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Steps Included in a Real Estate Transaction

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We here it all the time but aren’t too sure what exactly goes on in a real estate transaction. Especially if you’re shopping for your first home, you’ll definitely want to at least have a basic idea of what the process entails. It can be pretty lengthy, depending on how set you and the seller are in your ways.

Signing-Real-Estate-Document-with-Keys-to-Property

Check out the following steps when closing a real estate transaction to avoid getting stuck with an unfair deal.

But here you can get a basic idea of what to expect during the real estate closing process, starting with your offer until after you walk away with the keys.

1. Opening the Escrow

The definition of escrow is an account held by a third party on behalf of two main parties held in a transaction. As you may already be aware, there are lot of details involved in a real estate transaction, and the best way to prevent the deal from becoming unfair on either ends is to have a third party have the money and documents stored until everything is settled.

2. Title Search and Insurance

A title search and title insurance ensure that when you buy a property, nobody else can try to claim it as theirs in the future. The thief could be a revengeful relative that was not included in a will or a tax collector that was never paid.

In this phase, a title office will conduct a title search to make sure that the title is available. If there are any third parties claiming ownership, these issues will be resolved before the ownership of the property is transferred.

3. Find a Real Estate Attorney

It’s highly recommended to work with a real estate attorney in order to get a professional, legal opinion on your closing documents. It’s not common for homeowners to understand each details within them, but an attorney will know exactly what to look for and inform you of any potential problems you may face.

4. Pre-Approval for a Mortgage

It’s not required to close a deal, but getting pre-approved for a mortgage can help you to close it faster, as it shows that you are financially fit to own the property. This can also give you additional bargaining power as well as being offered a rate lock from specific vendors, meaning securing your interest rate for the loan.

5. Negotiate the Closing Costs

While the escrow (the party holding the papers and money) doesn’t provide their service for free, some even charge ridiculous fees to take advantage of consumer’s ignorance. What some consider a junk fee is debatable, but you should look in the details for appraisal review fees, email fees, processing fees, settlement fees, administrative fees, or application review fees.

If you’re willing to put up a fight, you might be able to get some of them waived or reduced. Just keep in mind that legitimate fees can also be inflated.

6. Get the Home Inspection Approval

A home inspection is not always needed, but it’s definitely a good idea to ask for one. At any time you find a problem during the inspection, you have the opportunity to back out of the deal. It’s up to them to either fix it themselves, pay someone to have it fixed, or reimburse you for having it fixed.

7. Get a Pest Inspection

A pest inspection is not covered during the home inspection. You’ll want to make sure that a professional examines each part of the home to ensure that there isn’t a problem. Even a small infestation of termites or ants can lead to a disaster in the future.

Termites can be removed, but make sure it’s done at a reasonable cost before completing the purchase of the home. In fact, if you were already pre-approved for a mortgage, the mortgage company will require that the problem be fixed before you close the deal.

8. Renegotiate the Offer

Even if the seller has already accepted your offer, it’s a good idea to consider renegotiating if the inspector finds any problems. This way, a lower cost of the house can cover the cost of repairs you will need to make. Or, you can keep the purchase price but require that the repairs must be paid for by the seller.

But if the contract already states that you will be buying the property “as is,” there’s not much power you will have in this situation. Just keep in mind that you still hold the power to back out without any penalty if the inspector did find a major problem with the property and the seller won’t fix it.

9. Secure the Interest Rate

At this point in the process, you’ll want to make sure that you have a locked interest rate. A trusted lender will watch rates carefully and inform you when is the best time to lock in so you can get a good deal. Otherwise, you can watch interest yourself online by using your lender’s website or a third party’s mortgage calculator.

It’s important to note that interest rates are almost always unpredictable and change all the time, sometimes several times a day. It can be easy to go insane about locking in the lowest rate, but you shouldn’t hold it against yourself if you found a lower rate the second you locked in. These rates can also vary according to your credit score, geographic location, and type of loan you get, so what you find posted online may not be the exact rate you get.

10. Get Rid of Contingencies

If you are working with a real estate agent, the purchase offer should be reliant on a few factors:

  • Financing at a reasonable interest rate
  • The home passing an inspection without major issues
  • The seller disclosing known issues with the home
  • The home passing a pet inspection with no damages or infestations
  • The seller agreeing to cover agreed repairs

The contingencies should be figured out and stated in writing by the date specified in your offer. But some purchase agreements have contingencies that have constructive approval, meaning they are protested by the specified deadlines.

11. Depositing Funds

It’s common to make an earnest money deposit when signing a purchase agreement, letting the seller that you are serious about your intentions to buy the property. Because the seller will be taking the property off of the market, they will be getting the earnest money if you back out at this point. But if they back out, then the earnest money will be returned to you.

To complete the purchase of the property, additional funds will need to be deposited into escrow. The original earnest money is applied towards the down payment and the rest as well as the closing costs will be due at the time of purchase.

12. Inspect the Proper One Last Time

Before reviewing the documents, you’ll want to walk through the property one last time and make sure it is in the exact condition as when you last saw it. If any damage has occurred between now and the inspection or if anything is missing, it should be reported right away. It may extend the deal, but at least you won’t be suffering in the end.

13. Sign the Papers

The last but certainly not least important step is to review and sign the closing documents – after they have been reviewed by your real estate attorney. Around 100 pages is common, so there is no need to rush through it. You may feel some pressure from the seller, mortgage lender, or notary to get it done, but reading each and every detail is crucial because it will be affecting your finances and life for a long time.

Pay attention to the interest rate, ensuring that it is correct and there is no prepayment penalty. Also compare the closing costs to the estimate you were previously given and report any fees that are 10% over the estimate.

What to Expect

The closing a process of a real estate transaction can seem long and is indeed a lot of work. But in the end you’ll find that your patience and persistence will pay off. It may be a while before the seller or third parties agree to your offers, so you’ll want to stay busy while they work on their part of the deal. Also remember that it’s important to feel confident that you have done your research and have given a fair offer, otherwise, the closing process can take even longer.

Berry K. Tucker & Associates, Ltd.-Oak-Lawn-IL

Our attorneys have years of experience in negotiating during a number of real estate transaction. We will ensure that you get your dream home at the price you want to pay.

Berry K. Tucker & Associates, Ltd.

Our professionals are knowledgeable in a number of areas and have worked with diverse cases, negotiating to provide an effective solution for each client.

If you have any questions regarding the closing process of a real estate transaction, you can give the real estate attorneys at Berry K. Tucker & Associates, Ltd. a call at (708) 425-9530

11 Mistakes to Avoid During Real Estate Transactions

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In order for a real estate transaction to be successful, both parties must be determined and willing to negotiate. In other words, it isn’t often that the perfect home comes up in a search that has everything you want at the perfect price.

Negotiation is Very Important

If you are looking to buy a home right away, working on your negotiating skills and knowing where to begin will be key in order to land the lowest price without pushing things too far. You will first want to get familiar with the market conditions and understand the steps involved in a real estate transaction.

Familiarize yourself with the market area and prices to determine what is considered reasonable as well as determining your counter-offer. But if it’s a seller’s market (where there are more buyers than homes on the market), the seller probably won’t be as flexible to negotiation, so keep this in mind when determining your strategy.

Within each real estate transaction, there are numerous factors to be considered and it’s almost impossible to predict the nature of the negotiation before it happens. But there are key strategies to be aware of so you can best prepare yourself and avoid any mistakes that can end up costing you for the next 15 or even 30 years.

Be sure to avoid the following mistakes during a real estate transaction:

Signing-Real-Estate-Document-with-Keys-to-Property

Make sure to avoid these mistakes when buying or selling your property.

  1. 1. Being afraid to lose the deal
  2. 2. Being too greedy
  3. 3. Only focusing on price
  4. 4. Prioritizing your needs
  5. 5. Threatening with an ultimatum
  6. 6. Taking control of the situation
  7. 7. Not controlling your emotions
  8. 8. Overreacting to their offer
  9. 9. Being nervous about your image
  10. 10. Being overconfident

1. Being Afraid to Lose the Deal

Even if you find the perfect home, you should never be afraid to lose it. Being too determined can only lead to disappointment and missing out on better opportunities. Even if you feel regretful about losing the property for whatever reason, your gut feeling will probably tell you that it wasn’t worth it.

But do keep in mind that you and the buyer or seller are both looking to make the transaction successful; therefore, as long as you are both determined, it is likely that you will both “win” in the end.

2. Being Too Greedy

Nobody will want to make a deal that doesn’t meet their best interests. In fact, being too greedy can actually push people away, causing you to miss your highest bidder or lowest offer because your pride took over. Make sure to consider all offers and stay reasonable with prospects.

3. Only Focusing on Price

Yes price is a big factor but it’s not the only one. If you make this mistake, you could be missing out on some opportunities for a great deal. If you’re the seller, consider adding in some other assets like furniture, washing machine, or refrigerator to make up for a higher price. If this doesn’t interest them there are a number of other terms that can be negotiated in order to get the price you are looking for.

4. Prioritizing Your Needs

Of course everyone will think about how they can benefit from the deal, but they make the mistake of not taking the other party’s interest into account that makes them lose it. To avoid this, get to know the other person and what is important to them.

By learning about their wants and needs, it’s more likely that you can negotiate a deal that will work in both of your best interests.

5. Threatening with an Ultimatum

Getting hasty to end the deal with an ultimatum can be tempting, but always consider stopping the negotiation. Being overly aggressive during the transaction can end up in an accepted but regretted contract or cause the deal to fall through.

In the worst case scenario, they may respond to your aggression by taking legal action because they may feel backed into a corner. Surely you wouldn’t want to feel this way, so it’s best to avoid it altogether.

6. Taking Control of the Situation

It’s common for parties to take control of the situation which gives them the feeling of having the upper hand, but it’s not often that they consider how it will affect the other person. The deal will most likely end up falling through because they feel weak or have no control.

Instead, show that you can be humble and allow them to take partial control. This way they can feel confident that they are making the best decision and end up in a fair deal between both of you.

7. Not Controlling Your Emotions

If the other party sees that you are becoming emotionally attached to the deal, they will feel more inclined to negotiate terms in their favor.

To avoid this mistake, make sure that your emotions are contained before entering the deal; it is important to care, but not too much. Be sure to write down any alternatives to the situation in case an agreement cannot be made. This way you will have some other options that can still give you a fighting chance without letting your emotions take over.

8. Overreacting to Their Offer

Even if their offer isn’t anywhere near what you expected, read through the details before reacting to it. They may be offering something else in exchange for the lower amount you were looking for.

Before entering the deal, clear your head and emotions. Then you can come up with a counter offer that makes sense for you.

9. Being Nervous About Your Image

Thinking about the wants and needs of the other party is important, but this shouldn’t deter you from making an offer that works for you. Regardless of the amount, make sure to support your decision with research and confidence about why you think it’s fair.

Even if the offer is low, tell them why, including facts from research and how it represents the market value of the property. If they are determined to sell the property, they will listen to your case and may even accept your offer because you did your homework.

10. Being Overconfident

It’s good to enter a deal with confidence, but too much can come off as conceited and have a negative impact on your ability to negotiate. Before making a quick decision to counter an offer, make sure that you have done all your research so you can support your reasoning.

A helpful tip would be to write down key points in the deal, bring notes, and practice what you will say. Doing this will show your professionalism, confidence, good reasoning, and minimize errors during the deal.

11. Not Working with a Real Estate Attorney

It can be tempting to save money by skipping out on working with a real estate attorney. But this can end up costing much more in the long run. Especially if you are buying your first property, detailed contracts can be misleading, boring, and difficult to understand.

But an experienced real estate attorney will know exactly what to look for, reading the fine print carefully, and “translating” the terms to give you an understanding of what you are signing. It has also been proven that working with an attorney can increase the chances of having a successful transaction which in turn serves both parties best interests.

Berry K. Tucker & Associates, Ltd.

If you are looking for an experienced real estate attorney, check out the law firm of Berry K. Tucker & Associates, Ltd. Our lawyers have not only overseen numerous transactions, but we have negotiated terms that proved to have successful results. Whether you are buying or selling residential or commercial property, we can negotiate the details as well as answer all of your questions, so you can make a decision with the confidence that you are getting a fair deal.

Our attorneys can provide all of the following:

Berry-K.-Tucker-Divorce-Lawyer-Oak-Lawn-IL

Berry Tucker has years of experience with real estate transactions. Ask him how he can help you with the property you are looking to buy or sell.

  • Explain the real estate transaction process and requirements
  • Examine all real estate documents
  • Register legal documents
  • Ensuring legal ownership
  • Handling issues with the title
  • Drafting necessary documents for closing
  • Handling negotiations
  • Attend the closing meeting

Final Thoughts

Real estate transactions can seem straightforward at first, but they only get more complicated further into the process. If at any time you feel nervous or have questions about the transaction or legal process, don’t hesitate to reach out to one of our attorneys at Berry K. Tucker & Associates, Ltd. We will guide you through each step of the process and negotiate a solution that works in your best interest.

Give us a call at (708) 425-9530 to speak with one of our real estate attorneys.

First Home Buyer Tips

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Purchasing a home is one of the biggest expenses of a lifetime. Considering the ongoing financial responsibility, it is important to think through a realm of scenarios to ensure your first home-buying experience runs smoothly.

Home Buyer TipsFirst-Time-Home-Buyer-Tips-How-to-Buy-a-House

Jumping at the first home that appeals to your fancy, especially if you’re a newbie at home buying, runs the risk of a backlash of unending hardship. The following are central points that can help you navigate the process and make that gigantic leap to blissful first-time home ownership:

1. Ensure you’re ready to buy

Being in the right emotional and financial situation is crucial to making the big move. When you’re ready to buy your first home, you’ve evaluated your job prospects and whether you will be relocating in the near future or staying put. If you have plans to move anytime in the near future, it’s better to postpone the investment on a home.

It is important that by the time you decide to buy a home, you’ve accumulated enough funds to make the down payment as well as pay for home insurance, property taxes, maintenance and inevitable repairs. The most cost-effective situation is a 20% down payment, which avoids the additional expense of a mandatory private mortgage insurance (PMI). However, your realtor can advise you on what is financially acceptable—even a 10% down payment.

2. Know how much you can affordHome-Buyer-Tips-Know-How-Much-You-Can-Afford-Budget

One of your first steps in the buying process is to visit a home lender who’d be in a position to grant you a mortgage pre-approval. A pre-approval lets you know within what price range you should start looking for homes. It is important to understand that if you are pre-approved to purchase a $200,000 home, that doesn’t necessarily mean you should spend that amount on your first home. In fact, experts recommend to keep your mortgage, taxes and insurance to within 25 to 30% of your income. Others suggest limiting your home costs to 2.5 times your yearly salary.

Most realtors will only show you homes if you have in hand a mortgage pre-approval letter. Sellers, too, will take your offer seriously if you are pre-approved. Many well-priced homes sell fast. So if you’re already pre-approved, this responsible step makes your offer one to consider immediately, and a more favorable one.

3. Put together an A-list team

Once you know your home-buying budget, look for a realtor who meets your needs. A compatible realtor is crucial to helping you find the home of your dreams, with all its bells and whistles. An ideal realtor is familiar with the area in which you wish to live. The realtor will explain the current market and answer any questions you may have about the home itself, its location and surrounding amenities. Plus, be sure to enlist a mortgage professional or real estate lawyer prior to your initial search to help you once you’re ready to sign the dotted line.

Home Buying Tips: The Search

1. Observe the neighborhood at night vs. dayFirst-Time-Home-Buyer-Tips-Observe-Neighborhood-at-Night

Visiting potential new homes is exciting and can give you new ideas and perspectives on the home into which you’ll eventually settle. Sure, it’s important to look at the house itself. Even more critical is to visit the neighborhood at different times to get a feel for how noisy evenings can get or how busy the commute will be from your potential new home. Daytimes are usually quiet, with kids in school and most adults at work. Evenings and weekends are when you get the total picture of the neighborhood and its inhabitants.

2. The neighbors are a rich source of information

Talking to the neighbors of your prospective home is invaluable. Those familiar with the area can give you a thorough assessment of petty crime, barking dogs, foundation issues or even some history on the house you have in mind.

3. Ignore reversible details

You may love a house you’ve visited, but abhor the bright red carpeting, the neon walls or even the countertops. A simple paint job will give you the ambiance you’re aiming for. Shaggy, 1970’s carpeting can be replaced. You can always upgrade the kitchen with granite countertops at your leisure.

4. Location, location, locationFirst-Time-Home-Buyer-Tips-Location-Location-Location

Consider you may have to compromise. If you have kids, you may want to be near a certain school district. In exchange, you may have to settle for a smaller house—or a larger one. Or, if your desired house is close to the water, you may encounter a flooded basement on occasion. Your real estate agent can fill you in on issues and offer solutions when it comes to choosing the best areas that fit your needs.

Process of Buying a House: When You Find the Right One

1. Move fast

When you’ve found the right home, act fast. As a first-time buyer, you may wish to think about it for a few weeks. Remember, however, that well-priced homes sell quickly—often within days.

2. Home inspections are crucial

Invest in an independent home inspection rather than rely on the homeowner’s inspection. You want to know in what condition the house is when you decide to buy. Especially on a foreclosed home, a home inspection is extremely important. The home inspector looks for hidden flaws in the home, such as termites, mold issues, a faulty roof or other problems that may prevent you from buying the home. If issues arise subsequent to the home inspection, you can negotiate a better deal.

3. Consider potential problems

The next step is a mortgage approval. Finally, a home appraisal that equals the purchase price is in store. Consider that some buyers are willing to waive contingencies in order to compete. Experts recommend not waiving contingencies unless you are 99.9% sure it’s safe to do so.

Consult with a Real Estate AttorneyReal-Estate-Attorneys-Berry-K-Tucker-&-Associates-Ltd

Once your bid on the desired home is accepted, you’ll move into escrow and soon close on the home. Throughout the process, however, contracts may be daunting; or real estate documents may require a professional to explain the nuts and bolts. When you aim to be in the know, consult a real estate lawyer from a reputable firm, like Berry K. Tucker & Associates, Ltd.

Real estate lawyers like those at Berry K. Tucker & Associates, Ltd. offer years of professional experience in residential real estate transactions. When you’re ready to close, the firm’s real estate attorney can attend the closing meeting, answering any questions and simplifying the process along the way. As a first-time buyer, you’ll find that a real estate lawyer can be an invaluable source of security.

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