Ok we’re back! To refresh, we got pre-approved, hunted for house, and made an offer. Now what? Well, once our seller’s accepted our offer, the ball was in our court to keep things moving. Our first step was to find an attorney to review our contract. This part of the process is called… wait for it… Attorney Review. Though real estate contracts are fairly standardized, each side is encouraged (required?) to find an attorney who will negotiate with the other parties attorney to try and create the most fair deal possible.
My mom was a real estate agent for many years, so she had an attorney that she trusted and recommended to us. Otherwise, your real estate agent can recommend someone. It’s better to go with a stranger who specializes in real estate law than a family friend who does not as these things are pretty specific. I contacted our attorney and forwarded him our completed contract. I stressed to him that with the nature of our speedy closing (less than 60 days) things needed to move quickly. He was wonderful and promptly reviewed the contract, explained every detail to me, and informed me of the changes he was requesting from the seller’s attorney.
Predictably, the seller’s attorney came back with his own set 0f changes, most of which we agreed on, some we did not. Mainly it came down to the issue of appliances. Typically, the stove, dishwasher and anything else “bolted down” is considered included in the contract, and the rest is up for grabs meaning the buyer and seller can negotiate on what stays and what goes. Our seller’s stated in their listing that they were leaving all appliances. However, when we got their seller’s disclosure (short statement from the sellers listing, among other things, what appliances are staying with the home) we noticed that they were NOT including their washer and dryer. We asked our attorney to write that into the contract thinking maybe they just forgot it (hah!), but they came back saying not only were they taking those two, but they were taking the refrigerator as well.
Hold up. That refrigerator was supposed to be included! They said they were leaving it. They can’t take it back! Right?? Right?? Wrong. Our attorney explained to us that, during attorney review, either side can change ANYTHING they want. Meaning, our sellers can “take back” anything they previously offered. It’s his job to negotiate it back for us. That’s why you get an attorney who knows real estate law.
Long story short, we got the refrigerator and lost the washer/dryer and felt a little burned. It wasn’t worth losing the house over, but it ruffled our feathers to say the least.
I should have mentioned that we actually had two first steps (?). While recruiting our attorney, we also had to forward our contract off to the bank to let them know we got the house and would be formally applying for a mortgage. I love our mortgage loan officer (as much as someone can love a bank official). Seriously, everyone (except our sellers) has been so incredible to work with. Pick people you feel comfortable with. It will make all the difference in this stressful time. Anyway, our mortgage officer congratulated us on the home and told me which documents we needed to get her asap. Luckily, I had read up about it online and had already gathered and scanned most of the documents which included (all documents needed for any parties signing on the loan):
- two most recent pay stubs
- past two years W2s and tax returns
- two most recent bank account statements (for all accounts, including retirement accounts)
- transaction histories for any statements that are outdated (for example: though the first quarter of 2013 is over, we did not yet have that statement for our retirement accounts, so we provided the 4th quarter 2012 statement along with a transaction history bridging the gap)
As far as I can gather, the bank wants to assess our creditworthiness through a credit check and thorough review of our accounts. It was also important to them to see that we had enough cash on hand for the down payment as well as two-three months of mortgage payments. Basically, don’t make any large purchases while considering buying a home. Have that cash ready to go.
Our final immediate step was finding a home inspector. When you sign a real estate contract, it’s legal binding but also contingent on a few things. So, while you can’t back out just because you got cold feet, you can back out without penalty if, say you can’t get approved for the mortgage you need to afford the house. You can also back out following an inspection. The home inspection is performed by a private inspector licensed by the state. We were given a few names from both my mom and the realtor and shopped around for the best price. We felt confident going with the most affordable inspector because they are all licensed under the same authority and required to check for the same things. Because of our area and the age of our home, we scheduled a full inspection, termite check, radon testing and an oil tank sweep. Necessary inspections vary by home.
After the inspection, we negotiate with the seller’s once more. If the findings are huge and expensive or time consuming, we have the right to back out of the contract. If the findings are more minor, we can ask the seller to fix the problem or compensate us so we can fix it ourselves. They can elect to do so or not in which case we’d have the option of accepting as is or breaking the deal.
This is why we’re not celebrating yet. Between the mortgage process and the inspection there are so many things that could cause this deal to fall apart between now and our closing. We’ll basically be holding our breaths for 60 days. I’ll keep you updated as things move along. Keep your fingers crossed for us!