Purchasing property

Discussion in 'Homesteading Questions' started by pcdreams, Aug 2, 2004.

  1. pcdreams

    pcdreams Well-Known Member

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    I don't know how it is elsewhere, but around here if you want to purchase land from in individual that they are going to finance, they write a contract both parties sign and your done.

    We're looking at a parcel in VT and the real estate agent is wanting us to sign a contract (not a realtor contract but a contract to purchase) before the offer is submitted. Is this standard proceedure? I figure she calls them, makes the offer and they say yea or nei, no paperwork should be involved at this point.

    She's also talking about closing. What more would there be to do other than sign the contract and pay the payments? I'm assuming there wouldn't be any closing involved other than said contract. Seller pays closing fees(don't see why there would be any in this case) correct?

    I'm a bit lost because it sounds more like purchasing a house rather than land. Maybe I'm just out of the loop.
     
  2. Cyngbaeld

    Cyngbaeld In Remembrance Supporter

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    Most of the time, if you buy land or a house, you will need to sign a contract to purchase before the realtor makes the offer. Some realtors will do a verbal offer, but it is really frowned upon. The contract offers you some protection as a buyer. Also when you close it is normal to go thru a title agency (which handles the closing) to insure that you get a clear title to the property. That insurance protects you from disputes. I actually had to use the title insurance once, when a neighbor decided to 'resurvey' the property line and tried to force me to move a shed and fence. It would have affected set backs on my addition as well. The tiltle co straightened her out pretty quick.
     

  3. pcdreams

    pcdreams Well-Known Member

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    What happens if you've signed that contract and they don't accept your offer? Are you still bound to purchase? I would hope not..

    what fees are there for the closing cost? are we talking hundreds or thousands of dollars?

    the deal is We have the downpayment set aside, but we're SOL if we have to pay much for closing cost.
     
  4. Meg Z

    Meg Z winding down

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    A title search isn't a bad idea...it's always good to know that the person selling the land really has the right to do so. That would be a 'closing cost'. So would a survey, if one hasn't been done. How about a perk test, if you're planning on building there at any point.

    Even on land with seller financing, you need to protect yourself.

    Meg :)
     
  5. BCR

    BCR Well-Known Member

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    Personally, if I were either the buyer or seller I would want your offer in writing so noone could change it. In writing it is less likely to be disputed. The contract should state what happens if accepted or rejected. I would expect you to put earnest money down pending a clear title as well.

    As a seller I would also do a credit check if I was going to finance your purchase, even for naked land. There will be costs associated with the closing. things like filing fees, deed prep. and more.
     
  6. homebirtha

    homebirtha Well-Known Member

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    Verbal offers aren't usually done because if it's not in writing, it can get a little hairy. No, you aren't obilgated to buy if they don't accept your offer EXACLTY as written. If they make any changes, (price, size of lot, contingencies on perk test, whatever), you have to sign off on those changes before it is a valid contract.

    Closing costs can get steep, depending on what you're doing. But, since you're not using bank financing, I would think a lot of those items would be optional. If you're not doing any inspections, perk tests, drilling for a well, etc., that the sale is contingent upon, then you wouldn't have any of those normal expenses. Other things that are included here are deed recordation tax, which is ridiculous, something like $10 per $1,000 of purchase price. That is a county fee and it would need to be paid no matter how you were doing the financing, when the deed is signed over into your name. You also usually have to prepay some of the year's taxes, and property insurance.

    There is usually also a title search which is a few hundred dollars. A survey is required by the bank which can be from a few hundred to a few thousand, depending on the size of the lot. Now most of that is required by a bank, so you can probably skip it, if you feel comfortable doing that. And of course, don't forget the realtor's fees. :rolleyes:

    The seller usually pays realtor fees, but the buyer pays most of the other closing fees in a typical real estate deal. On our purchase, about $300k, our closing costs are going to be around $10,000. But this is a house and land, so it's hard to compare.
     
  7. Cyngbaeld

    Cyngbaeld In Remembrance Supporter

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    When you make an offer to buy and sign the contract, the realtor sends a copy to the seller. The seller looks at it, says 'yes' or 'no' or makes a counter offer. Then the seller's realtor sends your realtor either a signed 'yes' contract or a counter offer contract. If they counter offer you can say 'yes' or 'no' or couter back. This goes on until you and the seller reach an agreement on price, who pays how much of the closing and any other particulars. Usually, if the seller is financing you pretty much accept their price and financing charge, or you find other financing and offer the seller cash. In that case you have more freedom to push for lower price, etc.

    On the closing costs you should ask your realtor up front how much those costs will be, since they can vary from area to area.
     
  8. CJ

    CJ Well-Known Member Supporter

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    Did you find this property without the realtor? Perhaps I'm just misreading this, but it sounds to me like the realtor wants you to sign an agent contract so he/she can get a commission, without one, he/she can't.
     
  9. agmantoo

    agmantoo agmantoo Supporter

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    The realtor is trying to help you. With an "offer to purchase and contract" signed you then have a legal document that binds the seller and the buyer. I have been burned by not having an offer to purchase and contract form signed and will never enter into a purchase agreement again without one. There are generic "offer to purchase and contract" forms on the net. You do need to get the seller to sign one and have it witnessed.
     
  10. The contract is always going to be 'subject to' a list of things. The truth is that any time that either the buyer or seller wants to get out of that contract he or she can very easily. That initial contract that is offered is more of a gesture of good faith than anything else.

    -Jack_Cville
     
  11. pcdreams

    pcdreams Well-Known Member

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    I knew I'd be showing my ignorance. She's going to e-mail me a copy of the contract. I'll have a look and see what its about. Thanks guys :)
     
  12. agmantoo

    agmantoo agmantoo Supporter

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    This is a copy and paste referencing an offer to purchase

    The Smart Buyer's Purchase Contract


    A written and signed (ratified) purchase offer can bind both you and the seller. Whether it's called a contract-to-purchase, an offer, binder, or earnest-money agreement, you can be held to your offer once it's signed by the seller. If you leave anything out and the seller accepts and signs the contract, you're out of luck. That's why your purchase offer must cover every minute detail and aspect of the sale, such as:

    The date and amount of deposit (earnest money).


    Your name as buyer and the property owner's name as seller.


    The total purchase price.


    Full legal description and street address of the property.


    The lawyers, brokers and others involved in the sale, as well as the terms and conditions of their compensation.


    The options available to both buyer and seller should either party default.

    As you see, it can be a very binding tool, and one that you may not get out of readily. The binding portion is the intent of the document.
     
  13. StinkerBell

    StinkerBell Well-Known Member

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    We just purchased some property ourself with the owner of the property financing it.

    We wanted title insurance on the property...sure glad we did, we found out that the owner was in a divorce and had not told his wife about the property and this is a comminuty property state! Well that got resolved and we bought the property. Now what happens is that the deed needs to be recorded to our name. We then get the deed and the previous owner places a lien on the property until the loan is paid off. Also there is yearly taxes that need to be paid and along with the titles search this little item gets checked out too.

    The title insurance protects the new owner. ALso there is closing fees and other fun stuff to deal with. Nothing seems simple anymore.
     
  14. bethlaf

    bethlaf Homegrown Family

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    the contract isnt a "contract" , its a written offer to purchase, typically used now in RE
    its automaticly invalid if the seller doesnt sign , its a dead deal, normally if they want to sell, and make a counter offer, when they do that, the first one is dead, and the counter offer becomes the new offer, this can play back and ofrth several times , but generally only happens once or twice .

    closing costs , cna vary, depending on the company, we had closing costs of about 600.00 on a 42,000.oo contract ....
    generally speaking if the land is owner financed , the closing costs will be around 500.00-700.00, if its a conventional mortgage, then they can be much higher, i have seen up to 5000.00, because of "points" the morgatge company insisted on ( basicly more of a down payment)

    GOOD LUCK!!
    i know its confusing !
     
  15. pcdreams

    pcdreams Well-Known Member

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    Well hopefully she'll send it tomorrow. For someone who sells property for a living, she sure is slow at returning correspondance. ;)
     
  16. boxwoods

    boxwoods Well-Known Member

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    You should have a lawyer as the buyer to protect you from possible liens, property taxes, unpaid bills, federal taxes etc.

    A title search is a good idea also to guarantee a free and clear title. Probably looking at a cost of $500 or so.

    You can use the same lawyer as the seller to keep the cost down, if there is no conflict in the contract.