Please keep in mind that the following information is not to be intended to be an absolute and/or complete representation of the home buying process in New York. However, it's intention is to give you a general overview of the process, and to allow you to understand it in it's most basic form. Information contained herein is not intended to be complete and/or to replace expert advise from qualified advisors such as a real estate attorney, a real estate agent, an engineer or home inspector, a mortgage counselor, an accountant, and an insurance agent, all of whom you may need to consult with and rely upon in connection with your planned home purchase.
You should have a list of criteria and a price point for your real estate agent to work with so they can locate and show you properties that meet your needs and budget. Your agent can work for you as an "Exclusive Buyers Agent". Please make sure to discuss agency relationships and representation with your agent during your first official meeting and have him or her explain it in detail. You will be required by law to sign an "Agency Disclosure Statement" afterwards. If you need to finance the purchase of your next home, it is recommended that you obtain mortgage pre-approval from a qualified lender prior to beginning your home search. A "Pre-Approval Letter" will give you a better idea of what you can afford and shows sellers that you are serious buyer. You should also select an experienced real estate attorney. If you don't have an attorney your agent can give you the names and contact information for several highly regarded real estate attorneys in the area which you can interview. Your real estate agent cannot and does not give legal advise. That is left up to the attorney but your agent will supply your attorney with all the information needed regarding your purchase.
Offer to Purchase
Once you have found a property you want your agent will supply you with recent comparable sales so you can work together on formulating an "Initial Offer". Offers and counter-offers can be submitted in writing or verbally. "Counter Offers" are often presented verbally. Once you have reached an agreement with the seller on the terms which includes price, contingencies and closing date you now have an "Accepted Offer". After an "Accepted Offer" has been reached the inspection is done. If all goes well with the home inspection then a written "Memorandum of Agreement" is usually drafted by the seller's agent, detailing the terms of the agreement. Copies are distributed to, the seller's attorney, the buyer's attorney, and both real estate agents. This memorandum will be used by the involved attorneys as a basis to draw up the "Purchase Contract". The buyer signs the contract first and at that time gives an "Ernest Money Deposit". Usually closings time is 60 to 90 days but that can vary greatly. All "Cash Deals" can be done as short as 30 days.
Accepted Offer to Inspection
After reaching an "Accepted Offer", you are given a limited time period to conduct a home inspection and/or any other types of inspections, if such are part of any contingency in the agreed-upon offer. Inspections should be done as quickly as possible so you can move forward into the contract phase because until the contract is fully executed the seller has only a verbal, non-binding agreement to sell the property to the buyer. The seller is free to listen to, negotiate, and/or accept other offers until the contract is fully executed.
It is strongly recommended that you use a "New York State Licensed Home Inspector". Your agent can give you a list of home inspectors. The purpose of an inspection is to verify the condition of the home and to allow the buyer to know exactly what he is buying. Even with newly constructed homes, condominiums, and coops it is possible that something could have been overlooked, is not working, does not conform to code, or is otherwise defective. An inspection will typically take 2-4 hours depending on the size and complexity of the property. The "Home Inspector" will go over things with you as he performs the inspection and provide you with a detailed, written report stating his or her findings as well. Other optional inspections you may wish to perform include a fuel oil tank test (which should always be done when underground), a radon test, a septic dye test (if applicable), a water potability and water recovery test (for private wells), asbestos testing, and lead paint tests. Lenders may require any one of these tests, including a termite test. Be sure to ask your lender what is required. This may vary from lender to lender.
Once inspections are completed and you are happy with the results the seller's attorney will draft a "Contract of Sale" and have it delivered with a copy of the existing survey, if they have one, to your (the buyer's) attorney. Your attorney will review the contract draft and then meet with you to discuss and explain it in detail. If any changes are requested by you, your attorney will discuss them with the seller's attorney. Once everything has been ironed out signed contracts are then returned to the seller's attorney with the "Contract Deposit", also called a "Down Payment" or "Earnest Money Deposit" (this down payment amount can be negotiable but is typically 10%). The contract deposit check is made payable to the seller's attorney who holds it in an escrow account until the closing. If you have a mortgage contingency and for some reason are denied a mortgage, your down payment is returned. Once the contract is signed by the seller, your attorney will receive two fully executed copies, one of which will be given to you for your mortgage application. Your completed mortgage loan application and all supporting documents should be submitted as quickly as possible to get the loan process started and get your mortgage commitment which most contracts are contingent on. Ask your attorney to explain the closing costs to you so it's not a surprise. Before closing, your attorney will order a title search of the property. The title company will issue a title report certifying clear title, and issue a title insurance policy to protect the lender (required) and the buyer in the event of a title problem. The title company also performs a property tax search and makes sure there are no violations ie: open permits, missing CO's etc. (required by the lender), as well as a survey inspection. If the existing survey is unacceptable, or if no survey exists, it is in most cases the buyer's responsibility to pay for a new survey.
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Once all conditions of the contract have been fully satisfied, the closing date is scheduled by the attorneys. All parties will be notified including the seller, the seller's attorney, the buyer, the buyer's attorney, the lender's attorney, the title company representative, and usually one or both real estate agents. Once the closing date has been scheduled, you can immediately prepare for moving. Contact utility companies, transfer any funds necessary for closing, and arrange for a homeowners insurance (the original and copies of the insurance policy, as well as proof of payment must be brought by you to the closing). Your attorney should give you a full breakdown of all costs and what you need to bring to the closing table. You will also need a vaild photo ID and he will tell you to bring some personal checks as well.
A final "Walk-Through" of the property is performed by you and your agent just prior to closing. Walk through should be done on closing or a day before. It's best not to do it to far in advance because you want to be sure everything is in working order right before you close. The purpose of the "Walk-Through" is to confirm that nothing has changed and no damage has been done to the home since the time of the home inspection as well as to confirm that all major systems and appliances are in working order and everything that was included in the sale is there. The property should also be completely vacant and at least broom cleaned.
Essential Home Buying Questions & Answers
Please Note: For additional information or clarification of any information provided herein, please consult your real estate agent and/or real estate attorney.