Nolo's Essential Guide to Buying Your First Home (66 page)
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Authors: Ilona Bray,Alayna Schroeder,Marcia Stewart
Tags: #Law, #Business & Economics, #House buying, #Property, #Real Estate
BOOK: Nolo's Essential Guide to Buying Your First Home
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TIPSave on attorney fees.
Attorney Fred Steingold notes, “Bringing an attorney to the actual closing can get expensive if the attorney’s time is mostly spent watching people sign papers. Often, a good middle course is for the attorney to receive the key documents for review the day before the closing—which is probably the earliest they’ll be ready—and to report any findings to the buyer by phone. The attorney may also agree to be reachable by phone if a problem comes up at the closing table.”
Have my lawyer there on closing day.
Mackenzie and her husband Don had agreed to buy a fixer-upper within walking distance of their jobs on the University of Michigan campus. “But,” says Mackenzie, “We had a feeling our seller wasn’t the most scrupulous character. He’d been renting out even the damp, gross basement spaces to students, and the place was a total wreck. Our suspicions were confirmed on closing day, when our lawyer discovered an outstanding water bill of some $800. The seller tried first to pretend that he’d paid it (he hadn’t), then to argue that it wasn’t up to him to pay it! It was quite a scene. But our lawyer eventually helped make him understand that he had to pay it in order to transfer the deed.”
Mackenzie and her husband Don had agreed to buy a fixer-upper within walking distance of their jobs on the University of Michigan campus. “But,” says Mackenzie, “We had a feeling our seller wasn’t the most scrupulous character. He’d been renting out even the damp, gross basement spaces to students, and the place was a total wreck. Our suspicions were confirmed on closing day, when our lawyer discovered an outstanding water bill of some $800. The seller tried first to pretend that he’d paid it (he hadn’t), then to argue that it wasn’t up to him to pay it! It was quite a scene. But our lawyer eventually helped make him understand that he had to pay it in order to transfer the deed.”
Unless you’re meeting at the lender’s office, the lender won’t normally send a representative, but will send the documents straight to the closing agent. If questions come up, your mortgage broker will normally contact the lender. The lender feels safe doing this because it knows the closing agent won’t actually finalize the transfer (by recording the deed) until the lender gives its final okay, even if that’s after you’ve all gone home.
TIPWho will answer last questions about your loan?
Many buyers develop new questions on closing day when all the documents are in front of them, such as why the lender is charging certain fees. Closing agents can’t answer these. Make sure that your mortgage broker or, if you have none, your lender, will either be represented at the closing or give you a direct-line phone number and a promise to be available on closing day.
Another person who may be in the room is a notary public, charged with the brief but all-important task of making sure that you and anyone else signing documents are, in fact, who you say you are (they’ll check your photo ID) and stamping the documents to confirm this.
Whether the seller and the seller’s agent or attorney will come to the same meeting as you also depends on local custom. They may handle their end of things separately—the seller has far fewer documents to sign. And signing documents—anywhere between ten and 75 of them—will, in fact, be your main task at the closing.
TIPDifferences with co-op closings.
Co-op buyers normally meet at the co-op attorney’s office, and a representative of the seller’s bank or lender will be there (to bring the stock certificate proving the seller’s ownership of the co-op, which they’ve been holding as security for their loan—and must destroy before you get a new certificate). Other folks in attendance will include an attorney or other representative of the co-op, the attorneys and real estate agents for both sides, a representative of your bank or lender, probably a paralegal who brings the checks, and the seller. Instead of recording a deed, your lender’s attorney might record a UCC-1 financing statement to publicly show its lien on your co-op shares.
Taking a last look at the house before the closing is both fun and vitally important. Never skip this step! The walk-through is your chance to make sure that the seller has (in accordance with your agreement) moved out of the house, made any agreed-upon repairs, left behind all fixtures or other agreed-upon property, and left the place clean and trash-free. Once the house has closed, it’s a lot harder to run after the seller saying, “Wait, I thought you were leaving the stove?!” (You could sue, but you’ll have more interesting things on your mind by then.) Be careful on your walk-through—but also don’t let last-minute jitters make you see major problems when you’re really looking at minor cracks or dust balls.
You’ll normally want to schedule the final walk-through within the five days before the closing, most often the day before, if not on the closing day itself. The closer to the closing day, the more time the seller has to move out completely—but the less time remains to fix any problems. There’s no perfect balance!
Arrive at your final walk-through with your agent. The seller’s agent may also be there as well as, in rare cases, the seller.
CD-ROMBring the “Final Walk-Through Checklist (Existing Home)” provided in the Homebuyer’s Toolkit on the CD-ROM.
A sample is shown below. It lists all the things you should check out, like the windows, faucets, and appliances.
Also bring along a copy of your purchase agreement and any follow-up writings explaining what the seller has agreed to repair or leave behind.
Then take a good, hard look around. Make a list of what remains to be done, and negotiate accordingly. If it’s just a matter of removing the old magazines from the garage, the seller should be able to handle that preclosing. If you find a more serious problem—one that appears to be new or previously hidden, such as a mysterious puddle in the crawl space or a foundation crack revealed after the boxes were moved—quickly get a contractor’s estimate. Then try to negotiate to withhold enough money from the seller’s proceeds to cover repairs after the closing.
Depending on the timing of your walk-through, the sellers may not have actually moved out yet. In that case, focus on whether repairs have been completed, and check that nothing has been removed that should have stayed behind. If, for example, there are holes in the wall where a mirror fixture used to hang, or the light fixtures have been downgraded, bring this up with the seller’s agent. If most of the seller’s possessions are in boxes, ask about trashy-looking items that no one seems to have taken an interest in packing. And if the seller has only a few hours in which to move, your real estate agent might need to get assurances about what will happen (preferably in writing) or, at worst, delay the closing or negotiate to have the seller rent the place back from you for awhile.
Final Walk-Through Checklist (Existing Home)Use this checklist to walk through the house and make sure everything is in good order or repair. You’ll want to make sure that the seller has made any agreed-upon repairs, left behind all fixtures or other agreed-upon property, and left the place clean and trash-free. Add any other relevant items (inside and outside) or questions you may have (such as the name of the architect who did a recent kitchen remodel) to the list. Note any problems and try to work them out with the seller before the closing. If the seller agrees to do additional work or repairs, be sure to get the details in writing, including how the costs will be paid.The keys fit in the locks, keys have been provided for every door, and you know how to use them.
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