The Purchase Contract Principles

1. During the negotiation process, the seller and buyer will agree to the sales price, and sales terms.  

2.  The buyer must tell the seller what type of financing will be used.  The reason being that different financing options will affect the closing costs, the time frame for closing, and contract details. Some of the different financing options are as follows, but not limited to;

     A. Cash
     B. Mortgage Loan
          1. Conventional Loan Type
          2. FHA, or VA insured loan

3. The buyer and seller decide who will pay what closing costs.  The buyer may ask for help with closing costs.  Below are common closing costs.

     A. Title insurance
     B. Loan associated costs,
          1. Loan Origination fee
          2. Processing fees
     C. State Transfer Tax
     D. HOA Transfer Fees
     E.  Real estate broker fee
     F.  Recording fees, fees for wiring, processing, etc.
     G. Prepaid escrow impounds as required by mortgage lender

4. Buyer, and seller should agree on a close of escrow date.

      A. Typically, this will be the amount of time the lender needs to finalize the loan.
      B.  A typical close of escrow is 30 to 45 days, from the contract date.
      C.  Usually, close escrow is towards the end of the month. But, the seller may agree to close anytime during the month, as it is convenient for them.

5. Once these major negotiation points are agreed upon, the due diligence period begins. 

 

      A. The due diligence period is typically 10 days. But, the buyer, and seller may agree on how ever many days, they chose. 

     B. The due diligence period is the time frame for the buyer to investigate the condition of the home. This is the time to order home inspections, and ask for repairs.
     C. This is the time to research factors that are important to to the buyer. For example, verify the schools, transportation, and other lifestyle factors.
      D. The due diligence period is the legal time frame that the buyer has to rescind the offer,  without penalty.

6. By Nevada State Law NRS. Chapter 113, the seller must provide disclosures to the buyer. The seller must provide disclosures that describe the condition of the property.  (You may retrieve booklet describing Disclosures here).  This is the seller's responsibility, during the due diligence period. 

 

         A. The seller must provide a Seller's Real Property Report.

         B. The seller must order immediately CCR's for the buyer to review.

Managing the escrow process.....Las Vegas, Nevada

I..   Once the buyers, and sellers have ratified the purchase contract, you now enter the escrow period. Make every effort to follow the timeline as described hereafter.

   A. Open escrow with the title company, within 24 hours, or one business day.
       1.  Contact the title company. Determine the method for delivering contract.
       2.  Provide a complete copy of your file to the title company.
       3.  If buyers presented a check, give the check to the title company.
       4.  If buyers will be wiring money, wait for written instructions.
       5.  Provide title with contact information for key people involved.
            See my sample form here.
       6. Typically, the buyer's agent will open escrow.  
       7.  Seller's agent may open escrow, also.
       7.  Both agents should verify escrow was opened correctly. 
            a. Verify receipt of earnest money.
            b. Verify the contract, and corresponding documents.
            c. Both agents must read documents produced by title company.
             .
B.  Provide contract, and documents to your real estate brokerage office.
      1.  Follow the checklist as provided by your broker
      2.  All documentation must be provided to broker within 2 days.
      3.  Be aware if your broker requires the original file.

C. Upload documents to your MLS document management system .
     1. Upload your work within two business days. 
     2. Uploading to your system legally time stamps your work.

D.  Deliver a copy to your assistant, if you are using one.


     To be continued.......


   
    
     

Details to be aware of when buying a resale property.

  

      As a buyer, it is a good idea to pay close attention to details of a home.  Damaged, or aged areas of a home can lead to expensive and time consuming repairs later. While small repairs should not totally discourage a home buyer, it is a good idea to enter into the purchase informed to avoid buyer's remorse later. 
     Here are a few areas that should be paid close attention to. 

1. Water damage. Look under kitchen sinks, ceiling area, and especially in bathrooms. 

2. Water stains
3. Mildew in bath tub
4.  Aged wood in cabinets
5. Stained Grout
6.  Needing new paint
7. Worn Linoleum
8. Aged carpeting, 
9. Smoke smell
8. Age of Heating and Cooling System
 

Property Valuation Basics

                            

                                          How to Establish Property Value

                                                       B.P.O. Basics 

                                              (Brokers Professional Opinion)

1. Find homes that sold with similar characteristics
     A. Try to use homes in same subdivision. If you compare with homes outside of subdivision, make note of it.
     B. Homes should be similar in size. Choose homes preferably within 100 feet in size. If you cannot find at least homes within 100 square feet in size, use homes as close in size as possible.
     C.  Try to find homes within 6 years of age.
     D.  Prioritize in using homes with the same size garage, also. 

2. Find, and save pictures for easy visual comparison
    A.  Take pictures of frontage of home.
    B.  Show back yard  landscaping.
    C. Take clear pictures to show upgrades, or distress of home
    D. Pictures should show flooring, ceiling fans, recessed lighting, track lighting, etc.  
    E. Save an aerial map of the area. This helps people understand the area being reviewed.

3. Make note of specific characteristics.
    A. Note lot size
    B. Note number of bath rooms
    C.  Note single story versus multiple levels
    D.  Note square footage of garage. How many cars can be stored
    E.  How many cars can be parked in driveway
    F. Note upgrades to home.
    G. Make note of repairs needed in subject property versus homes that have sold 

   

The Escrow Process - Opening Escrow

     Once the buyer, and seller agree on terms, and sign the purchase agreement, the escrow process begins.

     Escrow must be opened within one business day. That requirement is clearly stated in your GLVAR purchase contract. Do not jeopardize a contract by not opening escrow in a timely manner.  The earnest money deposit must also be deposited within one business day, or as soon as is possible.

      First, contact the title company.  Ask what is the preferred method for opening escrow. Here are some of the common methods for opening escrow. 

   1.  Via uploading documents online
   2.  Agent drops off purchase contract in person
   3.  The title company has a runner pick up the documents from agent

      Prepare a complete copy of your purchase file for the title company. If you are giving them a paper copy, make sure to keep original documents for your broker's file.

     It is equally important to to deliver the earnest money deposit, in a timely manner. If you are delivering documents to the title company, you may deliver personal check, money order, or cashiers check at the same time. It is becoming more common for clients to wire the earnest money. If they are wiring, be sure to receive wire instructions from the title company before transferring any money.

     It is a good idea to provide title company with an information sheet.  Write down the names of the buyers, sellers, agents, and loan officers involved. It also helps you.  You will have a fast reference guide to the contact information for all the people involved.

     The buyer should be aware if  lender requires the earnest money be withdrawn from the home buyer's personal account.  Buyer should discuss down payment, and EMD requirements with lender before transferring earnest money.

     The title company will issue you a receipt for the deposit. If you do not receive receipt within two days, contact the title company. When you do receive the earnest money receipt, forward a copy to the buyer.  Also, put a copy of the receipt in your permanent file.

     At this time is is also a good idea to provide your client with the contact information for the title company. You may also provide a map.  As this is most likely the place they will sign at the closing.  If they are new buyers, you can explain the role of the title company, in their purchase.

     Congratulations. You have now opened escrow. Now, proceed with your other due diligence duties.


Further information coming soon.....