’ disclosure. This event is the buyers’ reading and acceptance of this document. This document is signed by all parties.

 

·         Final Walk Through of the buyer

 

Once the buyer has their commitment for the loan and all is set to close, in the Standard Sales Agreement there is made mention of the Final Walk Through of the buyer. This is when the buyer has the opportunity to walk through the entire property to see if all is working as it was during the first walk-through and that the property is in the same condition with all inclusions if stated in the sales agreement to be left are functional and in the same condition they were at first walk through.

 

·          Closing – As stated above the time when title is transferred from Seller to Buyer, papers are signed and keys are exchanged, AND ALL IS DONE.
  CONGRATULATIONS, is offered around the table and all go their own way. Buyers’ usually run over to see “THEIR NEW HOME.”

Contact Fred Leff

             Associate Broker 412-731-5300 or fred@regentsquare.com

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