I am buying a small house not in the best shape but anyway. Never owed
a house before.
The real estate guy is nice but how honest and smart he is - I don't
What do I have to do to handle this purchase as best as possible?
What I know is that
1) I pay a deposit, (couple of thousands) and then monthly
installments. So, I need a contact for that and a receipt, right?
2) What do I need to make sure that I really get the house? I sign a
purchase agreement for the house? Who prepares it? Who signs it?
3) I pay the real estate guy or the owner? Or depends?
4) I need title insurance? When is the best to get it? Same day, I
purchase the house?
5) What about a warranty deed?
6) Do I have to go to local agencies to inform them that I am the
owner? Do I have to sign papers with them?
7) How can I find out if unpaid taxes or lien or other stuff is on the
property? And do I need an insurance against that too?
Did I forget something?
P.S. Thanks for the answers to the other thread with the noise
reduction. Some gave good advice.
Because you are asking all these questions, you have established one or both
of the following:
- You are not asking your real estate agent any or enough questions. Any RE
person who can't answer most/all of the questions is incompetent, and you
need to find another one.
- You need to ask 10 friends and/or coworkers which lawyer they used for
their home purchase, and assuming at least one person says "Yeah - I liked
the lawyer who helped me", you hire that lawyer. Prices will vary, but in
upstate NY, the lawyer charged $400.00 for everything involved with my home
|I am buying a small house not in the best shape but anyway. Never owed
| a house before.
| The real estate guy is nice but how honest and smart he is - I don't
he is sly and works for the seller
| What do I have to do to handle this purchase as best as possible?
make sure the realtor makes your 1st offer known to the seller.
they tend to negotiate for their own pockets.
| What I know is that
| 1) I pay a deposit, (couple of thousands) and then monthly
| installments. So, I need a contact for that and a receipt, right?
receipt for deposit...........always.
it will be taken into consideration at the closing.
| 2) What do I need to make sure that I really get the house? I sign a
| purchase agreement for the house? Who prepares it? Who signs it?
sign P&S Agreement contingent on a home and pest inspection.
| 3) I pay the real estate guy or the owner? Or depends?
depends on the circumstances.
| 4) I need title insurance? When is the best to get it? Same day, I
| purchase the house?
| 5) What about a warranty deed?
| 6) Do I have to go to local agencies to inform them that I am the
| owner? Do I have to sign papers with them?
| 7) How can I find out if unpaid taxes or lien or other stuff is on the
| property? And do I need an insurance against that too?
| Did I forget something?
hire a lawyer
| P.S. Thanks for the answers to the other thread with the noise
| reduction. Some gave good advice.
On Mar 25, 12:05 am, firstname.lastname@example.org wrote:
Others have given good advice on mortgage broker and lawyer, but, I
would add that you might want a separate property inspection to see
what it might cost you to fix house that is "not in the best shape."
Otherwise you could be buying a money pit.
On 24 Mar 2007 22:05:12 -0700, email@example.com wrote:
Your contact is the real estate agent. He will explain all the
paperwork and procedures.
Legally, you take possession of the house immediately following the
closing. Unless you pay for it in full the lender legally owns the
house until your mortgage is paid. You and the seller can put
whatever you want in the purchase agreement--the real estate lawyer
makes sure everything is legal. Papers are signed at the closing.
This is where real estate agent, seller, owner, lending agency, and
lawyer are present. Each state has slightly different laws.
Ask him. I brought my (cashiers) check to the closing.
Maybe. I didn't feel like paying $1000.
You get that if you buy from a builder (new construction). Usually
there are no warranties for a used house.
No. In fact, I asked my real estate agent to keep my sale private if
The lawyer does the checking.
Termite inspection. House inspection is a good thing. A house will
require lots of money and buying things you never thought you would
have to buy; be prepared.
If you pay under 20% down you need to pay yearly mortgage insurance.
Avoid it--why pay an extra $1000 per year?
Yes, the real estate agent can explain things, but I wouldn't rely on
a real estate agent, who is working for the seller, to explain
contract terms and what is or isn't in my best interest as buyer.
For that, as others have suggested, you should have a lawyer.
Make sure the contract is reviewed by your lawyer BEFORE you sign it.
In most parts of the US, this isn't true. The mortgage holder has a
first lien on the property, but you in fact own it. If someone slips
and falls, they are going to sue you as property owner, not the bank
holding the mortgage.
You and the seller can put
Beyond what is legal, it's equally important that the contract be
fair, or favorable to you as buyer. For example, you could sign a
contract with no inspection or financing contingency. Perfectly
legal, but very bad for you, if you're a typical buyer.
Typically the closing is handled by one of the attorneys, a title
insurance company, or similar. They will tell you how much to bring
and who to make it out to.
If you're getting a mortgage from a lender other than the seller, then
you are definitely going to need title insurance to get the
mortgage. And I think it's foolish not to get insurance anyway. It
guarantees that you have clear title to the property. Without it,
some party you never heard of could show up years later claiming that
they have a lien or actually own the property, and the problem is
No, a warranty deed is a basic form of deed, where the seller
guarantees that he has clear title to the property being sold. It
has nothing to do with a new home warranty.
Hmmm, how is that possible? Everywhere I'm aware of the deed has to
be recorded. Besides recording and protecting your ownership, it
also is how govts know who is going to pay tax on the property. As
buyer, this step is normally performed by whoever handles the
closing. You don't have to do it yourself. And usually there are
some fees included in the closing to handle charges to get it
A title search is performed, usually by the title insurance company,
who is engaged by your lawyer. And the questions about liens,
taxes, etc is why you should have title insurance. Because if
something is missed in the search and later surfaces, with title
insurance, it becomes the title insurance company's problem to
straighten out, pay, etc. Without it, it's YOUR problem.
I'm pretty sure that you can file all the right papers
with just the name of an agent, who will then be expected
to handle all the paperwork, and field any claims
by people who break their legs on the property.
Alternatively, you could buy it in the name of a trust,
foundation, or business, which happens to be controlled by you.
The municipality can certainly force the agent to reveal
the ultimate owner, although they might need a court order
to do it.
THese days the hard trick is moving enough money to buy
the place without having to do federal paperwork to show
where the money came from and went.
That will depend on what your mortgage company requires,
*YOU* don't want title insurance at all. You just want
the results of a title search. But if you're borrowing
money from a major corp. You probably have no choice.
You're confused. A warranty deed is as opposed to a quit-claim
deed. It's sort of like title insurance from the previous owner.
With a warranty deed the seller is guaranteeing that he actually
own all the property and rights that he's selling you. With
a quit-claim deed, he's just selling you whatever rights he happens
to have, and if someone else shows up with a land-grant from the
king of france giving HIM ownership, that's your problem.
If you're buying land from a family that's been living there
for 200 years, and you plan to die in place, there's not much
to choose between. If you're buying the place and expect to
sell it again on five years, a lot of people are more comfortable
with a warranty deed. If there's any question at all about
clear title, you want a warranty deed, because then the SELLER
gets to pay for the court fight.
So, say he buys the house for cash, with no title insurance. What
happens when a couple
years later someone shows up with a lien on the property that was
missed during the title search?
Or the spouse of the person who sold it to him shows up, saying the
property was really theirs
and the seller committed fraud, the deed that was filed wasn't real,
The buyer needs title insurance, regardless of whether they have a
mortgage or not.
No, you want title insurance, because then it's the title insurance
company's problem and costs, to straighten out, not yours. Suppose
the seller has moved across the country or even worse to another
country, is dead, etc? How easy do you think it's going to be to
recover anything from his "warranty deed" or get him to handle the
problem? The warranty is only as good as the person behind it. Even
if he's living across town, he could have no assets, be judgement
proof, and just say "screw you."
That's what the title search is supposed to find.
The odds of the title search missing something that
the title insurance will actually cover are extrememly low.
That's why title insurance is profitable.
Supposed to is the operative word here. And a title search will only
find what has
been recorded. For example, suppose the seller was a crook and sold
the same property to two other
people at the same time. It can take a week or so for the title
change to be recorded.
The same can be said of fire insurance. Should he skip that too?
But applying that to your property's title, who can survive the loss
of that? It's not just the house, minus the contents, but the land
The title insurance premium is only paid once. Fire insurance, every
Why do you suppose the major corp. wants him to get title insurance?
In case he doesn't have good title and/or someone else challenges it.
That's the same reason the buyer should want title insurance.
Whether he wants to act as a self-insurer or not, one shouldn't tell
him that there is no risk.
The title insurance company does a title search to lower its risk --
and I'm sure one can pay for a title search without the title
insurance. The records are public. One can go back there himself,
look in drawers, get copies made, etc. though I'm sure a newbie
woulldn't find everything -- but there is still some risk in writing
insurance, risk that they will have to pay out, because even a pro
might not find everything, especially if it is not there.
Whether title insurance is more expensive for the risk than other
insurance, I don't know, but I'm sure there are reports on that. If it
was an especially good deal, why aren't there competitors selling
title insurance for less? Even if the reports don't do cost/benefit,
there must be figures on how many title claims are brought, and how
many are successful, and maybe how much the legal costs are, on
One shouldn't bother insuring a 10 dollar, or even a 100 dollar
package sent by mail**, because one can act as a self-insurer and the
odds are he will make the same profit that the other insurer makes,
and if not, he can afford to bear the loss.
One should only insure for losses he can't afford to bear, and the
legal fees to defend a title claim, or the loss of the house are
things most people can't afford to bear.
**Unless he believes the post office etc. will take better care of
something that is insured, so he faces less risk of losing it in the
first place. I don't know if they do or not.
Because the corporate lender benefits from lower exposure
at ZERO cost. Heh, why wouldn't you get ***** [anything]
if you can strongarm someone else into picking up your tab.
Except that the buyer needs to balance the benefit against
the actual cost.
Having said all that, I would not personally skip the title
insurance. But that doesn't mean it isn't something of a
scam -- it is. In CA at least, quite a few title companies
have been clobbered by the state for some very shady dealings.
| Malcolm Hoar "The more I practice, the luckier I get". |
If the house is "not in the best of shape" I would get a *good* home
inspector out to look at the house. Get your realtor to structure your
offer so that it allows you room to renegotiate and/or back out of the
deal if it turns out that he uncovers some issues of which you were not
previously aware. It sounds like you're not 100% confident in your
abilities and I don't mean that in a derogatory way, it just would be a
good idea to get some professional input so you can estimate what work
you need to do to get it in shape and estimate cost of repairs you don't
want to do yourself.
Also keep in mind that there will probably still be one or two things
that even he won't find...
replace "roosters" with "cox" to reply.
Very bad advice. By all appearances, the real estate agent he is
represents the seller, not him. The agent is there to get the
property sold for the seller and earn their commission. The one who
should be structuring the purchase
agreement that spells out contigency clauses to get out of the deal
should be his lawyer, who represents his interests.
It sounds like you're not 100% confident in your
As someone else said, he does not work for you, he works
for the seller and is paid by the seller. You need your own
inspector to find out what needs to be fixed.
You will need more than a down payment (what you call deposit).
Things have changed since I have closed on a home, but there will
be many more fees. You need to talk to a mortgage broker and
get a truth in lending document.
If you put down less than 20% of the price of the house, you will
have to get what is called PMI, private mortgage insurance. You
can prepay that or pay for it every month.
I have never heard of anyone calling mortgage payments installments,
it makes me think you really need to find out more about house buying
before you sign anything.
You need to know what your property taxes will be. You'll have
to pay utilities. Homeowner's insurance. The mortgage company
will want some money in escrow for taxes and homeowner's insurance
payments. Can you afford all of that?
You have a closing at which the house will be turned over to you.
The lawyer will tell you who to make the checks out to.
The mortgage company will arrange for that before you close.
The idea is to make sure the people you are buying the house from
actually own the house and that their aren't any liens on it. You will
pay the mortgage company for that, it's one of the fees I mentioned.
Off the top of my head, I can't think what that is.
I don't think you have to sign anything, and the mortgage company
will have your tax bills sent directly to them. Ditto with your
homeowner's insurance bill.
That is title insurance.
Don't fall for those interest only mortgages, if you can't afford the
house with a regular mortgage, usually you should not be buying one.
Good luck, I hope it works out for you. Please get yourself a book
or something on buying real estate. I know Consumer Reports used
to have a good one, told you everything to look for when picking out
a house, plus the ins and outs of getting a mortgage.
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