Real Estate & Construction Law
— Real Estate: Buying a Home —
Like other trades and industries, real estate has a language all its own. For someone who isn’t experienced with real estate terminology the language can be both confusing and intimidating. Some of the basic terms you may run into are as follows. A “listing agreement” is a contract that’s signed between a person trying to sell property and the agent they’re using. “Disclosure” is a principle outlined by state law that requires a person to inform a potential buyer of all pertinent information about the property. The “implied warranty of habitability” is a law that requires the landlord to keep properties up to a level suitable for human habitation. To curtail discriminatory housing practices, the federal government passed the “Fair Housing Act”. This law serves to guarantee certain rights to everyone seeking housing in the United States. “Probate sales” are sales that result from the death of a property owner. In this situation, the courts appoint an “Executor” to carry out the sale of the property so that the money may be divided among all heirs. These are merely a few of the terms that one might run across in the real estate market. For more information about real estate terminology see our Home Buyer’s Vocabulary page, or contact an experienced real estate lawyer in your area.
Do I need a lawyer to buy a home?
There is no law in Idaho which requires you to hire a lawyer. However, purchasing a home is probably the largest single investment you will ever make. A lawyer can help with the complex paperwork and legal contracts. A lawyer can review contracts, review title to the property, make you aware of special considerations, any defects in title, covenants, restrictions or easements affecting the property and assist you with the closing process. To receive maximum benefit from a lawyer, the lawyer should be hired before you sign an Agreement of Purchase and Sale. Even if you are working with a real estate agent, it is important to have the purchase agreement reviewed by an attorney BEFORE YOU SIGN IT. At that point it is only an offer, but if the seller accepts the offer, you are bound by the agreement and may not generally make changes. The cost of such a review would not generally exceed $200.00; if the attorney notes changes that should be made, it will generally be worth your while to have those changes made even if it costs you more than the initial review.
How do I begin the home buying process?
The first step is to conduct the proper amount of research. Doing research is the most important step in deciding to buy a house. Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment? How much space do you need? What areas of town do you like?
After you answer these questions, create a To Do list and begin your initial research. Talk to friends and family, drive through neighborhoods, and look in the Homes section of the newspaper. With the proper amount of research, you will be in a much better position to make decisions regarding the purchase of your new home.
How do I know if I am ready to buy a home?
Buying a home is a major decision. A home is the largest purchase that you will likely make during your life. By asking yourself the following questions you can find out if you may be ready to buy a house:
- Do I have a steady source of income?
- Have I been employed on a regular basis for the last 2-3 years?
- Is my current income reliable?
- Do I have a good record of paying my bills?
- Do I have few outstanding long-term debts, like car payments?
- Do I have money saved for a down payment?
- Do I have the ability to pay a mortgage every month, plus additional costs?
- If you can answer yes to these questions, you may be ready to buy your own home.
How do I determine the type of home that I need?
Your home should fit the way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities – things like location and size. Should the house be close to certain schools, your job, to public transportation? How large should the house be? What type of lot do you prefer? What kinds of amenities are you looking for? Establish a set of minimum requirements and a wish list. Minimum requirements are things which a house must have for you to consider it, while a wish list covers things that you’d like to have but aren’t essential.
How do I select a real estate agent?
Start by asking family and friends if they can recommend an agent. Compile a list of several agents and talk to each before choosing one. Look for an agent who listens well and understands your needs, and whose judgment you trust. The ideal agent knows the local area well and has resources and contacts to help you in your search. Overall, you want to choose an agent that makes you feel comfortable and can provide you with all the knowledge and services that you need.
How many homes should I consider before choosing one?
There are not a set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see about 15 houses before choosing one. Just be sure to communicate often with the real estate agent about everything you’re looking for. It will help avoid wasting your time.
How should I decide on the community that I would like to live in?
It is very important to select a community that will allow you to feel comfortable and safe. Many people choose communities based on schools. Do you want access to shopping and public transportation? Is access to local facilities like libraries and museums important to you? Or do you prefer the peace and quiet of a rural community? When you find places that you like, talk to people that live there. They know the most about the area and will be your future neighbors. More than anything, you want a neighborhood that you feel comfortable in.
Is an older home a better value than a new one?
There isn’t a definitive answer to this question. You should look at each home for its individual characteristics. Generally, older homes may be in more established neighborhoods, offer more ambiance, and have lower property tax rates. People who buy older homes, however, shouldn’t mind maintaining their home and making some repairs. Newer homes tend to use more modern architecture and systems, are usually easier to maintain, and may be more energy-efficient. People who buy new homes often don’t want to worry initially about upkeep and repairs.
What should I look for when walking through a home?
- In addition to comparing the home to your minimum requirement and wish lists, consider the following:
- Is there enough room for both the present and the future?
- Are there enough bedrooms and bathrooms?
- Is the house structurally sound?
- Do the mechanical systems and appliances work?
- Is the yard big enough?Do you like the floor plan?
- Will your furniture fit in the space? Is there enough storage space? (Bring a tape measure to better answer these questions.)
- Does anything need to repaired or replaced? Will the seller repair or replace the items?
- Imagine the house in good weather and bad, and in each season. Will you be happy with it year-round?
Take your time and think carefully about each house you see. Ask the real estate agent to point out the pros and cons of each home from a professional standpoint. In addition, you should hire a home inspector before you purchase a home. The inspector can make a detailed analysis of the structural integrity of the home.
What are the similarities between purchasing a home or renting an apartment?
The two do not really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities and long term commitment. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity. Owning a home is usually a good investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities. Homeowners insurance, real estate taxes, and upkeep can be a substantial amount of money. However, many people feel that the freedom, stability, and security of owning your own home outweighs the negatives associated with home ownership.
What question should I ask when looking at homes?
Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete. Ask questions until you understand all of the information they’ve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive.
What should I do if I think that I am being excluded from certain neighborhoods?
Immediately contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or particular house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD’s Office of Fair Housing has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).
How can I find out about community resources?
Contact the local chamber of commerce for promotional literature or talk to your real estate agent about welcome kits, maps, and other information. You may also want to visit the local library. The library can be an excellent source for information on local events and resources. In addition, the librarians will probably be able to answer many of the questions you have.
How can I find out about local schools?
You can get information about school systems by contacting the city or county school board or the local schools. Your real estate agent may also be knowledgeable about schools in the area.
How can I find out about the property tax?
The total amount of the previous year’s property taxes is usually included in the listing information. If it’s not, ask the seller for a tax receipt or contact the local assessor’s office. Tax rates can change from year to year, so these figures may be approximate.
How can I find out how much homes are selling for in certain communities and neighborhoods?
Your real estate agent can give you a ballpark figure by showing you comparable listings. If you are working with a realtor, they may have access to comparable sales maintained on a database.
How do I know if the home is located in a flood plain?
Your real estate agent or lender can help you answer this question. If you live in a flood plain, the lender will require that you have flood insurance before lending any money to you. But if you live near a flood plain, you may choose whether or not to get flood insurance coverage for your home. Work with an insurance agent to construct a policy that fits your needs.
How can I keep track of all the homes that I see?
If possible, take photographs of each house: the outside, the major rooms, the yard, and extra features that you like or ones you see as potential problems. And don’t hesitate to return for a second look.
How do I determine the initial offer?
Remember that the agent receives payment from the seller which is based on a percentage of the purchase price. Listen to your real estate agent’s advice, but follow your own instincts on deciding a fair price.
Calculating your offer should involve several factors: what homes sell for in the area, the home’s condition, how long it’s been on the market, financing terms, and the seller’s situation. By the time you’re ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.
How do I make an offer?
Your real estate agent will assist you in preparing an offer, which will include the following information:
- Complete legal description of the property.
- Amount of earnest money paid.
- Down payment and financing details.
- Proposed move-in date.
- Price you are offering.
- Proposed closing date.
- Length of time the offer is valid.
- Details of the deal.
What does a home inspector do?
An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of any repairs that are needed.
The Inspector does not evaluate whether or not you’re getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.
It’s a good idea to have an inspection before you sign a written offer since, once the deal is closed, you’ve bought the house as is. Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection t clause gives you an out on buying the house if serious problems are found or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house. Your lawyer can assist you with including an inspection clause in your offer.
Are other types of inspections needed?
If your home inspector discovers a serious problem a more specific inspection may be recommended. In addition, It is a good idea to consider having your home inspected for the presence of a variety of health-related risks like radon gas or asbestos, possible problems with the water or waste disposal system, or insect infestation.
Do I need to be there for the inspection?
It’s not required, but it’s a good idea. The home inspector will be able to answer questions concerning the current condition of the home and report any problem areas. This is also an opportunity to hear an objective opinion on the home that you would like to purchase and it is a good time to ask general maintenance questions.
How can I protect my family from lead in the home?
If the house you’re considering was built before 1978 and you have children under the age of seven, you will want to have an inspection for lead-based paint. It is important to know that lead flakes from paint can be present in both the home and in the soil surrounding the house. The problem can be fixed temporarily by repairing damaged paint surfaces or planting grass over effected soil. Hiring a lead abatement contractor to remove paint chips and seal damaged areas will permanently fix the problem.
Should I consider a home warranty?
Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner’s insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves short on money.
What should I look for when I make my final walk-through of the house?
This will likely be the first opportunity to examine the house without furniture, giving you a clear view of everything. Check the walls and ceilings carefully, as well as any work the seller agreed to do in response to the inspection. Any problems discovered previously that you find uncorrected should be brought up prior to closing. It is the seller’s responsibility to fix them.