Buyers’ Questions & FAQs
FREQUENTLY ASKED QUESTIONS — BUYER
1. Do I need an attorney?
Answer: The purchase of a home involves numerous issues with which the average buyer will not be familiar. The preparation and negotiation of the purchase agreement is an adversarial process. Experienced real estate attorneys know what is reasonable and customary so that a fair agreement is the usual result when both parties have attorneys.
2. If so, when in the process should I talk to one? Is after the offer is signed a good time?
Answer: An attorney should be consulted prior to signing an offer because it may be difficult to include contingencies in the purchase agreement if they do not appear in the offer.
3. Can I always get my initial deposit back and could I be forced to complete a purchase if all I signed is an offer?
Answer: The usual deposit is $1,000 and should be recoverable if a contingency noted in the offer is not satisfied. The offer most frequently seen in the Boston area contains a liquidated damages provision which requires the buyer to surrender the deposit if a purchase agreement is not signed. Under those circumstances both parties should sign a mutual release. If the offer does not contain a liquidated damages provision, the buyer could be forced to purchase the property or face substantial monetary damages and attorney’s fees.
4. Should I use a buyer’s broker?
Answer: The prevailing practice in the local area is for the buyer’s and seller’s brokers to divide the commission with the seller paying the entire amount. So long as the buyer and buyer’s broker agree that the buyer will have no commission obligation the buyer will be well-served by having a buyer’s broker who will be familiar with the details of locating a property that meets the buyer’s requirements.
5. What does an attorney charge to represent a buyer?
Answer: Attorneys vary as to how fees are calculated; some charge a fixed fee and others use an hourly rate. Frequently the attorney will determine the method to be used only after reviewing the details and degree of complexity involved. The cost of purchase representation is impacted by whether or not the buyer’s attorney will also represent the buyer’s lender since the attorney will receive a fee for bank representation and also receive a portion of the title insurance premium, and under those circumstances the purchase representation can be reduced to a flat fee of $500 in most cases.
6. Should I have a home inspection performed?
Answer: Unless the buyer is sophisticated regarding construction materials and methods, the buyer should have a home inspection performed.
7. What are typical contingencies for an offer?
Answer: Contingencies should be tailored to the buyer’s needs and the particular property and at a minimum typically include financing and inspection contingencies. The sale of an existing home is generally not accepted by sellers.
8. Should I buy title insurance and what does it cost?
Answer: Massachusetts law requires the bank attorney to certify in writing as to the adequacy of the title to the buyer on the basis of a 50-year title search. Matters arising more than 50 years prior to the date of the search are not reviewed unless there is connection in the current title to the past matter. The bank attorney is not responsible for administrative errors in the land records or for survey matters, forgeries or lack of competency. Title insurance does cover those matters and is not limited to a 50-year period. Owner’s title insurance is paid for at closing and is a one-time matter; the policy lasts for as long as the owner keeps the property. Loan policies must be replaced whenever a new loan is made.
9. Should I consider purchasing at a foreclosure or “short sale ?”
Answer: Foreclosures and short sales are unpredictable and very technical. Although it is possible to acquire a property at a very attractive price, the likelihood of a smooth process is slim. The attractive price can be quickly offset by delays, frustrations and attorney’s fees.
10. How long between acceptance of offer and closing?
Answer: Generally, four to six weeks. Buyers must be careful to avoid a closing date that is beyond the loan commitment.
11. If the property I am purchasing is a condominium unit are there issues to investigate because of that?
Answer: Prudent buyers and their attorneys need to be especially diligent if the property being purchased is a condominium. The buyer should review the master deed and trust to be certain that nothing therein interferes with the intended use of the property. The buyer should also review meeting minutes, the budget and delinquency rate regarding the monthly common charges. The buyer may wish to speak to other unit owners in the condominium or condominium trustees to learn whether the condominium is functioning as intended with no problems such as sloppy procedures and deferred maintenance.
If you are planning to buy real estate and additional questions, contact our attorneys to schedule an initial consultation.
