Tips on Buying A Home in Pennsylvania
1. Area Pricing: Shop online to get a realistic idea of area pricing. I think you'll find that my new mls search tool at www.gailnagele.com is very cool, offers state-of-the-art search techniques, is easy to use and is extremely flexible. My search offers more up-to-date information than www.realtor.com, newspapers and real estate magazines.
2. Pre-Qualification vs. Pre-Approval: A Pre-Approval is when you have made a formal application to a lending institution, and the lender has verified your assets, income and credit reports. A Pre-Qualification is based on verbal information (no financial information has been verified). A pre-approval is necessary and expected when you are making an offer on a property. Most mortgage companies can do a pre-approval within a few hours. Good realtors know the difference between a pre-qualification and a pre-approval, and will not accept a pre-qualification with an offer.
3. Realtor representation: When representing a Buyer in Pa., Agents act as Buyer Agents - but can, at the same time, represent the Seller. There are obvious, clear, advantages to representation by a qualified Buyer's Agent. He/she owes you care, obedience, accountability, loyalty, notice, disclosure, and will negotiate in your best interests.
4. House Hunting: I will be able to provide you with up-to-the-minute property information from the local Multi-List System (MLS). Good realtors will also have access to the extremely small percentage of real estate brokers that do not subscribe to broker reciprocity. They will also have access to the local FSBO (for-sale-by-owner) market.
5. Buying a Home: An offer to purchase is in writing, typically using a Pennsylvania Association of Realtors standard Agreement of Sale. Attorney reviews are not typical in Pa. as realtors are licensed to fill in the blanks of the PAR Agreements. (Note: this agreement is not typically used for new construction, and many people use attorneys for this type of purchase and other more complicated transactions).
6. Deposit Monies: It is customary to offer approximately 5% (though there can be exceptions) of the purchase price as deposit monies to hold the property until settlement. Typically, a $1,000 check is given when the offer is tendered. The remainder of the deposit monies is usually given within 14-15 days.
7. Contingencies: All the terms and conditions that must be satisfied for you to proceed with the purchase of a property. Typical contingencies are: mortgage commitment, and home inspections (typical inspections are: home, termite, radon, water, septic). Inspections can often take longer than one would think, so adjust your time frames accordingly. Buyer typically pays for anything and everything they want inspected.
8. Time Essential: "Time is of the essence" is an extremely important concept in Pennsylvania contracts, and all contingencies must be satisfied by the dates promised or the agreement can be voided by the Seller. The "clock" starts the day after the date of execution of the agreement, and includes the due date.
9. Fixtures & Personal Property: In Pa., ovens, ranges, mailboxes, curtain rods (because they are attached to the property) are considered real property, and they stay with the house. Be sure to check paragraph 4 of the Agreement of Sale for detail of inclusions and exclusions. What appears in a brochure or advertising is irrelevant if it is not shown as "included" in paragraph 4 (or specified as such)
10. Mortgage Approval: If you already have a pre-approval as recommended, you can expect the mortgage approval (commitment) process to be complete in approximately 45 days.
11. Abstract (Title) Companies: The fees charged by Abstract companies are state regulated. The job of Title companies is to facilitate the transaction between the buyer and the seller including, but not limited to: verifying ownership, preparing the deeds, and making the appropriate adjustments. See my preferred partners for an abstract company within Bucks or Montgomery counties. It is not necessary to employ an attorney for a Pennsylvania transaction.
12. Getting To Settlement: The "Conveyancing" department will be responsible for "conveying" your transaction. "Conveyancing" processes all information needed to convey a property. If the transaction does not move forward because of inspection or mortgage problems, that information should be known fairly early on in the process. Provided the Buyer has not defaulted in the contract, all deposit monies will eventually be returned to Buyer.
13. Preparing For Closing: There are many services to be organized for your move.
14. Day of Closing: The property should be vacant, broom clean, and free of debris. You have the right to pre-inspect the property prior to settlement. (There is no legal right to re-enter the property from your final inspection until the day of closing, so be sure to gather all your pertinent information in advance). At settlement you will receive a copy of the deed and the keys to your new home. There is no opportunity, without legal action, to pursue any problems after closing. Consider a home warranty from my preferred partners.
FACTS TO NOTE:
- Prior to the current mortgage climate, you could typically buy a home with as little as 5% of the purchase price and under certain circumstances, zero money down. In the present mortgage climate, you typically have to put more than 5% down monies. See my preferred partners for mortgage pre-approvals.
- Most homes in the area have basements, and many farmhouses and older homes have wet basements. Basement sump pumps are commonplace.
- Many homes in suburban & particularly rural areas are serviced by private water and septic systems.
- Insurance is now rated by persons and by property. See my preferred partners for additional information.
- Attorney reviews are not typical except for corporate sponsored transferees, and complicated transactions. When hiring an attorney, be sure to use one who specializes in real estate law. See my preferred partners.
- Verbal Agreements are rarely effective. If you don't want to go to the extent of completing an agreement of sale, have a letter of intent drafted.
- "Time is of the essence" is an important concept in Pa. contracts (not so in the neighboring states of NY or NJ).
- Ranges and other built-in appliances are part of the transfer of real property. Most refrigerators, washers and dryers are personal property, and do not necessarily stay with the property.
- Land/property Surveys are not a part of the Agreement of Sale and are rarely requested. If a Buyer does want a Survey, they pay the costs.
- A transfer of ownership does not necessitate a change in the real estate taxes in Bucks and Montgomery Counties.
- The local public school systems are funded through a portion of the real estate taxes.
- A 2% state transfer tax applies to all real estate transactions. This fee is typically divided between the buyer and the seller.