Home Purchase Guide
The Mike DelRose Real Estate Team
RE/MAX First Realty
142 Galen Street
Watertown, MA 02472
“It is in our best interest, to act in your best interest, to provide only the highest level of service for our
clients as we continually strive to set a standard of excellence in the real estate industry.”
-Mike DelRose Jr.
The Mike DelRose Real Estate Team
Mike DelRose Real Estate Team, Galen Realty Inc., 142 Galen Street, Watertown, MA 02472
Table of Contents
Mission Statement…………………………………………………….…..…….. 3
Description Of Services……………………………………………………..…..4
Steps In Home Buying Process………...……………………….………..….5
Home Buyers Checklist……………………………………………………….....6
Home Purchase Timeline………………………………………………………..7
Buying Vs. Renting………………………………………………………………..10
The Cost Of Renting……………………………………………………………...11
Determining the Level of Service Needed……………………………..12
Level of Service Chart…………………………………………………………...14
Things Buyers Should Know…………………………………………………..16
8 Insider Tips For Home Buyers……………………………………………..17
10 Things to Take the Trauma Out of Home Buying……………….18
6 Creative Ways to Afford A Home………………………………………..19
Purchasing New Construction………………………………………………..20
Steps of Home Purchasing……………………………………………………..21
Applying For a Loan……………………………………………………………….23
Making An Offer More Appealing………………………………………….24
The Role of an Attorney………………………………………………………...26
10 Questions to Ask a Home Inspector……………………………..…...36
What Your Home Inspection Should Cover…………………………….37
5 Tax Questions & What You Should Ask Your Lender…………...38
What a Lender Needs From You…………………………………………….39
Choices That Will Affect Your Loan………………………………………...40
Things To Understand About Title Insurance………………………….41
Understanding Your Options For Taking Title…………………………42
Common Closing Costs For Buyers………………………………………….43
Radon In Homes……………………………………………………………………..44
Tips On Packing……………………………………………………………………...45
Moving With Children……………………………………………………………..48
Moving With Pets…………………………………….……………………………..49
Tips for a Garage Sale………………………………………………………………51
The Mike DelRose Real Estate Team has utilized a team concept since 1992 but has
recently expanded on its foundation to what you see today; a branded network of
realtors and associates designed to guide clients through the real estate transac-
tion process to its most simples, stress-free, and refined form.
Utilizing our team means that each part of the process is handled by a trained
professional that has been working in the industry for over 10 years.
While you as our client may only interact with one broker or agent, you can be
well-assured that the team will be here to support you through what may be the
largest financial transaction of your life.
Our purpose is to assist our clientele with all aspects of their real estate needs,
Including the sale, purchase, or rental of a home while conducting ourselves with
integrity, being knowledgeable about our industry, and carrying ourselves in a
We take great pride in our business diversity to meet our clients’ real estate needs
by providing comprehensive services that also include commercial and investment
opportunities. Our goal is to keep our clients updated and educated about the
challenges and changes in the real estate market so they are well informed and
thereby empowered to make decisions that are in their best interest.
At the Mike DelRose Real Estate Team we maintain a standard of excellence by
continually attending business education courses and seminars on an ongoing ba-
sis and by enthusiastically meeting each day with a commitment to succeed above
expectations of our clients, partners, and associates.
The Mike DelRose Real Estate Team offers unparalleled service to all clients in the Greater
Boston, Massachusetts real estate market. Your complete satisfaction with our service and
representation is our number one priority. Here are some of the things we are going to do for you:
Consult with you to determine your particular real estate needs. We will help you define your
financial ability to purchase, and explain alternative methods of purchasing and financing.
Familiarize you with the community to help you with your neighborhood and property choices.
This may include properties listed with our office, as well as those offered through other real es-
Explain local real estate procedures, including typical closing costs and purchase agreements.
Offer/show properties in accordance with Fair Housing Regulations and ethical real estate
Disclose material facts known about the property. Respond accurately to questions concerning
Assist in arranging mortgage financing.
Assist you with arrangements for a variety of relocation services; including worldwide referrals
with RE/MAX should you require assistance in selling your existing property.
Assist you in preparing a purchase agreement, and help facilitate the preparation and comple-
tion of all paperwork pertaining to the purchase of your new property (as permitted by law).
Promptly present all written offers to sellers or their designated representative as prescribed by
law or local practice.
Upon acceptance of an offer between you and the seller, monitor all pre-settlement (escrow)
activities through out the closing process as permitted by law or local practice.
Keep you informed throughout the entire real estate purchase process.
We appreciate your allowing us to help you with your property purchase. If at any time you have
a question, concern, comment or suggestion, please contact the team:
The Mike DelRose Real Estate Team
RE/MAX First Realty
142 Galen Street
Watertown, MA 02472
Steps in the Home-Buying Process
View homes with us
Select a home
Complete contract to buy
Negotiate any counteroffers
Obtain a home inspection
Negotiate repairs with seller
Complete loan process
Loan package submitted to underwriting
Possible request for additional information
Back to underwriting
Final inspection of home repairs
Obtain homeowners insurance
Documents are drawn by the lender
Documents are sent to the title company
Documents are recorded
Welcome to your new home!
Home Buyer Checklist for Purchase of a Home
Due Date / Item Completion
Pre-Approval Letter with offer ( / / ) ___________
Initial Deposit ( / / ) ___________
Prior to Purchase and Sales Agreement (P&S)
Set up home and pest inspections ( / / ) ___________
Obtain contact information for attorney ( / / ) ___________
Decide on lender ( / / ) ___________
Second security deposit ( / / ) ___________
After P & S
Apply for loan in time frame specified on offer ( / / ) ___________
Transfer funds needed for final payment ( / / ) ___________
Set up homeowner’s insurance ( / / ) ___________
Contact moving company ( / / ) ___________
Set up utilities ( / / ) ___________
Schedule final walk through pre-closing ( / / ) ___________
Certified bank check for final payments ( / / ) ___________
Driver’s license or other valid photo ID ( / / ) ___________
Personal check for last minute adjustments ( / / ) ___________
Tips & tricks: Write in your due dates on a calendar or Outlook to keep on task.
Home Purchase Timeline
While the purchase of each home is different, the following is a time line typically
experienced in purchasing home, provided here in hopes of helping you plan the
steps to be taken after your offer has been accepted.
Day Step Task
Day 1 Offer Initial deposit*, Pre-approval Letter
Day 2 Inspections Set up inspections and tests, Home Inspection, Pest
Inspection, Lead Paint Inspection Radon Tests
Day 3 Attorney Obtain attorney, provide attorney copy of Offer,
And copy of Condo Documents if Applicable
Day 6 Inspections Inspections and test completed, review results with
Day 7-9 Finalize terms Negotiate major discrepancies, review and approve
final version of Purchase and Sale agreement.
Initiate loan application
Day 10 P&S Sigh Purchase and Sales agreement, 2nd deposit
Day 11 Loan Application If not done so apply for loan
2-3 Weeks Bank Letter Letter from lender confirming loan approval
Pre-Closing Walk Through Final Walk through. Obtain any bank checks for
Any other necessary payments
Closing Day Closing Bring to closing Certified Bank check you’re your
final payments**, picture Id, Check book for minor
* Deposit with Offer to Purchase and Purchase and Sales Agreements can be personal check
** Payments at closing must be certified bank Check
Question: Do home buyers need the help of a Buyer Representative?
Answer: You bet! Because when buyers work with a real estate professional who is
100% loyal and completely committed to them, chances are that the entire home-
buying process will go smoothly, with a higher level of buyer
Question: What is a Buyer Representative?
Answer: A Buyer Representative works solely for you and has no legal or other re-
sponsibilities to the seller. When working with a Buyer Representative, you have
the advantage of personal representation, independent counseling, loyalty, confi-
dentiality, and trust. On the other hand, while helping you present an offer and
then negotiate and close a transaction, a general real estate agent has certain fidu-
ciary responsibilities to the seller and agent of any property you choose. In a case
where the property your agent is representing you to buy is also that agent’s listing,
dual agency applies. Talk to your agent for more information.
Question: Can a Buyer Representative show us the same properties?
Answer: Yes, a Buyer Representative can show you every home listed in the REAL-
TOR®’s Multiple Listing Service (MLS), PLUS Real Estate Owned
(REO) and For Sale By Owner (FSBO) properties. Additionally, a Buyer
Representative can show you builder models to select your own, brand-new
properties and unlisted homes.
Question: Will a Buyer Representative disclose more information to us?
Answer: Yes indeed. Because a Buyer Representative’s fiduciary responsibility is to
you, he or she can be more forthcoming with any negative aspects about properties
that you are investigating for purchase.
Question: Does a Buyer Representative make decisions for us?
Answer: No. As your personal ally, advocating your best interests, a Buyer
Representative is obligated to provide you with maximum information about
buying a home, each step of the way. That means disclosing specifics about
location, property values, offering price, negotiations, counter-offers,
contingencies, financing, and the entire closing process. Armed with such
vital and detailed information, you’ll be thoroughly prepared to make decisions that
are right for you and your family.
Buyer Representation (cont..)
Question: What about negotiating the details?
Answer: First, a Buyer Representative is fully qualified and highly skilled in the back-
and forth negotiations and financing queries that precede the closing of most real es-
tate transactions. Second, a Buyer Representative is also experienced and committed
to helping protect your best interests in the purchase. Representing you and support-
ing you - that’s a powerful combination!
Question: What did you mean by “confidentiality”?
Answer: Since a Buyer Representative is legally obligated to only you, he or she can
help you maintain absolute privacy with regard to financial and personal information.
That’s another important benefit of working with a qualified Buyer Representative.
Question: A few more questions?
Answer: We can give you more details and answer all of your questions. Please jot
down here, so you can come back to them.
Your Question ______________________________________________
Your Question ______________________________________________
Your Question ______________________________________________
Your Question ______________________________________________
Renting Versus Buying Your Home
Pride in Owning: Most people buy homes to have control over where they live. Although invest-
ment features are important, the psychological reasons for buying—the satisfaction of owning
and freedom from paying rent—are at least as important.
In a survey done by the National Association of REALTORS® of 6,000 homeowners and 2,000 rent-
ers—perhaps the largest survey ever of attitudes toward home ownership—it was shown that
76% of owners and 66% of renters considered pride of ownership an important reason for buy-
Dislike Paying Rent: Close to 7 in 10 of almost equal portions of owners and renters expressed a
dislike of paying rent as an important reason to buy. Renting offers a lifestyle that’s nearly main-
tenance-free. That may appeal to you, but consider that renting offers you no equity, no tax
benefit, and no protection against regular rent increases. Writing a rent check is just like watch-
ing your hard-earned money sail away!
Settling Down: More than 6 in 10 renters said “settling down” was an important reason to buy.
Good Investment: 76% of owners and 69% of renters said that the investment aspect of owner-
ship was important.
Tax Advantages: Property taxes and qualified home interests are deductible on Schedule A, for
Long-Term Appreciation: People consider homeownership a good investment because they view
it as a long-term venture. Historically, home prices have risen at relatively steady rates. Existing
home prices rose an average of 4% per year between 1980 and 1992.
Leverage Investment: People borrow a great deal to buy homes, yet they receive the full benefits
of price appreciation. In the long run, investments in homes far outpace inflation rates.
Source of Savings: Homeownership always has been and continues to comprise the single largest
source of savings for American households. Homeowners build equity and can borrow against it.
Sacrifices Are Worth It: Almost 7 in 10 renters in the National Association of REALTORS home-
ownership survey said that they planned to buy a home in the future. More than three-quarters
of these people said they were willing to sacrifice to do that.
The Real Cost of Renting
Based on a 6% Rental Increase Each Year, If You Now Pay…
$1,000/ $1,500/ $2,000/ $2,500/ $3,000/
Month Month Month Month Month
1st Year $12,000 $18,000 $24,000 $30,000 $36,000
2nd Year $12,720 $19,080 $25,440 $31,800 $38,160
3rd Year $13,483 $20,225 $26,966 $33,708 $40,450
4th Year $14,292 $21,438 $28,584 $35,730 $42,877
5th Year $15,150 $22,725 $30,299 $37,874 $45,449
6th Year $16,059 $24,088 $32,117 $40,147 $48,176
7th Year $17,022 $25,533 $34,044 $42,556 $51,067
8th Year $18,044 $27,065 $36,087 $45,109 $54,131
9th Year $19,126 $28,689 $38,253 $47,815 $57,379
10th Year $20,274 $30,411 $40,547 $50,684 $60,821
TOTAL $158,170 $237,254 $316,339 $395,424 $474,509
Think about the home you could have purchased using that money.
Not to mention the potential annual tax deduction for mortgage interest paid!
Determining the level of Service needed in buying a home.
ABOUT BUYER AGENCY
Because of changes in Massachusetts Consumer Protection Law regarding Agency the vast ma-
jority of seller’s are excluding non-Buyer Agents in presenting their homes to prospective buy-
ers, resulting in many real estate offices now being able to permit only Buyer-Agents to show
Also, with the large number of properties currently for sale, combined with the constraints im-
posed on real estate agents it becoming increasingly difficult for home buyers to view every
possible house that meets their criteria Along with the additional service provided by a Buyer
Agent, Buyer Agency may be the buyer’s best option in finding a new home.
If you are contemplating Buying a home and are unsure about Buyer Agency, This Brochure is
provided to help you better understand Buyer Agency, and how a Buyer agent can assist you in
the purchase of your next home.
A Buyer Agent has a contractual agreement with his client, the Buyer, and is obligated to work
in the best interest of the Buyer.
A Seller’s Agent or Sub-Agent does not have a contract with the buyer, his customer. His con-
tract is with the seller and is obligated to work in the best interest of the Seller.
The following shows the services provided to the Buyer-client by the Buyer Agent. I hope that
this will assist you in determining if you would prefer the services of a Buyer Agent.
Pay full attention to the Buyer’s needs. Have a meeting with clients prior to the clients
viewing any home to determine exact location and type of home desired. This saves the
the home buyer by viewing only those homes that meets the home buyers criteria.
The Buyers can talk freely. The Agent is responsible to the Buyer only and will not
provide the seller or seller’s agent any information without the permission of the Buyer
Suggest alternative solutions. Work with Buyers to find all avenues to meet their goals.
Work in the best interest of the Buyers
Find the best property for the Buyer.
“Leave no stone unturned.” Review For sale by owners for example.
First opportunity to view new listings. When new properties become available Real Estate
Agents will call their clients first.
All properties are available. Unlike Non-Buyer Agents can set showings on all properties
offered via Multiple Listing Service.
It is permissible to provide advice along with the facts.. Because he or she is working for the
buyer, a Buyer Agents can give different options as they got through a home and advise the
Educate the Buyer by informing the Buyer of potential problems and remedies available.
Assessing Buyer’s Progress
Review recent showings to ensure that the buyers are viewing correct properties.
Confer with Buyers on any changes in their situation and needs
Negotiating the Offer
Educate and advise the Buyer. Go through the offer process to ensure the Buyer’s under
stand all aspects of the offer.
Provide a Comparable Market Analysis to arrive at an offer price instead of a list of
Discuss the different options available in making an offer, and how to make Buyer’s offer
stand out. Suggest financing alternatives that may be in Buyer best interests. Not only the best
rates, but what will make the offer stronger.
Negotiate on behalf of Buyer.
Continue to provide services to Buyer during the negotiations. Assist in setting up and go
over home inspections to check for any problems ensure all deadlines are met.
Share all known information about Seller.
Set up steps finalizing the Purchase and Sales Agreement.
Follow-through After the Purchase and Sales Agreement
Attempt to solve problems to the Buyer-client’s satisfaction. Keep abreast of the purchase
to ensure any potential problems are resolved
If you would like to discuss further Buyer Agency or want additional information about Buyer
Agency and Sub-Agency please feel free to contact me.
Determining the Level of Service Desired
Buyer – Customer Buyer - Client
o Maintain loyalty to Seller’s needs. o Pay full attention to the Buyer’s needs.
o Tell Seller all that you learn. o Buyer can talk freely.
o Focus on the Seller-client’s property. o Suggest alternative solutions.
Buyer – Customer Buyer - Client
o Get the best offer for the Seller-client. o Find the best property for the Buyer-client.
o Limit properties to listed properties only. o “Leave no stone unturned.”
o Lower level of responsibility to Buyer- o First opportunity to view new listings.
o Show properties listed within Buyer-customer’s o All properties are available.
Buyer – Customer Buyer - Client
o Just the facts o OK to give advice with facts.
o Protect the Seller-client. o Educate the Buyer-client.
Negotiating the Purchase and Sales Agreement
Buyer – Customer Buyer - Client
o Disclose only material facts about the property o Educate the Buyer-client.
o Negotiate on behalf of Seller-clients. o Negotiate on behalf of Buyer-clients.
o Volunteer a CMA for the buyer only if it sup- o Suggest approved protective clauses for the purchase
ports the Seller-client’s listing price. agreement to protect Buyer-clients.
o Attempt to negotiate approved protective o Suggest financing alternatives that may be in Buyer-
clauses into the purchase agreement to protect client’s best interests.
o Suggest financing alternatives to the Buyer- o Suggest financing alternatives that may be in Buyer-
customer in order to help benefit the Seller- client’s best interests.
o Continue services to Seller-client during nego- o Continue services to Buyer-client’s during negotia-
o Strengthen of the Seller-client’s negotiating o Strengthen the Buyer-client’s negotiating position.
o Share all information about Buyer-customer. o Share all information about Seller.
Follow-through After the Purchase Agreement
Buyer – Customer Buyer - Client
o Attempt to solve problems to the Seller-client’s o Attempt to solve problems to the Buyer-client’s satis-
After your initial counseling session (either via e-mail, phone, or a face-to-face interview), we will
have a good idea of your wants, needs, price range, and desired location and will enter your re-
quirements in the Multiple Listing Service (MLS) computer. From the many listings in its inven-
tory, the computer will print a list of homes tailored just for you. We will make arrangements to
show you those homes that meet your criteria.
As you walk through the homes, feel free to open cabinets and closets. Most often, the sellers
will be absent, but should they be present, they will understand your need to examine the home
carefully. When a home appeals to you, make notes. It is easy to forget details. Often there will
be information at the home and, whenever possible, we will have given you a copy of the MLS
information on the home you are viewing.
Don’t be surprised if the first home you see is the perfect one for you, and don’t be discouraged
if none of those you visit the first day are what you want. We are committed to finding the house
that you will call home, and we will work diligently until you find it. Usually, we will be able to
find the home of your dreams rather quickly from a selection of three to five homes that best fit
desires you expressed.
During the Home Search…
Discuss the benefits and drawbacks of each home in relation to your specific needs.
Keep you informed on a regular basis.
Check the MLS database and with other brokers daily for new listings that meet your criteria.
Keep you up to date on changing financial conditions that may affect the housing market.
Be available to answer your questions or to offer assistance regarding your home purchase.
Discuss market trends and values relative to properties that may be of interest to you.
Show you new homes as well as pre-owned homes if you desire.
Assist you with homes offered by the sellers’ themselves as For Sale By Owner (FSBO)
listings. A homeowner who is trying to sell his home himself is usually doing so in hopes of
saving the commission. Coincidentally, this is the reason a buyer wants to deal directly with a
homeowner. Many times a homeowner will work with an agent, even though his home is not
listed, if the agent introduces the buyer to the property. If you should see a FSBO and want
the advantages of our services, please let us contact the owner and set the appointment.
As members of the MLS, we can show you any property. If you should see an ad in the newspaper
or a sign in a yard, call us to find out the information you’re looking for. If you want to view the
home, we’d be happy to show it to you!
15 Things Every Buyer Should Know Before Purchasing
1. Property taxes and qualified home interest are deductible on an individual’s federal income tax return.
2. Many times, a home is the largest asset an individual has and is considered one of the safest invest-
3. A homeowner can exclude up to $500,000 of capital gain if married filing jointly or up to $250,000 if sin-
gle or married filing separately. The home must have been the taxpayer’s principal residence for the previ-
ous two years.
4. A portion of each amortized mortgage payment goes toward the principal, which is an investment.
5. A home is one of the few investments you can enjoy by living in it!
6. The majority of the time, a REALTOR® can show you any home, whether it is listed with a company or a
builder or is even a For Sale By Owner.
7. Working with a REALTOR to purchase a For Sale By Owner property is very advantageous, because some-
one will be looking out for your best interests.
8. A real estate professional who can provide you financial information with a computer will give you a dis-
tinct advantage in making the right decisions.
9. A pre-approved program will actually approve you for a specific loan amount subject to the property.
This will give you confidence and will help when negotiating with the seller.
10. Your real estate professional can provide you with a list of items that you’ll need to make a loan appli-
cation, so you’ll be ready when the time comes.
11. The right to conduct a property inspection, included in your purchase agreement, gives you the ability
to negotiate with the seller once you know all the facts about the property’s condition.
12. A Home Protection Plan can provide coverage for selected items, such as central heat and interior
plumbing, built-in appliances, water heaters, etc. If the seller is not providing this coverage, you can pur-
chase it yourself.
13. Ask your real estate professional if he or she is familiar with the neighborhoods you want to live in. Ask
how many homes he or she has sold in those areas in the past year.
14. Working with a REALTOR who has an office “Group” helps assure the buyer that the transaction will be
15. In a “seller’s market,” don’t go looking for a deal. Set your sights on the right house for you,
and then let your REALTOR help you negotiate the best price and terms.
8 Insider Tips For Home Buyers
1. Be a Pre-Approved Buyer: A pre-approved buyer always has the advantage in an offer
situation. Becoming pre-approved is very easy: you complete your loan application with a
credit check prior to beginning your home search process. Pre-approval means that you have
actually been approved for the purchase by a lender, which gives you the edge in home pur-
2. Beat The Competition to The Best New Listings: The search process can be both fun and
trying. You will notice that some homes sell very fast and others hang around for long peri-
ods of time. The best homes at the best prices sell fast. Keeping on top of this is essential.
Connect with a professional Real Estate agent that knows the market and keeps you up-
3. Do The Research: Make yourself a "home value expert." Investigate the areas and price
ranges for the kind of home you are looking for. Get a good idea of the price ranges these
homes sell for and how long the market time is for them. Your agent is a great asset here.
4. Have Your Offer Presented in Person: Your agent represents you and your best interests.
To adequately do this, make sure that your home offer is presented by them directly to the
seller. The personal touch will give you the edge. Your agent also might pick up critical infor-
mation during this meeting.
5. Prove That You Are a Serious Buyer: The best way to accomplish this is with strong ear-
nest money. This might mean that you put 5% or more down to get the sellers attention.
6. Don't Go Crazy: Even in a hot market, be cool and calculated with your decisions. A
knowledgeable agent can really help you here. Your home purchase may be your single larg-
est investment. It is important to make sure that you get the best deal possible. Overpaying
now will make it harder to get your value back when you sell.
7. Keep Your Offer Simple and Clean: Make sure that your contract to purchase is simple,
clean and not bogged down with unnecessary contingencies, especially repairs. Keep the
time frames of repairs and responses to a minimum. The cleaner your offer, the more inter-
ested the seller will become. This may help you purchase the property at the best price.
8. Don't Wing It Alone: What you need most in today's complex marketplace is an experi-
enced and professional real estate agent who represents your interests only. No matter how
heated the competition or the negotiations, a professional agent will represent your best in-
terests, keep you from paying too much and help you maximize your investment.
10 Things to Take the Trauma Out of Home Buying
1. Find a real estate agent that’s simpatico. Home buying is not only a big financial commit-
ment, but also an emotional one. It’s critical that the agent you chose is both skilled and a good
fit with your personality.
2. Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you
find a home now, don’t try to second-guess the interest rates or the housing market by waiting.
Changes don’t usually occur fast enough to make that much difference in price, and a good
home won’t stay on the market long.
3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but
too many ideas will make it much harder to make a decision.
4. Accept that no house is ever perfect. Focus in on the things that are most important to you
and let the minor ones go.
5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process,
but trying to “win” by getting an extra-low price may lose you the home you love.
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical as-
pects of the house itself—room size, kitchen—that you forget such issues as amenities, noise
level, etc., that have a big impact on what it’s like to live in your new home.
7. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, in-
vestigate insurance availability, and consider a schedule for moving. Presenting an offer contin-
gent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a
new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, espe-
cially for the first time, is a big commitment, but it also yields big benefits.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes
have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most
important role is as a comfortable, safe place to live.
6 Creative Ways to Afford a Home
If your income and savings are making home buying a challenge, consider these options.
1. Investigate local, state, and national down payment assistance programs. These programs
give loans or grants to cover all or part of your required down payment. National programs in-
clude the Nehemiah program, http://www.getdownpayment.com, and the American Dream
down payment fund from the Department of Housing and Urban Development.
2. Get the seller to provide financing. In some cases, sellers may be willing to finance all or part
of the purchase price of the home and let you repay them gradually, just as you do with a mort-
3. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement,
your family, friends, or even an third-party may buy a portion of the home and thus share in
any appreciation when the home is sold. The owner/occupant usually pays the mortgage, prop-
erty taxes, and maintenance costs, but all the investors' names are usually on the mortgage.
There are companies that can help you find such an investor if your family can’t participate.
4. Get help from your family. Perhaps a family member will loan you money for the down pay-
ment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you
have little credit history.
5. Lease with the option to buy. Renting the home for a year or more will give you the chance
to save more toward your down payment. And in many cases, owners will apply some of the
rental amount toward the purchase price. You usually have to pay a small, nonrefundable op-
tion fee to the owner.
6. See if you can qualify for a short-term second mortgage to give you the money to make a
higher down payment. This may be possible if you have a good income and little other debt.
Purchasing New Construction
Why should I use an agent to purchase a new-construction home?
The advantages of having us help you purchase a new home are the same as those
for purchasing a resale home. We can provide you with valuable insight into the
new construction industry, help you find the perfect home quickly, and then pro-
vide you with expertise in contract writing, negotiation, and closing assistance. The
builder has a professional real estate representative who watches out for his or her
best interests, and you need and deserve the same expert representation watching
out for yours.
Buying a new home is more difficult and time-consuming than buying a resale
home. We can professionally guide you through this process. Having spent years
working with builders, Experienced agents have rapport with them and a database
of information about previous projects,
floor plans, etc. The specialists on our team are also very familiar with new home
warranties and the nuances of the builder’s purchase contracts and various home
It is very important that your interests be professionally represented when you are
entering into a contract for a semi-custom or a build-to-suit home. These transac-
tions are complex and the contract details must be exactly in order to protect you
and to ensure that you get exactly the home you want!
And when it comes to the home inspection, we will explain to you why it is essential
to hire an independent home inspector to thoroughly inspect a newly constructed
Are there any advantages to not using an agent to purchase a new home?
There is no financial advantage for you to buy directly from the builder. Builders
have a “single price” policy, meaning that you will be charged the same price
whether your interests are represented by an agent or not. If you buy without an
agent, the builder’s profit usually increases by the amount of the brokerage fee.
Just as in any resale, the seller pays your agent’s fee. Most builders will make you
give up your right to representation if you visit their model homes/open houses
without an agent on the first visit. Therefore, please call us if you would
like to look at some model homes, so you are given the representation you deserve!
There are 2 major steps prior to closing, the Offer and Purchase and Sales Agreement.
Both of these documents spell out the terms of the Sale and both require deposits.
Steps of Home Purchasing
If it is beneficial (different in every situation) the Team will provide for you a Comparable Market
Analysis, which will give you the a range of where an offer should be made.
2. The Offer typically covers the first 2 weeks of the process and gives us time to set up inspec-
tions and allows your attorney to set up the final details of the sale, and in the case of a Condo-
minium purchase, gives him time to review the Condominium documents to ensure there are no
“hidden” problems. At this time an initial deposit is made to demonstrate good faith and com-
mitment. A typical deposit is between $2000.00 to $5000.00, the higher the deposit the more
serious you appear and the more likely your offer will be considered
The offer itself is a binding contract that is actually a several pages that denotes the initial terms
of the sale. The first time we write an offer we can expect to spend about 1 hour going over the
details to ensure you understand all aspects of the offer. If we end up making more that one of-
fer, it will take considerably less time, as we will only have to go over the specifics. The Offer
consists of the Offer To Purchase, Inspection Contingencies, Test Contingencies, Mortgage Con-
tingencies, and Acknowledgement of your rights in regards to inspections and tests and a Pre-
All pertinent documents must be made in writing and signed or initialed, as annotated by all par-
ties, (Buyers and Sellers) for it to be enforceable. Once it is signed it can only be terminated upon
written agreement of both parties and if one of the parties fails to perform any of the terms of
Offer to Purchase
Offer to Purchase. The first part identifies the property, and any specific requests, such as inclu-
sion of any appliances.
The next part details the amount of the offer, and how much the various deposits will be, that
with the offer and that at Purchase and Sales Agreement and how much will be paid at the final
The next phase details time lines. How long the offer is good for, usually no more than 36 hours
typically much less. The date when the Purchase and Sales agreement is to be signed, usually 10
days from acceptance of offer, and the date of the closing, bout 6 to 8 weeks from the date of
the acceptance of the offer. This section also spells out who will
be holding the deposits; typically the listing Office. If it is a For Sale by Owner, We try to have it
held by my company, or by an attorney.
The final section details any conditions; this is where we will inform the seller there will be con-
tingencies and that a pre-approval letter will be accompanying the offer.
This details other actions to be taken prior to signing a Purchase and Sales Agreement. While you
may have the old forms, which consist of 4 pages, there is a new 1-page form that has all the
The first parts consist of inspections. They are Home Inspection, pest, and lead paint. Those in-
spections you whish to have done are typically done together and within 6 days of your offer be-
ing accepted. When we write up the offer, we will then decide which inspections you will want
to have done. By the way, the pest inspection is done to discover any wood destroying insects
and any damage done by them.
A Radon test may also be ordered again we would decide the time frame depending on the dates
of the home inspection.
If you are purchasing a condominium, here is where we will request a copy of all the pertinent
documents, to be delivered to your attorney in a timely fashion in order that he can review them
prior to the signing of the purchase and sales agreement
Finally the mortgage contingency, It spells out how much you will be financing, the less the better
as you will be less dependent upon the appraisal, and when you intend to apply for the mort-
Post inspection. After the inspections are completed if there are any major issues we then nego-
tiate with the Sellers to have as much as possible repairs made or an adjustment in the price.
Any changes agreed upon, will then be forwarded to your attorney to ensure they are included in
the Purchase and Sales agreements.
Also during this time any questions regarding the condominium documents will be will answer.
Purchase and Sales Agreement
The Purchase and Sales agreements “fine tunes” the terms of the sale, reiterates the initial terms
that are still in force, details any corrective action the seller has to take and gives the bank time
to process the loan and research the deed Prior to closing. At this time the second earnest
money deposit is made the typical deposit is 5% to 25% of the Purchase Price. Again, the higher
deposit the stronger your offer and the more likely it will be
accepted. In most cases I recommend at least 7.5% but no more than 10% unless it is a strong
Sellers Market and you are in a multiple offer situation.
Applying for Loan
If, right after the home inspection has been completed and we are confident about the home you
can start the application process. However, if some questions remained until all the terms were
worked out, the application is made no later than the day after the Purchase and sales agree-
ment is signed. At this time the lender will require, along with other documents, a copy of the
executed purchase and sales agreement. The lender will also order an appraisal and the banks
attorney will check on the deed.
About 2 weeks before the closing we should receive a ban commitment letter, which will confirm
that all aspects of the loan are set and have been approved. Shortly there after a date time and
location will be set for the actual closing.
Final Walk Through
As close to the closing time as possible we will go through the home to ensure it is ready for you:
The Day of closing
Bring with you a picture ID
Bank Check for balance of your deposit
Check book for any minor adjustments, ex: prepaid taxes, condo fees etc.
How to Make Your Offer More Appealing
By making your offer more appealing to the Seller, you will stand better chance of having it accepted.
Listed below are five strategies, which in most cases they will have little impact on you but will dem-
onstrate to the seller that your are very serious about purchasing their home.
They will make your offer stand out from others and get the attention of the Seller. These are proven
strategies that will make your offer stand out from the others and enhance your ability to buy the
home of your choice.
Letter of Introduction
In many cases you will be purchasing the Seller’s home, who most likely will have an emotional at-
tachment to it. We suggest providing a letter, addressed to the seller, about yourself and your fam-
ily, describing who you are and what draws you to this particular home and neighborhood. One or
more points of your letter may connect on a personal level with the seller and it may be enough to
tip the scales in your favor.
Deposit With Offer
With the prices of homes, in this area, starting at $300,000 for a condominium and $400,000 for a
single-family house the $1000 deposit that had been typically provided with an offer may appear as a
very low risk to the buyer. By making a higher initial deposit you will demonstrate to the seller that
you are very serious and less likely to withdraw your offer. We recommend, in order to have your
offer stand out that the deposit made with an Offer to Purchase be between $2500 and $5000.
Your ability to prove that you are able to purchase the house is a key factor. In most cases, if a pre-
approval is not provided with the offer, it will not even be considered. The best letter to have is one
that essentially makes you a cash buyer. It should state that: “Based upon verification of income,
credit history, source of down payment and sources of funds, and subject only to appraisal and re-
verification of income you have been approved for financing.”Also extremely important; if you decide
to finance through a lender other than the one who provided the pre-approval letter and that lender,
who may possibly, using a different set of criteria to qualify you, subsequently refuse the loan. If this
occurs, you could be accused of misrepresentation and jeopardize your deposit. Therefore if you
choose to go with a different lender, retain the ability to use the first lender.
We also do not recommend using an online financing company. Past experience has shown that
most are not in this area, and their criteria are more stringent and not flexible enough to provide
loans in all cases. Also, since they have no ongoing relationship with Appraisers, insurance compa-
nies and conveyance attorneys and will not be familiar with the local real estate practices and re-
quirements your loan process can bog down and problems are more likely to occur.
Shorten Contingency/ Performance Dates
Shorten the time for inspections and Purchase, Sales Agreement and Mortgage Contingency. Use
6 days to inspection in lieu of 9 days and 10 days for Purchase and Sales Agreement instead of 14.
By having a strong pre-approval letter as we discussed previously you can also shorten the time
to obtain a bank commitment letter.
To be able to fulfill these obligations you should have already contacted an inspector or inspec-
tors and know who you can count on to be there for you. And also should know and have the
contact information of your attorney.
Flexible Closing Date
Unless otherwise stated by the seller, we will not ordinarily know what they are looking for in a
closing date. It is good practice to enter standard times of 4 to 6 weeks from purchases and sales
agreement to close, with an accompanying statement that you are flexible to extend or shorten
the closing date. By providing this flexibility to the seller, you may be able to eliminate other of-
fers at the outset.
The Role of an Attorney In the Real Estate Transaction
The purchase or sale of your home is one of the most important transactions you will ever make.
The process of buying a home requires attention to numerous details, many of which require
extensive knowledge of local real estate laws. Therefore, it is advisable to consult with and
enlist the services of a knowledgeable real estate attorney.
The role of an attorney is particularly important in the following matters:
Purchase and Sale Agreement To avoid potential complications, it is advisable for both the buyer
and seller to enlist the services of a real estate attorney prior to signing a Purchase and Sale
Agreement. By doing this, each attorney can help make his/her client aware of the legal
ramifications of each clause in the Purchase and Sale Agreement.
Title Search This is accomplished by examining the records at the Registry of Deeds and, in some
cases, the Registry of Probate of the county in which the property is located to insure that the
owner does in fact have a good, clear record and marketable title to the property. The title
search will also reveal any encumbrances, rights of way, easements, restrictions and any
other closing documents which may affect the property.
The Closing This is the final financial statement. The buyer, the seller, their respective attorneys
and the attorney for the mortgage holder meet to finalize and execute all the closing docu-
ments. These include, among many others:
Discharges of Mortgages
Promissory Note and Mortgage
The Truth in Lending Statement which documents all finance charges
Survey or Mortgage Plot Plan
Final Accounting which involves a prorating of property taxes, water bills, etc.
After the Closing After the closing, the title examination is updated and the Deed, Mortgage and
other miscellaneous documents, including a Municipal Lien Certificate from the town or city
in which the property is located are recorded in the Registry of Deeds, at which time title to
the property is transferred to the new owner.
The attorney’s role is to make sure that his/her client is informed and protected through the
transaction. When choosing an attorney, keep in mind that many specialize in certain aspects of
legal practice. You should take the time to make sure that the attorney you choose is familiar
with local real estate laws and practices.
A. PROVIDED BY THE ATTORNEY:
Copy of the ratified contract.
Any ratified addendum.
A copy of the listing.
A copy of earnest money deposit check (should be certified or cashier check).
Copy of plat
B. PERSONAL INFORMATION:
Full names of all purchasers as they are to appear on the title.
Social security numbers of all purchasers.
Present residence for all purchasers.
Previous address going back two years if they have not resided in the present home for two
Home and office phone numbers.
C. EMPLOYMENT INFORMATION:
Present Employer name, address, and contact person to send employment verification form.
Explanation of any gap during 2 year history. Previous Employer name, address and a contact
person, going back two years if not in present job 2 FULL years.
Present Salary -year to date pay stub and last 2 years’ W-2’s.
If any variable income, commission, part-time income, bonus, overtime, interest income, etc., is
being used to qualify: 2 years signed federal tax returns and W-2’s and/or 1099’s.
If self-employed: 2 years’ signed federal individual and corporate returns, if any. Also a profit and
loss statement and balance sheet.
Diploma or transcript if student during 2 year period.
D. OTHER INCOME:
Rental Income: copy of a lease which is current and at least one year in length.
Alimony and Child Support: only if used for qualification. Copy of divorce decree and property
settlement (ratified) setting out terms. Proof of payment will also be requested at applica-
Income from notes held: a copy of the ratified note.
Retirement, Social Security, and Disability Income: copy of award letter and latest check show-
ing amount of present payment. Copy of end of the year statement if applicable.
Bank Accounts: name of bank, address, account numbers, types of accounts and present bal-
ances with checking. Use average balance.
Statements: Copy of 2 most recent statements for all accounts.
Stocks and Bonds: copy of certificates or copy of recent (within 30 days) broker statement list-
ing the holdings. Copy of statement can be used for many mutual funds, etc.
Life Insurance: cash value, only if being used for down payment.
Vehicle: year and make and value. Copy of the title if under 4 years old with no outstanding
Real Estate: address and market value. If free and clear, deed of release, deed, or mortgage pay-
Present Home: copy of sales contract, settlement sheet, and/or lease.
Gift Letter: form will be provided by financial representative. Donor capacity must be verified.
Receipt of funds must be shown in account.
Credit Cards: account numbers and outstanding balance and most recent statements.
Loans: auto, mortgage, personal student, etc., outstanding balance, monthly payments, months
left on loan. Copy of next payment coupon. 12 months statements or cancelled checks for
Alimony and Child Support: copy of ratified decree and property settlement setting out terms.
G. VA LOANS:
Certificate of Eligibility: to obtain certificate, you will need a DD-214 (separation of service) or if
in Service you will need statement of service signed by Commanding Officer or Personnel
Officer (certificated must be updated before application). If in service you will need authori-
zation to live off base (DD-1747 from housing office and transfer orders if applicable.
H. PAYMENTS MADE AT APPLICATION:
I. PRESENT HOME:
Settlement Sheet (if sold within last year)
Name and Address of Present Landlord
Deed (refinances only)
1. Master Insurance Policy – Property and liability coverage for common areas
2. Unit Owner's Policy – Real and personal property and liability for unit owner
Paid individually by unit owners – usually based on both the tax assessment and % share of common area.
If valuation of common area was taxed directly to the association, it would be passed on to the owners
through the condo fee.
Right of First Refusal:
Some condominium documents, in the Master Deed, or in the Declaration of Trust, contain an element
called "Right of First Refusal" which guarantees to the association or its members the right to buy a unit
under the same terms and conditions as set forth in a bona fide contract with a potential purchaser of
that unit, provided the right is exercised within the time period specified in the documents.
1. Letter of Declination - Waiver of right of first refusal; required at closing
Condo Super Lien Bill (Chapter 400 of M.G.L. 183A):
1. Priority of Lien - Signed into law in 1992 – the most sweeping revision of the Mass. Condo Law since its
enactment. Gives condo associations the authority to impose a "priority" lien (taking precedence over the first
mortgage on the condo unit) on owners who fail to make required common-area payments. In order for costs and
fees to be a super-priority item, a notice to the owner and first mortgagee after 60 days of delinquency and a sepa-
rate notice to the lender 30 days before filing the lien foreclosure action. If the association were to proceed to a
lien enforcement sale of the unit, the effect would be to wipe out the first mortgage. However, payment at any
time of the super-priority amount will eliminate the super-priority. This provision is intended to balance the inter-
ests of associations and lenders. Important for a condo association to have legal counsel involved to serve the
proper notifications and monitor the process.
2. Unit Owner's Liability - Explicit recognition that fines, losses and costs of enforcement for a unit owner's
(or tenant or guest's) misconduct will constitute a lien.
3. On File Documents – The association, in the custody of the trustees or management company, must keep
up-to-date copies of the recorded master deed, by-laws and amendments, a minute book of the association meet-
ings, and financial records, contracts for work or services to be provided to the association, and insurance policies.
These records must be made available for inspection by unit owners and first mortgagees, including a right to copy
at the requesting party's expense.
What is a Condominium:
A. Property Interests in Condominiums
1. Real Property Interests
a. Unit –
B. Common Areas-
2. Personal Property Interests: -
Examples: Clubhouse furniture, basketball hoop, picnic tables
How A Condominium is Created:
In Massachusetts a condominium is created under the provisions of Massachusetts
General Laws (MGL), Chapter 183A.
The documents and instruments that create, describe, and establish the framework
1. Master Deed:
This is the legal instrument that transfers property to condominium ownership and
describes: Each is different but follows a familiar pattern according to the pow-
ers of the statute. The deed includes:
Description of land and buildings
What you own and what's common area
Description of limited common elements
Determination of percentage interest
Architectural and use restrictions
Outline of managing entity
Protection of first mortgagees
Plat/ plot plan
In Massachusetts, the % interest is determined by the market value at the time of
recording of the deed. (Overhead)
2. Unit Deed:
The individual Unit Deed is the document that provides the unit buyer with the
following basic rights and obligations:
Right of ownership and % interest
First time conveyed, has floor plans attached
3. The Declaration of Trust (The Bylaws)
This is the document that establishes the Condominium Association and its legal authority.
Most Condominiums in Massachusetts are set up as trusts with trustees. If the association is
to be incorporated, the Articles of Incorporation will establish the association and its organ-
Describes obligations and powers of the Trustees, procedures for maintenance and repair of
the unit and common areas, insurance requirements, association meetings, and voting
rights, handling of common area expenses, reserve funds, and assessment of unit owners.
4. Rules and Regulations:
Summarize important provisions of the trust which govern the conduct of residents, guests,
The Annual Budget:
a. Capital – allocation of funds for maintenance of the common area
b. Contingency–reserves that cover emergencies that aren't foreseen or in the budget
Note: language typically included in the P & S explaining that the conveyance of
the condo shall be deemed to include the Seller's allocable share of reserve
funds held by the organization of unit owners. This is explained to Seller when a
listing is taken.
2. Condominium Fees - Determined by the annual budget; usually paid monthly. Owners are
typically assessed expenses according to their % interest.
3. 6 (d) certificates - refers to section of M.G.L. 183A, verifies owners payment status of fees
4. Management Obligations - Management contracts must provide for the right of the Board
to terminate the contract for cause with 10 days notice (but giving that amount of time to
cure) and 90 days (or less if the contract permits) to terminate without cause.
6(d) Certificates must be furnished within 10 business days after a written request.
Condo Conversion Statute- Emergency legislation, approved in 1983
(St. 1983, c.527)
1. Major Conversion Provisions- Applies to co-ops as well as condos; doesn't apply to buildings
containing less than 4 residential units-Review highlights of the law, including tenants have a
period of time to purchase on terms and conditions the same or more favorable than those ex-
tended to the general public.
2. Protected Classes
Elderly, Handicapped, Low or Moderate Income – 62 years+. Physically handicapped,
income less than 80% of median income for the area set forth in HUD regulations
Time to Vacate- 1 year for non-protected classes; 2 years for protected classes
Moving reimbursement -Up to $750.00 of documented expenses for non-protected
classes; up to $1,000 for protected classes. Tenant has to be up-to-date on rent pay-
ments and voluntarily vacate before end of notice period to be eligible for reim-
**Any city or town may impose their own conversion regulations in lieu of this statute
(Use example such as recent adoption of condominium conversion ordinance by city of
Unlike condominiums, residents do not own their units, but instead, own shares in a
corporation that owns the building.
1. The Proprietary Lease – Spells out the number of shares a Buyer will own and states that
those shares entitle him to occupy a certain space and have access to the building facilities.
At closing, the Buyer receives a proprietary lease and stock certificates.
2. Monthly Fees – Amount determined by # of shares. The allocation of shares is determined
by unit size, location, condition, and amenities. The monthly fee covers maintenance, re-
pairs, improvements, as well as payment of real estate taxes and interest on the underlying
mortgage for the building (if applicable).
3. The Board of Directors
Elected from shareholders; oversees management, may have a managing agent, has the au-
thority to approve or disprove a prospective purchaser – scrutinizes a prospect's financial docu-
ments – in a privately owned co-op (no government agency subsidy) has the right to reject any-
one they feel will alter the quality of life of the co-op as long as the reason doesn't involve dis-
crimination against a protected class (example of Cher and Richard Nixon)
Higher risks to shareholders in case of co-op owner default on payment - the difference need to
be made up by other shareholders. The bank financing co-op loans is in second position to the
bank holding mortgages on the building. The Board establishes the amount of financing allow-
able for unsubsidized market rate condominiums. More limited availability of co-op financing,
because the only collateral is the lease and the stock certificates.
Activity coop - condo comparison list
Started in the French Alps in the 60's, time shares spread through Europe and reached
the United States in the early 70's.
1. Ownership (Fee Simple)
The Buyer buys his unit outright for the specified week or weeks spelled out in his contract. He
has a deed, title, and title insurance. He can rent or sell his timeshare for profit or leave it as
part of his estate. He will pay real estate taxes and mortgage interest just as in a regular condo
purchase, but the deductions are based on the fraction of the year he actually owns. Majority
of time shares are purchased with a personal loan. Loans for both ownership and right-to-use
plans are unsecured consumer loans.
2. Right to Use (Leasehold Interest)
Right to use every year for the specified period of time. Upon expiration of the lease period, the
property reverts back to the Owner. With both types of time shares, there is usually an annual
External – independent service with a membership fee
Internal – in-house service for affiliated resorts
Trading Network – system where owners make direct arrangements to
swap units with one another
Example: Marriott's Custom House
Due Diligence Issues and Fiduciary Duties:
1. Provision of access to condo docs and provision of information about rental
guidelines, pets, assigned versus deeded parking.
2. Fiduciary Obligations of Buyers Agents to provide analysis of market value,
alert buyer to potential issues of concern, including financial health of the
complex, average length of time for units on market in complex, vacancy rates,
if applicable, and % of owner-occupied units.
Be Prepared to ask these Important Questions:
What is included in the condominium fee?
What are the approximate utility costs for the unit?
Are utilities metered separately or included in the fee?
Is the parking deeded or assigned?
Is there guest parking?
Are pets allowed?
Can I rent out my unit?
What are the arrangements for trash/refuse disposal?
What are the arrangements for snow removal?
Is there a security system?
Is there extra storage?
How is mail and parcel delivery handled?
What is the percentage of owner-occupied units?
10 Questions to Ask Your Condo Board
Before you buy, contact the condo board with the following questions. In the process, you’ll
learn how responsive—and organized—its members are.
1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Gener-
ally, the higher the percentage of owner-occupied units, the more marketable the units will be
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are
in place? You may find, for instance, that those who buy a property after a certain date can’t
rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to deter-
mine if you can live within them. And have an attorney review property docs, including the
master deed, for you.
3. How much does the association keep in reserve? How is that money being invested?
4. Are association assessments keeping pace with the annual rate of inflation? Smart boards
raise assessments a certain percentage each year to build reserves to fund future repairs. To
determine if the assessment is reasonable, compare the rate to others in the area.
5. What does and doesn’t the assessment cover—common area maintenance, recreational fa-
cilities, trash collection, snow removal?
6. What special assessments have been mandated in the past five years? How much was each
owner responsible for? Some special assessments are unavoidable. But repeated, expensive
assessments could be a red flag about the condition of the building or the board’s fiscal policy.
7. How much turnover occurs in the building?
8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves
can be depleted quickly.
9. Is the developer reputable? Find out what other projects the developer has built and visit
one if you can. Ask residents about their perceptions. Request an engineer’s report for develop-
ments that have been reconverted from other uses to determine what shape the building is in.
If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.
10. Are multiple associations involved in the property? In very large developments, umbrella
associations, as well as the smaller association into which you’re buying, may require separate
10 Questions to Ask a Home Inspector
1. What are your qualifications? Are you a member of the American Society of Home Inspectors
or National Association of Home Inspectors?
2. Do you have a current license? Inspectors are not required to be licensed in every state.
3. How many inspections of properties such as this do you do each year?
4. Do you have a list of past clients I can contact?
5. Do you carry professional errors and omission insurance? May I have a copy of the policy?
6. Do you provide any guarantees of your work?
7. What specifically will the inspection cover?
8. What type of report will I receive after the inspection?
9. How long will the inspection take and how long will it take to receive the report?
10. How much will the inspection cost?
What Your Home Inspection Should Cover
Siding: Look for dents or buckling
Foundations: Look for cracks or water seepage
Exterior Brick: Look for cracked bricks or mortar pulling away from bricks
Insulation: Look for condition, adequate rating for climate (the higher the R value, the more
effective the insulation is)
Doors and Windows: Look for loose or tight fits, condition of locks, condition of weather strip-
Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and
Ceilings, walls, and moldings: Look for loose pieces, dry wall that is pulling away.
Porch/Deck: Loose railings or step, rot
Electrical: Look for condition of fuse box/circuit breakers, number of outlets in each room
Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate
leaks, sufficient insulation
Water Heater: Look for age, size adequate for house, speed of recovery, energy rating.
Furnace/Air Conditioning: Look for age, energy rating. Furnaces are rated by annual fuel utiliza-
tion efficiency; the higher the rating, the lower your fuel costs. However, other factors such as
payback period and other operating costs, such as electricity to operate motors.
Garage: Look for exterior in good repair; condition of floor—cracks, stains, etc.; condition of
Basement: Look for water leakage, musty smell.
Attic: Look for adequate ventilation, water leaks from roof.
Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your
area and the size of your family.
Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains.
5 Property Tax Questions You Need to Ask
What is the assessed value of the property? Note that assessed value is generally less than mar-
ket value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.
How often are properties reassessed and when was the last reassessment done? Generally
taxes jump most significantly when a property is reassessed.
Will the sale of the property trigger a tax increase? Often the assessed value of the property
may increase based on the amount you pay for the property. And in some areas, such as Cali-
fornia, taxes may be frozen until resale.
Is the amount of taxes paid comparable to other properties in the area? If not, it might be pos-
sible to appeal the tax assessment and lower the rate?
Does the current tax bill reflect any special exemptions that you might not qualify for? For ex-
ample, many tax districts offer reductions to those 65 or over.
10 Questions to Ask Your Lender
Be sure you find a loan that fits your needs with these comprehensive questions.
1. What are the most popular mortgage loans you make? Why?
2. Which type of mortgage plan do you think would best for us? Why?
3. Are your rates, terms, fees, and closing costs negotiable?
4. Will I have to buy private mortgage insurance? If so how much will it cost and how long will it
be required? NOTE: Private mortgage insurance is usually required if you make less than a 20-
percent down payment, but most lenders will let you discontinue the policy when you’ve ac-
quired a certain amount of equity by paying down the loan.
5. Who will service the loan? Your bank or another company?
6. What escrow requirements do you have?
7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)?
Will I be able to obtain a lower rate if they drop during this period?
8. How long will the loan approval process take?
9. How long will it take to close the loan?
10. Are there any charges or penalties for prepaying the loan?
10 Things a Lender Needs From You
1. W-2 forms or business tax return forms if you're self-employed for the last two or three years
for every person signing the loan.
2. Copies of at least one pay stub for every person signing the loan.
3. Copies of two to four months of bank or credit union statements for both checking and sav-
4. Copies of personal tax forms for the last two to three years.
5. Copies of brokerage account statements for two to four months, as well as a list of any other
major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.
6. Copies of your most recent 401(k) or other retirement account statement.
7. Documentation to verify additional income, such as child support or a pension.
8. Account numbers of all your credit cards and the amounts of any outstanding balances.
9. Lender, loan number, and amount owed on other installment loans, such as student loans
and car loans.
10. Addresses where you have lived for the last five to seven years, with names of landlords if
Choices That Will Affect Your Loan:
Mortgage term. Mortgages are generally available at 15-, 20-, or 30-year terms. The longer
the term, the lower the monthly payment if the same amount is borrowed. However, you pay
more interest overall if you borrow for a longer term.
Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate for as long as
you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate
mortgage is designed so that interest rates will rise as interest rates increase; however they
usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to
how much the interest rate can be increased and how frequently they can be raised. ARMs are
a good choice when interest rates are high or when you expect your income to grow signifi-
cantly in the coming years.
Balloon mortgages offer very low interest rates for a short period of time—often three to
seven years. Payments usually cover only the interest, so the principal owed is not reduced.
However, this type of loan may be a good choice if you think you will sell your home in a few
Government-backed loans, sponsored by agencies such as the Federal Housing Administration
(www.fha.gov) or the Department of Veterans Affairs (www.va.gov), offer special terms, includ-
ing lower down-payments or reduced interest rates—to qualified buyers.
Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly
For help in determining how much your monthly payment will be for various loan amounts, use
Fannie Mae’s online mortgage calculators.
5 Things to Understand About Title Insurance
1. It protects your ownership right to your home both from fraudulent claims against your own-
ership and from mistakes made in earlier sales, such a mistake in the spelling of a person’s
name or an inaccurate description of the property.
2. It’s a one-time cost usually based on the price of the property.
3. It’s usually paid for by the sellers.
4. There are both lender title policies, which protect the lender, and owner title policies, which
protect you. The lender will probably require a lender policy.
5. Discounts on premiums are sometimes available if the home has been bought within only a
few years since not as much work is required to check the title. Ask the title company if this dis-
count is available.
What Not to Overlook on a Final Walk-Through
Be sure that:
repairs you’ve requested have been made. Obtain copies of paid bills and any related war-
all items that were included in the sale price—draperies, lighting fixtures—are still there.
screens and storm windows are in place or stored.
all appliances are operating.
intercom, doorbell, and alarm are operational.
hot water heater is working.
HVAC is working.
no plants or shrubs have been removed from the yard.
garage door opener and other remotes are available.
instruction books and warranties on appliances and fixtures are there.
all personal items of the sellers and all debris have been removed.
Understanding Your Options for Taking Title
Carefully consider how you intend to take title of your property. This will determine
your legal status, rights, and obligations to the property. You may want to discuss
your options with an attorney to determine which is best for you. Most of the possi-
ble ways to take title to your property are listed here.
Title may be taken in the name of a corporation provided that the corporation is
duly formed and in good standing in the state of its incorporation.
Title may be taken in the name of a general partnership provided that the general
partnership was duly
formed according to the laws of the state. A partnership is defined as a voluntary
association of two or
more persons as co-owners in a business for profit.
Title may be taken in the name of a limited partnership provided that there are one
or more general partners and one or more limited partners. A certificate of limited
partnership must be filed in the office of theSecretary of State, a certified copy of
which must be recorded.
Joint Tenancy With Right of Survivorship
Joint tenancy is a method of co-ownership that gives title to the real property to
the last survivor. Title to real property can be acquired by two or more individuals.
If a married couple acquires title as joint tenants with the right of survivorship, they
must specifically accept the joint tenancy to avoid the presumption of community
Tenancy in Common
Tenancy in common is a method of co-ownership in which parties do not have sur-
vivorship rights and each owns a specific undivided interest in the entire title.
Tenancy By The Entirety
A form of ownership offered to a married couple. The main advantage is that a
judgment creditor or one party cannot enforce their liens against the property.
Common Closing Costs for Buyers
The lender must disclose a good faith estimate of all settlement costs. A check to cover your
closing costs will probably have to be a cashier’s check. The title company or other entity con-
ducting the closing will tell you the required amount for:
Loan origination fees.
Points, or loan discount fees you pay to receive a lower interest rate.
Private mortgage insurance premium.
Insurance escrow for homeowners insurance, if being paid as part of the mortgage.
Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and
insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or
taxes for you.
Deed recording fees.
Title insurance policy premiums.
Inspection fees—building inspection, termites, etc.
Prorations for your share of costs such as utility bills and property taxes.
A Note About Prorations. Because such costs are usually paid on either a monthly or yearly basis, you might
have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you
back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a
bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the
month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would
owe for the first 5 days. The bill would be prorated for the number of days in the month, and then each person
would be responsible for the days of his or her ownership.
What to Keep From Your Closing
The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called
a HUD 1 statement, itemizes all the costs associated with the closing. You’ll need for income tax
purposes and when you sell the home.
The Truth in Lending Statement summarizes the terms of your mortgage loan.
The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage
obligation and the agreed-upon repayment terms.
The deed transfers ownership of the property to you.
Affidavits swearing to various statements by either party. For example, the sellers will often
sign an affidavit stating that they have not incurred any liens on the property.
Riders are amendments to the sales contract that affect your rights. For example, if you buy
a condominium, you may have a rider outline the condo association’s rules and restrictions.
Insurance policies provide a record and proof of your coverage.
Radon in Homes
Radon is an invisible, odorless gas that is a natural radioactive decay product of
uranium, a common element in soil and rocks. Radon gas is considered harmless
when dispersed in outdoor air but can be a serious health hazard when trapped in
Radon gas can seep into a home from the soil through dirt crawlspaces, cracks in
the foundation and walls, floor drains, pipes and sump pumps. Radon can enter
any home, old or new, even those with no visible cracks. Each building is unique,
and the ground beneath it is also unique. Two houses side-by-side can have totally
different radon levels. The only way to know what the radon levels are inside your
home is to measure them.
Radon also can enter a home through the well water. If your water contains high
levels of radon, the radon gas escapes into the household air when the water is
running. The EPA says, “The radon in your water supply poses an inhalation risk
and an ingestion risk. Research has shown that your risk of lung cancer from
breathing radon in air is much larger than your risk of stomach cancer from swal-
lowing water with radon in it.”
Tips on Packing
1. Use strong containers that are in good condition and can be secured
tightly with twine or strapping tape. These can usually be purchased
from your moving company. Purchase special boxes for dishes, wardrobe,
and other special items.
2. Label each box with its contents, which room it should go in, whether
it is fragile, and whether it should be loaded last so as to be unloaded
3. Don’t load more than 50 pounds into any one box, and make sure that
the weight is evenly distributed.
4. Cushion contents with newspaper or other packing material to prevent
breakage. Use newsprint paper or tissue paper for items that might be
soiled by newspaper. Towels and cloth napkins are great for wrapping
5. Pack books tightly in small boxes. Alternate bindings and wrap valuable
6. Have your rugs and draperies cleaned before moving and leave them
in their wrappings for easier handling.
7. Remove all breakables and liquids from drawers and pack them sepa-
rately. Seal medicines and other containers to prevent leaking and pack
them in a leak-proof bag or container.
8. Pack linens and clothing in drawers, but don’t overload them.
9. Carry all valuables with you. Do not pack jewelry, documents, coin or
stamp collections, or anything that will be difficult to replace. The con-
tents of a safety deposit box can be moved for you by your bank.
Moving Timeline and Checklist
One month before your move:
Arrange for moving your furniture and personal belongings either by hiring a moving com-
pany or renting a truck. Get estimates from several moving companies or truck-rental compa-
nies and be sure to obtain a hand truck (appliance dolly) if you’re moving yourself.
Gather moving supplies: boxes, tape, rope, and anything else you might need.
Plan your travel itinerary and make transportation and lodging reservations in advance if you
are driving to your new home (leave a copy with a friend or relative).
Some moving expenses are tax deductible, so you will want to save your moving expense re-
ceipts (if the move is employment-related) for tax deductions, including meals, lodging, and
gasoline. Record expenses incurred during your house-hunting trips.
Develop a plan for packing, such as packing last the things you use the most. See page 47.
Notify others of your new address: post office, charge accounts, subscriptions, relatives and
friends, national and alumni organizations, church, mail order clubs (books, videos, cata-
logues), firms with which you have time payments, and your past employer to make sure that
you receive W-2 forms and retirement-account information. Save your old address labels to
speed up filling out change-of-address forms for your new address.
Notify federal and state taxing authorities or any governmental agency necessary.
Two weeks before your move:
Notify and get refunds from your present utilities: gas, electric, water, cable, and phone. Ar-
range for services at your new address. Notify long-distance phone company and arrange for
service at your new address.
Have your car serviced if you are driving a long distance to your new home.
Recruit people to help you on moving day.
Arrange for someone to take care of your pets and children during the move.
Confirm moving company or rental truck arrangements.
One day before your move:
Keep moving materials separate so they don’t get packed until you are finished.
Pick up rental truck if you are moving yourself.
Fill up your car with gas and check oil and tires.
Additional Moving-Checklist Items
Decide what to move and what not to move. Possibly have a garage sale (extra cash and less
move). See “Tips on Having a Garage Sale” on the next page.
Transfer your bank accounts. Your new bank will be happy to open your account by mail.
Contact your local credit bureau to find out if they are on the same system that your new
home town subscribes to; if not, they will be able to transfer your credit file.
Request records from doctors and dentists, including eye-glass prescriptions, dental x-rays,
Obtain your children’s school records to make for an easier transfer.
Draw up a floor plan of where your furniture should be placed. This will help avoid confusion
for you and your movers.
Pay existing bills and close out local charge accounts.
Arrange any special movers which may be necessary for an expensive piano or to break down
and move a pool table or above-ground swimming pool.
Cancel or transfer deliveries, newspaper, garbage collection, etc. Coordinate the transfer of
gas, electric (water and sewer when not handled by title company) with the next occupant of
your old home as well as with the previous owner of your new home, so as to avoid lapses in
service and extra re-start expenses.
Check on personal items that might be at the photo shop, in a safe-deposit box, at a
neighbor’s house, on lay-away, or in a repair shop (e.g., shoe repair, jewelry store, small-
appliance repair, dry cleaners, or dressmaker).
Make arrangements for transporting your plants and pets. See pages 50 and 51.
Save the phone book from your former city residence for tying up loose ends or for future
Transfer insurance policies or arrange for new policies.
Gather all valuables, jewelry, important papers (birth certificates, deeds, documents) to take
with you personally.
Pack an arrival kit of necessities just in case you arrive before the mover, if applicable.
Purchase moving insurance. Your mover’s liability for lost or damaged goods will not equal
their replacement cost. Have valuable items appraised.
Check with your attorney about your will, if crossing state lines.
Ask for professional referrals if available (e.g., doctor, accountant, etc.)
Moving With Children
(Adapted from information at www.MoversGuide.com.)
If you think moving is hard on adults, imagine what it’s like for children. They’re starting over and
trying to meet new friends while getting used to a new home, neighborhood, and school. Think
about your children’s specific needs before, during, and after the transition and you’ll make a big
difference in how your children feel about the move and how they adjust afterwards.
BEFORE THE MOVE: PREPARING
Give your children a chance to express their feelings, and be honest about your own feelings.
Children who have a chance to express themselves work through their doubts more easily.
Help children compile a list of phone numbers and addresses of friends, relatives, and other
important people. Knowing they can stay in touch with these people will be reassuring.
Take your children to your new home before you move and explore the new neighborhood and
town or city together.
Try to line up some activities in which your child can participate after the move: a sports Group,
music lessons, or a scouting troop. Not only will activities like these keep your children involved,
but they will help the kids feel like part of the group.
DURING THE MOVE: REMEMBERING WHAT’S IMPORTANT
Stay as upbeat and calm as you can. Your own mood will impact your children’s moods.
Involve your children in the packing. Older children can put their own belongings in boxes, and
children of all ages will enjoy decorating the boxes containing their things.
Stick to your routines. Have meals at the same times you normally do.
Don’t pack things that your children treasure. Take special blankets, favorite books, and other
prized items in the car or on the plane with you.
Help your children say goodbye to the important people in their lives. For their friends, a party
is a fun way to celebrate the friendship.
For many families, moving day means a long car trip or a cross-country flight. Prevent backseat
blues and airline angst by adding travel fun and games to your plans. See the next page for ideas.
Allow your child to bring an album with pictures of their old home and friends. This will allow
them to express their feelings and provide you with a chance to reassure your child that it is
natural to feel loss and initial discomfort with such a big change.
AFTER THE MOVE: GETTING SETTLED
To make your new home seem more like home, hang your child’s or family portrait in a promi-
nent location or create a tabletop display of family photographs.
Take pictures of the new home, neighborhood playmates, family members, and school. Start a
new family album to show there is fun and family togetherness available at the new home.
Don’t spend too much time unpacking In the first few days, take time to enjoy your new home
with your family. Take walks and check out local restaurants. Above all, listen. Be there when
your children get home after the first day at their new schools, even if it means having to leave
work early. Ask often how things are going, and take time to listen.
Moving Your Pets
Cats and Dogs
Cats and dogs can either be shipped by air or taken along in the car. If you are flying to your new
destination, your cat or dog can ride in the baggage compartment. Your pet will need a health
certificate from your vet. Call the airline in advance to find out about special boxes they may
have. If you are going to make a container for your pet, make sure that the container complies
with airline regulations. It is a good idea to put a piece of clothing with your scent in the animal’s
box so he/she feels more at home.
If you aren’t flying with your pet but are having it shipped by air, make sure that someone is on
the other end to pick your pet up at the airport and take care of him/her until you arrive. The
easiest way to care for your pet before your arrival is a kennel. Many kennels can take your pet
several days before your move (keeping him/her safe and out of your way). Or you can take your
pet to the airport and arrange to have a kennel on the other end pick him/her up and take care of
him/her until you arrive.
Think twice about taking your dog or cat with you on a long cross-country trip. Not only can ani-
mals get car sick, but being cooped up in a car all day can make them nervous and upset. They
must be fed and have plenty to drink (make sure that you take along a water dish), they have to
make “rest stops,” and they have to be on a leash to keep them from running off anytime the car
door is opened.
Some motels and hotels don’t allow pets. Others have special facilities for handling travelers’
pets. Call in advance and check out the available literature on hotels along your route. National
chains usually publish such information.
Hamsters, birds, mice, and such can be transported in the family car fairly easily. Make sure that
the animals have enough food and water in their cages and are out of drafts or extreme tempera-
tures. Cover cages with a cloth to keep the pets quiet and restful.
It is not practical to move fish in their aquarium. A gallon of water weighs eight pounds. Plan on
giving the fish away and restock the aquarium when you arrive at your new home.
Your veterinarian and pet stores are also valuable sources of information.
Moving Your House Plants
You can take your plants with you when you move without harming them. Here are
Call your local U.S. Department of Agriculture to check on regulations if moving
from one state to another. Many states have restrictions on certain kinds of
plants to prevent importing bugs or pests that can destroy valuable cash crops in
A couple of weeks before you move, prune plants to facilitate packing. Consult a
florist or a plant book for instructions.
A week before you move, put your plants in a black plastic bag. Prior to placing
your plant in the bag, place a bug/pest strip, conventional flea collar, or bug
powder in the bag. Close the bag and place it in a cool area overnight. This will
kill any pests on the plant or in the soil.
The day before you move, put your plants in cardboard containers. Make sure
that they are held in place by dampened newspaper or packing paper. Use paper
to cushion the leaves and place a final layer of wet paper on top to keep them
moist. Water the plants normally in summer, a little less in winter.
On the day of your move, set the boxes aside and mark “DO NOT LOAD” so they
won’t be taken on the moving van.
On the day you leave, close boxes, punch air holes in the top, and load them in
When on the road, be careful where you park your car. Look for a shaded area in
the summer and a sunny spot in the winter.
Unpack the plants as soon as you can after arriving. Remove plants through the
bottom of the box in order to avoid breaking their stems. Do not expose the
plants to much sunlight at first. Let them get accustomed to more light gradually.
If you must leave your plants behind, take cuttings. Put them in plastic bags with
wet paper towels around them.
Tips on Having a Garage Sale
1. Allow plenty of time—three or four weeks—to prepare for the sale.
2. Choose a date that will not conflict with holidays.
3. Weekends are more convenient for more people than weekdays.
4. Your sale is likely to attract more people if you join together with neighbors in an effort to have
more merchandise. Some homeowners’ groups are sponsoring neighborhood sales that are prov-
5. Practical household goods are popular items; adult clothing has less appeal.
6. Merchandise your items attractively in neat, clean surroundings.
7. Cluster like items together; place the more desirable items in the back of the garage so brows-
ers are urged to look at other merchandise on their way to the most popular items.
8. All items should be clean, polished, and in good repair.
9. Locate your appliance table near an outlet so customers can try before they buy!
10. Be sure that there is adequate parking space and a place to load large items.
11. Have plenty of bags and boxes for packing and newspapers for wrapping glass items.
12. Place a classified ad in the local paper. Include 3 to 4 items for sale, directions, and other de-
13. Take advantage of free publicity on bulletin boards in grocery stores and other public places.
14. Provide directional signs to your property.
15. If your home is listed for sale, have flyers about your home available for people to take.
16. Visit other sales to form an idea on how to price things. Be prepared to bargain down your
17. Post a notice that all sales are final and payment must be cash.
18. Have plenty of change in a cash box that is kept in a protected spot. Keep a record of sales,
especially when there are several sellers. One recording method that is simple and efficient is to
use small white stickers for prices. When an item is purchased, remove the sticker and place
it next to the name of the seller on a piece of paper.
19. On a hot day, have ice water or lemonade available so people will stay longer, and on cold
days serve hot chocolate.
20. Tell your real estate agent about some of the major items in your sale. She/he may have a
client looking for just that thing! One person’s trash is another’s treasure!
Glossary Of Terms
Abstract of Title
The summary of the public records relating to the ownership of a particular piece of land. It represents a short legal
history of an individual piece of property from the time of the first recorded transfer to present.
Consent to an offer to enter into contract.
Adjustable Rate Mortgage (ARM)
A mortgage in which interest and payment rates vary periodically, based on a specific index, such as 30-year
Treasury Bills or the Cost-of-Funds index.
Money credited or debited to either/both buyer and seller at closing, including real estate taxes, association fees,
garbage fees, rents, etc.
A mutual-consent, legal relationship in which a seller or buyer engages a broker-agent in the sale or purchase of
A licensed person who represents the seller (and/or buyer) and who provides market assessment, offers sales or
buying strategy, recommends various services and sources important to the seller or buyer, is a member of the
National Association of REALTORS (NAR), and subscribes to NAR’s strict Code of Ethics.
A method by which monthly mortgage payments are equalized over the life of a loan, despite the fact that the
proportion of principal to interest changes.
Annual Percentage Rate (APR)
The total finance charge (interest, loan fees, points) expressed as a percentage of the mortgage amount.
A professional and unbiased written opinion of a property’s value that is based on recent, comparable sales; quality
of construction and current condition; and style of architecture.
Increase in value to any cause.
The price at which a property has been placed on the market for sale.
The established value of a property for tax-assessment purposes, which may or may not reflect market value.
Assumption of Mortgage
The taking of title to property by a grantee, wherein he or she assumes liability for payment of an existing note
secured by a mortgage or deed of
Glossary Of Terms (cont)
A short-term mortgage, generally at a fixed rate of interest, to be paid back in predetermined, equal monthly
payments with a large final payment for the balance of the loan to be paid at the end of the term.
A person licensed to represent home buyers or sellers for a contracted fee. Brokers manage real estate offices and
employ licensed agents to sell properties.
A short-term mortgage made until a longer-term loan can be made; it’s sometimes used when a person needs
money to build or purchase a home before the present one has been sold.
State and local laws that regulate the construction of new property and the rehabilitation of existing property.
A limit on the total amount an interest rate can be increased in a specified time and over the lifetime of an
The taxable profit derived from the sale of a capital asset. A gain is the difference between the sale price and the
basis of the property, after making appropriate adjustments for closing costs, fix-up expenses, capital
improvements, allowable depreciation, etc.
The final settlement at which time the title is transferred from seller to buyer, accounts are settled, new mortgages
are signed, and all fees and expenses are dispersed or satisfied.
All fees, taxes, charges, commissions, surveys, lender fees, inspection fees, and other costs paid by the buyer and/
or seller at the closing.
A previously agreed upon percentage of the home’s sale price paid to the listing and selling agent(s).
Similar properties in type, size, price, and amenities that have sold recently, been adjusted, and are used for
comparison in the appraisal report.
Real estate ownership in which a property owner has title to a specific unit but shared interest in common areas.
A condition that must be satisfied before a contract is binding.
An agreement to do or not to do a certain thing.
Glossary Of Terms (cont)
Contract for Deed
A contract ordinarily used in connection with the sale of a property in cases where the seller does not wish to
convey title until all or a certain part of the purchase price is paid by the buyer.
Contract of Title
A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title together with
any other elements or records that may affect the marketability of the title.
Most popular home financing form not insured by Federal Housing Administration (FHA) or guaranteed by
Veteran’s Affairs (VA). Available from many lenders at varying rates, terms, and conditions.
Clause in an ARM permitting conversion from an adjustable loan to a fixed-rate loan.
An offer made by a buyer or seller to the other party, responding to the asking price or a subsequent adjustment to
that price to complete a purchase of sale.
Certificate of Reasonable Value. A document of appraisal issued by VA establishing their opinion of the maximum
A term used by REALTORS® that encompasses all that a buyer sees from the street that may induce the buyer to
look more closely at the property.
A legal “instrument” that conveys the title to a property from seller to buyer.
State and federal regulations that require sellers to disclose such conditions as whether a house is located in a flood
plain or if there are any known defects that would affect the value of the property.
Additional charges made by a lender at the time a loan is made. Points are measured as a percent of the loan, with
each point equal to one percent. These additional interest charges are paid at the time a loan is closed to increase
the rate of return to the lender so as to approximate the market level.
The buyer and lender determine the down payment requirements during the pre-qualification process. The down
payment is usually expressed as a percentage of the purchase price: e.g., 0%, 5%, 10%, 20%, 25%, 30%.
Earnest Money (Escrow Deposit)
Money paid by the buyer at the time an official offer to purchase is submitted to the seller, intended to demonstrate
the good faith of the buyer to complete the purchase. Earnest money is applied against the purchase price when the
sale is finalized. Under certain conditions, the earnest money may be forfeited if the buyer fails to complete the
purchase under the terms of the sales contract.
Glossary Of Terms (cont)
A right to use the land of another.
A condition that limits the interest in a title to property, such as a mortgage, deed restrictions, easements, unpaid
The difference between the sale price of a property and the mortgage balance owed on the property.
A mortgage based on the borrower’s equity in their home rather than on their credit worthiness.
A third-party account used to retain funds, including the property owner’s real estate taxes, the buyer’s earnest
money, or hazard insurance premiums.
The trading of equity in a piece of property for equity in another property.
Fair Market Account
The highest price an informed buyer will pay, assuming there is no unusual pressure to complete the purchase.
The Federal National Mortgage Association (FNMA) is a privately owned corporation created by congress to buy
mortgage notes from local lenders and provide guidelines for most lenders to use to qualify borrowers.
The act or process of estimating values of real estate or any interest therein for a fee.
A loan made by a local lending institution and insured by the Federal Housing Administration, whereas the buyer
pays the premium.
A lender’s agreement to make a loan to a specific borrower on a specific property. An FHA or Private Mortgage
Insurance (PMI) agreement to insure a loan on a specific property, with a designed purchaser.
A mortgage with a set interest rate for the entire term of the mortgage.
A loan insured by the Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated
corporation to support the secondary-mortgage market.
A legal procedure whereby mortgaged property is seized and sold as payment for a debt in the event of default.
Glossary Of Terms (cont)
The nickname for Federal Home Loan Mortgage Corporation (FHLMC), Freddie Mac is a federally controlled and
operated corporation to support the secondary-mortgage market. It purchases and sells residential conventional
This mortgage offers low initial monthly payments that increase at a predetermined rate and then cap at a final
level for the duration of the mortgage.
A formal survey of a home’s structure, mechanical systems, and overall condition, generally performed by an
inspector or contractor.
A policy available to the buyer or seller as insurance against unanticipated home-repair costs.
A hazard insurance policy covering, at the very least, the appraised value of a house and property.
A written stipulation contained in an “offer to buy” that makes the sales contract predicated upon the findings of a
professional home inspector.
Long-term debts that usually extend for more than one month.
The predetermined charge or fee paid to a lender by the borrower for the use of monies loaned.
The holder of a mortgage or the permanent lender. Any person or institution that invests in mortgages.
Joint ownership by two or more persons with right of survivorship; all joint tenants own equal interests and have
equal rights in the property.
A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey
title until all or a certain part of the purchase price is paid by the buyer.
Lease Purchase Agreement
The buyer makes a deposit for the future purchase of property with the right to lease the property in the interim.
A legal claim against a property that must be paid when the property is sold.
A contract through which a seller agrees to terms and fees with an agent who will sell the property to a buyer.
Glossary Of Terms (cont)
A written promise by a lender to make a loan under certain terms and conditions. These include interest rate, length
of loan, lender fees, annual percentage rate, mortgage and hazard insurance, and other special requirements.
The relationship between the amount of a home mortgage and the total value of the property.
A commitment made by lenders on a mortgage loan to “lock in” an interest rate pending mortgage approval. Lockin
The actual price at which a property is sold.
The price that is established for a property by existing economic conditions, property location, size, etc.
Merchantable title, free and clear of objectionable liens or encumbrances.
Mold is a superficial and often woolly growth produced on damp or decaying organic matter or on living
organisms. See www.epa.gov/iag/molds/moldguide.html for a guide that provides information and guidance for
homeowners and renters on how to clean up residential mold problems.
A legal claim received by the lender on a property as security for the loan made to a buyer.
The lender of money or the receiver of the mortgage document.
An independent, third-party, licensed broker who arranges loan transactions between lenders and borrowers by
facilitating the application and approval process.
Mortgage Insurance Premium (MIP)
The consideration paid by a mortgagor for mortgage insurance either to the FHA or a PMI company. On an FHA
loan, the payment is one half of one percent annually on the declined balance of the mortgage. It is a part of the
regular monthly payment and is used by the FHA to meet operating expenses and provide loss reserves.
The borrower of money or the giver of the mortgage document.
Glossary Of Terms (cont)
Multiple Listing Service (MLS)
A system through which participating brokers agree to share commissions on a predetermined percentage split on
the sale of properties listed on the system.
This fee is a supplemental fee paid by buyers to lenders, usually stated as a percentage or as points.
Any property which is not real property: e.g., money, savings accounts, appliances, cars, boats, etc.
Common real estate acronym meaning Principal, Interest, Taxes, Insurance.
A single percent of the loan principal, often charged by the lender in addition to various fees and interest.
When a borrower pays off an entire mortgage before the scheduled payoff date.
A fee included in the mortgage agreement that is required of the borrower in the event the loan is paid off before
the due date. Look for a clause that says, “There shall be no prepayment penalty.”
An informal estimate of the “financing potential” of a prospective borrower.
The amount of money borrowed against which interest and possibly fees will be charged. OR: One of the parties to
Private Mortgage Insurance (PMI)
Insurance issued to a lender by a private company to protect the lender against loss on a defaulted mortgage loan.
Its use is usually limited to loans with high loan-to-value ratios. The borrower pays the premiums.
A written contract that contains a promise to pay a definite amount of money at a specific time in the future.
Proportionate division of expenses based on days or time occupied or used by the seller and/or buyer.
A written, legally binding contractual agreement between a buyer and a seller for the purchase of real estate.
Ability of a borrower to satisfy a lender’s mortgage-approval requirements.
Glossary Of Terms (cont)
A colorless, odorless gas formed by the breakdown of uranium in sub-soils. It can enter a house through cracks in
the foundation or in water and is considered to be a hazard. Your REALTOR ® can supply a radon brochure.
Any land and whatever by nature or artificial annexation is a part of it.
The recommendation by one agent of a potential buyer and/or seller to another agent either locally or long distance.
The process of applying for a new mortgage to gain better terms or use of equity.
A firm or person specializing in advising buyers or sellers on relocating to different and/or new communities.
There are designations for REALTORS that indicate additional educational training. Look for the Certified
Relocation Professional (CRP) designation.
The Real Estate Settlement Procedures Act requires a precise listing of all closing costs for both sellers and buyers.
Return on Investment (ROI)
The profit gained as the result of money spent on an improvement or addition to a home or property.
Settlement Disclosure Statement
A statement or list providing a complete breakdown of costs involved in finalizing a real estate transaction
prepared by the lender’s agent prior to closing and reviewed at closing by the buyer and seller.
The process by which a parcel of land is measured and its area ascertained. Title companies study the survey to
check for encroachments.
A legal document that defines the property, right of ownership, and possession.
An outstanding claim or encumbrance on property that affects marketability.
An insurance policy that protects the buyer against errors, omissions, or any defects in the title.
A highly detailed search of the document history of a property title for the purpose of identifying any and all legal
encumbrances to the property prior to title transfer to a new owner.
Glossary Of Terms (cont)
The Department of Veterans Affairs has made guaranteed mortgages available through banks and other lending
institutions to active military personnel, veterans, or spouses of veterans who died of service-related injuries.
A special suspension of zoning laws to allow the use of property in a manner not in accord with existing laws.
The final inspection by the buyers, usually in the company of the buyers’ real estate sales agent, to ensure that all
conditions noted in the offer to purchase and all seller-related contingencies have been met. This inspection is most
often completed immediately prior to the closing and after the seller has vacated the premises.
Virtually all local communities have established specific restrictions for land use, new construction, and
remodeling activity. These are available to you through a local regulatory department such as the Building
Inspector’s Department or office or the Planning and Zoning Board.