Misiano Law

Thinking of Buying a Home? Read This First!

July 2018 – The real estate market is heating up on Long Island, and you are thinking about entering the hunt for a home. So, what should you do?

First, I would recommend seeing a mortgage banker at the bank you do business with or at a reputable local private mortgage banking company. This is because you need to know whether you are financially qualified to purchase the home in the first place. You also need to know what price range can you afford. There is no sense looking at homes that you can’t afford to buy, right?

The banker can provide a mortgage pre-qualification letter to certify you as a serious buyer. This added legitimacy is important to sellers and real estate brokers as it says you can afford the home being shown. It can give you a “leg up” on other potential buyers bidding for the same home.

What happens after you agree to terms of a sale?

You should contact two people – your lawyer and a home inspector. Let’s start with the home inspector. This is an additional expense that some buyers do not want to incur but – in my humble opinion – is well worth it. This is probably the largest purchase of your life so don’t you want to make sure that the home does not have any hidden pitfalls?

Home Inspection

Generally, a home buyer is not qualified to know if the house’s electrical panel or wiring was done to code, or whether that two-story deck of the kitchen was constructed sturdily with proper cement footings supporting the framework. Home inspectors give you a written report making you aware of obvious or hidden defects. If there are none, then it will give you peace of mind. If there are problems, you can bring them to your broker’s attention BEFORE any contract is prepared. In such a case, some negotiation can be had to determine if the seller is willing to remedy the condition or reduce the price commensurate with the cost of repairs. This is not your attorney’s job.

The Role of Your Attorney

Many buyers, especially first time buyers, do not understand the role of their attorney in the transaction. The attorney’s role for the buyer is foremost to ensure that whatever terms of the deal were agreed upon are contained within the four corners of the contract. Under New York State law, to enforce a contract to purchase real estate, the contract must be in writing (called the Statute of Frauds – although it has nothing to do with fraud).

Let’s Make a Deal (Sheet)

Usually, the broker provides the attorney with a “deal sheet” which lists the purchase price, down payment, mortgage contingency amount, and approximate date of closing. Now the attorney is aware of the basic components of your deal, but as the buyer/client, you must inform him/her of any additional factors or nuances. This could be something such as the patio furniture is included or that the seller agreed to repair the sprinkler system before closing. Those terms must be spelled out in the written contract or they are not enforceable!

Closing the Sale

The contract of sale/purchase agreement is usually emailed to your attorney. The attorney should review the contract and then set up an appointment with you to go over the salient terms of the contract. Once you understand what the important terms are, you then can execute the contract and provide the down payment check (a personal check is generally accepted subject to its collection). The attorney should, at this appointment, go over the closing costs and approximate the total funds required.

Getting the Title Report

A title report will be ordered on your behalf and a copy sent to your lender’s attorneys. Your attorney should review the report prior to closing to ensure that the sellers do indeed own the home, that the property size is what was bargained for, that there are no code violations against the home, and (amongst many other items) that the mortgages or liens (eg. tax liens by IRS) filed against the home do not exceed the purchase price.

Survey Says

Sometimes the lender requires an updated survey or perhaps the buyers may just want one to be sure of the boundaries of their parcel. This is an expense that is well worth it! A survey (topographical depiction of your lot) done by a licensed surveying engineer, will help the title company ensure the exact boundaries of your home. It can disclose facts such as the neighbors’ shed is a foot onto your property or like disclosures. It is also helpful if you want to install a fence after closing or need a permit for outdoor structures such as a gazebo you’d like constructed in the future.

Wrapping it Up

Your attorney should be provided with your lender’s information so they can receive the mortgage commitment when issued, comply with their outstanding checklist for closing, and ultimately coordinate a closing date with the seller and lender. I am giving a synopsis here. There are generally many other small details that must be checked, reviewed and reckoned with, but this should give one a general idea of the process leading to a closing of the title (the transference of the deed).

I have handled real estate closings for 38 years, including owning an operating a title abstract company for more than ten years. I am very familiar with title issues and standard terms of a real estate contract. I am more than happy to help, so please feel free to reach out today with any questions – (631) 396-0255 or send a message.