Buying a home is an exciting and potentially confusing prospect. It is important to understand your rights and any legal issues that might be applicable. Real estate agents, open houses, paperwork and more should be understood before the process begins.
Before You Buy
- Can you afford to buy? Before buying a home, it is a good idea to do a little readiness check and homework. It also is important to be sure your finances are in order and that buying would be appropriate at this time.
- Get help with purchase. Connecticut offers homeownership assistance through the Department of Housing and Urban Development.
- Research the neighborhood. Learn about the areas where you are considering to live and take some time to monitor the market in that area. Read the papers and study the home sales. Research available homes and their listing prices.
- Gather information. Begin visiting homes during their open houses and make note of features, expenses and what you can expect for comparison and informed decision making.
Working with a Real Estate Agent â€¨
There are many benefits to working with a real estate agent. The listing agent must represent the seller of the property and is not allowed to advise the buyer. Hiring your own agent protects and serves you, the buyer. Real estate agents earn a commission that is commonly paid for by the seller, but ultimately the cost is figured into the sale price, so in effect the buyer is funding the commission in the end.
- Experience: Hiring an agent gives you're a professional's experienced advice to guide you through the complicated home buying process. The agent you hire works in your best interest and not the seller's.
- Red tape: Paperwork, home inspections, mortgage broker selection, price and repair negotiations will be made on your behalf. A real estate agent will prescreen the homes you look into, saving you time and focusing your home search. Real estate agents have access to all the home sales, houses on the market and they know what is customary in their area of expertise.
Finding a real estate agent in Connecticut is similar to finding a real estate agent in many states. Keep in mind:
- You should consider the agent's personal integrity and reputation.
- The agent should have knowledge of the area where you're considering a home purchase.
- Verify if the agent is licensed in Connecticut.
- Ask lots of questions, including the commission expected, the time span of representation with the agent and whether your agreement will be an exclusive right to represent, exclusive agency right to represent or an open right to represent, as well as the agent's history of home sales in the area in the last year.
- When interviewing agents, be sure to get a list of referrals from previous clients as references. It is a good idea to select two or three agents for consideration before making your final decision.
- The Connecticut Association of Realtors information for homebuyers' booklet contains further details.
Choosing a Lawyer
- You will need to retain a lawyer for a portion of your home purchase. A lawyer will assist in assuring the mortgage documents are in order.
- Getting legal help with the mortgage commitment letter, Good Faith estimates of Closing Costs, escrows and proper calculation of lender's fees is crucial.
- Title insurers, friends, family, federal, state and local bar associations all have information and lists of lawyers who work in real estate.
- Discuss all fees up front and degree of representation and protection to avoid unnecessary confusion.
Connecticut's Property Disclosure
- Sellers must disclose what they know about their property and any problems of which they're aware. Issues that must be disclosed in writing by the seller to any potential buyer include infestations, water leaks, hazards, structural damage, fire damage and neighborhood issues to name a few, to any potential buyer.
- The property disclosure is made via a special form, in writing and signed by the seller. It is common to see these forms at open houses and at minimum before making an offer on the property. Your real estate agent or attorney will be able to explain which disclosures are required. Regardless of whether it is specifically called for, many agents are insisting on full disclosure forms.
- Property owners are required in all states to disclose lead hazards. See the EPA's website for further information on buyer's rights and seller's obligations in this matter.
- The purchase agreement contract is basically a form with fill-in-the-blanks.
- Purchasing agreements must include the purchase price, total down payment and closing date. The purchase agreement also specifies who, buyer or seller, will pay for which settlement or closing costs, the type of loan you are applying for, the interest rate, term of the loan and the date by which the loan must be in place.
- Oral contracts for purchase are not enforceable.
- Mortgage lenders require an appraisal on the property. The appraisal is paid for at closing as part of the mortgage fees. The appraisal determines the average value of the home you're looking to buy in comparison with other similar homes in similar neighborhoods.
- Home inspections are an evaluation of the property in order to give the buyer an idea of what is wrong with the house that could change the value. A detailed report will be made. The buyer usually pays for this inspection. Find an inspector in Connecticut at the websites for ASHI (American Society of Home Inspectors) or CAHI (Connecticut Association of Home Inspectors).
- Additional inspections you may discuss with your real estate agent and lawyer include pest inspection, water analysis, radon gas test, lead hazard, septic inspection (if applicable), well water test and underground oil tank inspections.
Legal Title Issuesâ€¨â€¨
- Title search and insurance are legal issues your lawyer can assist you with. A title search is performed to verify the home you're buying is free from liens that could keep you from taking possession of the property. Liens on the title affect the seller's legal ownership and ability to transfer the property title. Probate, construction, tax and other liens are put on record for the property's title in the town records. Uncovering any problems with the property's legal ownership ahead of time saves time, money and grief.
- Once your attorney has had the title search performed and assuming there are no issues with the title, you will be issued title insurance on the property. Title insurance gives you protection from financial loss from title defects or claims against your property.
Special Considerations for Buying Foreclosure and Short Sale Properties
- When buying foreclosure or short sale properties, it should be noted that the servicer or investor manages the sale of these types of properties and provides a release of title, which is needed for a clean sale and title transfer—or short payoff.
- It is just as important to have a real estate agent in foreclosures or short sales. All the same issues apply as in any home purchase.
- Short sales or foreclosures are not necessarily faster or cheaper than is typical. It can time for the transaction to complete—perhaps months—and purchase price must satisfy the lender or investor holding the property.
- Lenders typically set the procedure for their foreclosures or short sales but usually these transactions are more uncomplicated than traditional home purchases.
As this article provides a brief, general introduction to the topic, you should contact a Connecticut real estate lawyer for legal advice specific to your situation.