BEFORE YOU MAKE AN OFFER TO PURCHASE PROPERTY by Peter Mark Heintzelman, Esq. (Copyright1999 - all rights reserved) How many times in our lives do we spend the kind of money we do when we purchase a home or investment residential property? If there is anytime to surround yourself with competent people, this is it. A good start, is to go to your local mortgage lender, be it a private mortgage company or a local bank. They are waiting for people like you to walk in, so they can prequalify you for a loan. Typically, there is no cost to be prequalified. This way, you can determine how much of a loan you can obtain; that way you know the price range for property that you want to purchase. This prequalification process also helps you estimate realistically the out-of-pocket costs you will incur in your real estate purchase. A second good step, is to link up with a competent real estate realtor, who can help you find the right house for the right price. Massachusetts has experienced changes in realtor practices, and you can now get a "buyers' broker" to represent your interests as buyers, not the interest of the seller, as was long the practice. Most real estate deals in MA today, close with two realtors invovled, the listing (or sellers') realtor, and the selling (or buyers') realtor. The good news for buyers, is that the Seller pays the realtors customarily, unless that is an expense the buyers obligates themselves to pay -watch what is writing!! In otherwords, buyers can normally engage a Buyers' broker to help them find a house, without paying them!! The realtors commonly split the commission which the seller customarily pays. A good local realtor can help you locate the appropriate house for your price range, and will make appointments with listing realtors, to show you the premises before you make that offer. Listen closely to your realtor; their professional experience can be crucial in getting a good deal. The buyers and sellers of Worcester area properties are fortunate to be serviced by an excellent professional realtor community. Your realtor will also help you draw up the Offer to Purchase, which is the written offer presented to the Seller for their consideration and hopeful acceptance. Normally, a Buyer puts down around $500.00 to $1,000.00 deposit with the offer, and if the offer is accepted by the Seller, the deposit customarily is increased to 5% of the purchase price once the parties executed the next agreement, called a Purchase and Sales Agreement. The less deposit you can "get away with", the better! The contents of the Offer to Purchase you make are crucial to a good deal meeting your expectations. Be cautious in filling out the Offer to Purchase form. Its good legal advice to have your completed Offer to Purchase form reviewed by your attorney, before you submit it to the Seller for their consideration. Offer to Purchases should clearly specify the property description, and any items of personal property which may be included in the sale. Buyers should seek also to incorporate "escape valves", such as a satisfactory home inspection, a mortgage contingency clause, a clear and marketable title standard, a liquidated damage clause, and other similar considerations. Is the property to be vacant at closing? How will you verify the existing tenancies and conditions of the premises? Will the Seller contribute towards closing costs? Who pays for the septic system inspection? Any repairs to be completed prior to closing? If the property is a condominium, you may want to reserve in writing the right to withdrawal you offer if your review of condominium rules and restrictions are not what you expected or can live with. These and other questions should be reviewed with your realtor and attorney. In real estate, its whats written that counts, so, make sure your Offer to Purchase is given sufficient attention. Rental property buyers must be all the more cautious and detailed in preparing to make an offer, and in the terms of the offer itself. Did you know you could go to the local code inspection department and/or board of health, to verify if the property has been subject to inspection, for example, to determine if the premises comply with the State Sanitary Code? These records can also show if the current tenants have had to call the code inspectors to complain. Be careful to screen existing tenancies, including reviewing existing tenancy agreements, restricting changes/alterations/additions to tenancies during the pre-closing period. Did you know you can also "screen" existing tenants, by checking Housing Court records, for example, to see if the tenant had been evicted or subject to legal proceedings! Clearly, there are a number of issues and considerations in purchasing any property, not to mention residential rental properties. There are many issues involved in buying residential property, and your satisfaction with the process will be affected by using the right realtor, home inspector, lender, and attorney to represent your interests appropriately. If you are looking at buying or selling residential property, single-family, multi-family, or condominium property, do not hesitate to contact Peter Mark Heintzelman, Esquire; with over 15 years of experience in Massachusetts residential transactions of all kinds, your best interests will be served. |
