First time buyer with contract signing/mortgage closing questions
Hi I am a newbie buyer and ok I now have an accepted offer and nervous as hell. The seller’s broker has indicated that I would be expected to bring a check for 10% of the $980k purchase price at contract signing and that the seller would like the contract signed in a week. He…
Hi I am a newbie buyer and ok I now have an accepted offer and nervous as hell.
The seller’s broker has indicated that I would be expected to bring a check for 10% of the $980k purchase price at contract signing and that the seller would like the contract signed in a week. He also wants the bank’s due dilligence completed within a week of closing.
Is this typical? If not, what is typical?
Also what should I look out for at signing and then also at closing. I have an attorney so I know this is what I am paying him for but just nervous about the whole process and do not want $98k at risk that if this falls through I may have to spend money to get back.
true dat, archie!
I’m just amazed that your first home purchase is almost $1M. That boggles my mind. No starter homes? Wow. I would be scared too.
Thanks all. All very good advice. I have not got the contract yet so I am probably pre-empting information that my attorney will give me.
Oh yes, Anon 1:57 is totally right.
There are good attorneys and not so good attorneys, you may have to do some legwork on your own, but definitely make sure there is no conflict of interest.
It may be worth it to shell out an extra $1000 for a better attorney if yours is unapproachable or not giving you the answers you need.
All of the above posters are correct.
Make sure your attorney is good and experienced in real estate law and that you trust him/her.
A week is not very long for any aspect of the process, in my experience.
Ask you lawyer to explain what would constitute a default of the 98K.
Having just gone through the process myself, here are some suggestions for contract terms to request:
-As long an inspection period as possible. Allow for as many inspections as necessary – seller must provide access to intire premises. Also inspections to your satisfaction with an inspector of your choosing. Subsequent inspections must be allowed.
-Contract is contingent upon you being offered a loan at up to a predetermined rate… decide what you can afford beforehand.
-Contract term of at least 30-45 days… 60 is even better.
-Seller must make sure all violations are cleared prior to sale.
Get as many of the terms worked out and try to get your inspection to happen before you sign anything. Get it in writing. If it’s stated verbally, then send a written confirmation and summary of the conversation to the agent and the seller’s attorney.
In a worst-case scenario, you’re better off losing an inspector’s fee than having your 98K tied up in escrow and having to pay you lawyer to fight to have it released. There are sometimes gray areas and even if you’re not in default, they can make threats and suggest you are.
Buy some Rolaids – under the best of circumstances, it’s nerve wracking.
Brokers can be pushy. Let your attorney handle things and make sure they explain everything to you.
The realtor will send your attorney a “deal sheet” which includes things like the closing date, accepted price, mortgage contingency, downpayment, etc. This is all negotiable.
10% is a standard deposit. The deposit should absolutely be put in escrow. You’ll probably make it out to the buyer’s attorney with “attorney escrow account” as part of the payee’s name. The money is held in this account until the closing.
In general the only potential losses you’re looking at are fees that you pay to the inspector/engineer, mortgage company/bank, surveyor, your lawyer, etc. Unless you decide to back out (default) on a signed contract.
Attorney review of the contract can take a couple of weeks. Your attorney can negotiate with the seller’s attorney regarding the above-mentioned items plus amount of time before contract signing, the amount of the deposit, etc. After you hire and engineer to do an inspection you can renegotiate the price, too.
These things take time. Brokers want to get paid so they try to pressure you to have a quick closing. Don’t let anyone push you around.
12:40 here again; good advice from everyone above. One more thing, if your lawyer was referred by the broker, get a different one. Your attorney should be able to walk you through all of the issues raised here and protect your interest. The fact that you raise them here suggest you are not getting the help yuo need from your attorney. You want an attorney who has no loyalty to anyone else in the deal.
dude – slow down! you need to understand what you’re getting into, and you need to understand that you are still negotiating what you are getting into. the 10% check can be standard, but that can be negotiated. the 10 day inspection is bullshit, and should be negotiated. most important is what you haven’t described, probably because you haven’t read the contract yet – is there a mortgage contingency in their? is there a clause forcing you to take on whatever mortgage, at whatever rate is available? is the seller trying to stick you with all sorts of preposterous fees that he should be absorbing? lots and lots to hash out here, and you should adopt the posture that this will happen on your timetable, not the sellers. doesn’t mean you’re not negotiating in good faith, but it does mean that you should be willing to walk away if the seller is making unreasonable demands. good luck.
i don’t think you necessarily lose what you put down now if the deal goes south. don’t worry too much until you get down to the brass tacks of the closing. usually at the contract signing level, you put down part of your down payment (are you putting down more than 10% total?) as ‘earnest’ money. but dont get spooked into thinking you’ll lose 98K if something goes wrong (like the other posters said, make sure the right people are holding the bag). lots of things can go wrong between now and the closing, so minimize your worry list.