When talking and listening to my buyers, I try, more than anything else to pay attention to their needs, likes and dislikes. Sometimes it is difficult for agents not to overshadow their clients' needs with their own preferences, be it style of house, area of town, nearby amenities, or school district. Below are some points buyers should know prior to looking for a property:
Agency Agreement - Many agents ask their buyers to sign a Buyer's Agency agreement for an extended period of time when they first start working with a buyer. This insures that the buyer will use this agent to purchase their new home, and that eventually, the agent will get paid for their time and effort. Good agents put a lot of time and effort into finding their clients the right home, and should be compensated for this. Agents also should know a lot about construction and values, as well as current trends and possible changes in a market area. To date, I have not asked my buyers to sign this agreement until they submit an offer. I have expected my clients to be considerate of my time and efforts, and appreciative of my knowledge and experience. I found out recently that this is not always the case, but all any agent can do is concentrate on their successes and their clients that value them.
Due Diligence Period/Money - A year or so ago, North Carolina Real estate offers added Due Diligence Fee as an option. This is a non- refundable fee that the buyer pays directly to the seller(s) at the time of an excepted offer, for the sellers to take their house off the market while the buyers get home inspections, loan approval, a survey, and review Home Owners' Association documents, if they apply. Buyers have until 5PM on the day Due Diligence ends to terminate the purchase. If they do terminate, they forfeit this fee to the seller. If a successful closing on the property is reached, the fee is credited to the buyer, as part of the purchase price. Naturally buyers want the Due Diligence fee as low as possible, while sellers want it as large as possible. It is a negotiated amount, many times depending upon the length of the due diligence period, the activity (showings) the house has been experiencing, and asking price of the house.
Earnest Money - Additional money paid by the buyer at the time of an accepted offer, which is held by the listing agency or an attorney until closing, in an escrow account. If a successful closing is reached, it is applied to the purchase price of the property. It is refundable to the buyer, if the buyer terminates the purchase for any reason prior to the end of the Due Diligence period. All buyers should be aware, though, that whoever is holding the Earnest Money cannot release it until the seller has signed a release. If they do not agree to sign a release, the fate of the earnest money may have to be decided by a court of law. This does not happen very often.
Price Negotiation - When a client of mine is interested enough in a property to make an offer, I research the recent comparable sales and current listings in the market area, and advise the clients as to what I think the property is worth. I am usually pretty good at this because of my 28+ years of experience in the Charlotte area as a real estate agent and certified residential appraiser. Many clients listen to my advice, but some do not. Those who do not listen are usually disappointed when they do not get the house, and a buyer who was more realistic with their offer does. All buyers should know that the North Carolina Offer to Purchase contains a clause stating that the property must appraise for at least the purchase price. If it does not, many sellers will lower the agreed upon price, in order to reach closing. A Buyer relying on the Internet free services to determine what to offer on a house is usually not very realistic. Please, please, please listen to your knowledgeable buyer's agent! You will reduce your stress and move into your dream property much more quickly, if you objectively make an offer based upon recently closed comparable sales and current market activity!
Inspections - The problems raised by home inspections are often more difficult to resolve than price negotiations are. Buyers should know that they are free to use any inspection service they want to, have a relative inspect, inspect themselves, or not have any inspections at all. Just because a buyer has inspections done does not mean that the seller is obligated to repair anything. They can choose to not repair a thing, leaving it the buyers choice as to whether they wish to continue with the purchase. I am happy to provide buyers names of inspection services I have worked with in the past, but cannot guarantee they will find everything, or get their report in on time. Buyers should be aware that Radon is becoming more of an issue, even in Charlotte. Prudent buyers should order a Radon inspection, termite inspection, mechanical and structural inspections. If a house is several years old, they should hire an inspector to make sure there is no underground fuel tank on the property. Be aware that some buyer's agents prefer that you hire an "easy" inspector, that will not raise a lot of questions that could be difficult to resolve. I will tell you who I think is most thorough, even if it causes more problems for me in repair negotiations. You should also know that a seller can hire anyone they want to complete repairs, and you can hire your inspector to make sure they are completed correctly. My advice is do not worry about asking for small stuff to be repaired. Also, it may be smarter to settle for a reduction in price, rather than have a seller get repairs done, as they most likely will not have them done in the manner you would. Finally, please be aware that no where in the North Carolina residential offer to purchase contract does it say that a dwelling has to meet current building codes. Unless it is a new home, this should not be something you raise as a requirement when negotiating with a seller about repairs.
Loan Originators - A good loan originator is key for a smooth transaction. I know several of them and can provide contact information to compare interest rates and closing costs. A good question to ask the loan originator is how long will it take to get a loan commitment after we apply for the loan? Be aware that you cannot apply until you have an accepted contract on a property, but you can be pre-approved based upon your income and credit rating.
Survey - If you are buying a property with an individual lot, you want a survey. It is sometimes acceptable to review and use a survey the owner may have had done, but you need to make sure there have been no significant changes to the structures on the lot you are buying, or on the adjoining properties. Pay attention to easements on a survey and determine whether they have a negative affect on you. Review of a survey should be done during the due diligence period, not at the closing table!
Closing Attorney- Obviously you want an honest and competent one. You can use any real estate attorney you like, but sometimes it is a good idea to use one that your agent is familiar with, or that your loan originator suggests. You can compare what various attorneys will charge you to close the sale and do their title search and perhaps save a few dollars this way.
Be Observant - I suggest to my clients that they drive buy the property they are buying several times during the due diligence period, to see what the neighborhood is like. Find out how the commute to work is, where is the nearest grocery store, restaurants, movie theaters. Buyers should also talk to neighbors, who are often full of information. Check out all you can prior to your due diligence period expiring. Remember, you can back out for any or no reason during that period, if you are willing to forfeit your Due Diligence Fee and any money you have spent on inspections.
School Districts - Many buyers in Charlotte are concerned about school district ratings for their own children and future resale. Not everyone has these same concerns, and nearby private schools can outweigh a public school assignment that is not considered to be desirable.
Property Improvements - Many buyers appear to prefer properties that at first glance appear not to need any immediate improvements. They should try to be aware of quick fixes that sellers have applied that do not really meet the buyer's needs. These can be things like fiberglass surrounds in the showers, when you really wanted ceramic tile. Sometimes the more cheaply priced property that needs new tile around the shower right away may be the better choice...
Old Houses - Alright, I do have to confess one weakness of my own: I prefer old houses and old neighborhoods. I like the hardwood floors throughout many old houses, the molding details, and the established trees in old neighborhoods. I love mid-century homes and older. That said, I have sold new houses too, and see the advantages of some of them. Buyers should be ware of what the trade offs are between new and existing construction. They should also know that a house in a new subdivision usually does not start appreciating until the builder has finished building in the subdivision.
Deed Registration - Buyers should know that they could not have the keys to their new home until the deed has been registered in their names at the courthouse. This is for home insurance reasons, and because of this, I tell my buyers they should schedule their closing in the morning on a weekday to allow time for the attorney to get it registered that afternoon and permit them to then pick up the keys. Many attorneys register deeds electronically now, which cuts down on the lag time.
Down Payment Money - The closing attorney is going to expect the buyer to bring a certified check to closing or wire the funds to the attorney's account. Every attempt is made to get a closing statement the day before closing to let you know what the final amount needed to close is. Whether this can be done is often a function of how efficient your lender is and when they get the closing package to the attorney's office.
Utilities - I will remind you to have them switched to your name prior to closing. You should make the calls at least a week in advance, and arrange for all utilities to be transferred to your name on the day of closing. It is not fun to move in your new home with no running water for the weekend, which can happen.
Selling and listing great homes in Charlotte since 1984