HarryTheSpider

We're finally in a position to buy our first home in the US (Arizona), after nearly 3 years renting, and having just gone from L1B visa to GC.

I was a little surprised to find nothing specific in the wiki or elsewhere, conveniently collected in 1 place, covering the purchase of a home for newbies from the UK.

So I am happy to collate all your collective knowledge & experiences and put in to the wiki here...

Please post your do's and don'ts about buying a home, be it state-specific or at the fed level.

Also welcome is any info in normal English (not copy-pasted from a lawyer's book) on assistance programmes (eg first time buyers, buying a fixer-upper, buying in a rural area etc) and criteria.

And of course any links to useful sites.

I'm also looking to create a list of great questions to ask when buying a home, and who to ask. Ideal would be good answers for them, which I can turn in to an FAQ.

Many thanks

Harold Spider Esq.
(Edit: just found out that whilst adding "esq" after your name in UK means nothing, in the US it can mean you are licensed to practice law! Let it be known I am not licensed to do much of anything of use to anybody, least of all practice law!!)

rpjs

I think it's something that varies widely from state to state. I can give you chapter and verse about buying in NYS, but a co-worker who last bought a house in Ohio was boggled by how bureaucratic the process is here in NY.

Weeze

Agree that's is hugely different state to state, and time of buying. Here in Houston at the moment it is a sellers market. These are some of the things we have learnt in the process of attempting to buy our first house:

- the highest bid doesn't necessarily get the property. They look at things like mortgage amount vs cash amount, entry date etc

- ask when the roof was last replaced.

- have a good look at the air con and up in the roof when you view.

- some realtors are the scum of the Earth

Nutmegger

Never decide you don't need a home inspection and that you could save some money by doing without. Contract to purchase should be contingent upon a positive report from your home inspection service. Depending on results, you can either step away or negotiate a compromise. Always request full disclosure on what the home owner and realtor know about the premises. I haven't done this, but I have a friend who always knocks on doors and talks to the prospective neighbors.

GeoffM

Not really about buying a home, more of the moving process, but USPS redirection for mail is free (surprisingly), and not only that but they send you a $10 gift card for Lowes too. I may have unwittingly signed myself up for a load of junk mail in the process though...

I thought Lowes did a moving scheme where you show proof of new address and they give you X% off your shop. Or maybe it was Home Depot, or maybe they don't do it anymore. Anybody know?

HarryTheSpider

Thanks for the co contributions so far - they've prompted some specific questions...

Are there applicable laws & regulations at the federal level, or is it all down to individual states?

Do you have to have an agent/realtor?

What function does a realtor/agent perform, and what do they typically charge for it?

What conflicts of interest can arise with agents/realtors?

Do realtors/agents as well as home inspectors have to be certified/bonded etc? How can you check?

Is something like Angie's List good enough to use for checking the reputation etc of realtors/home builders/home inspectors?

Are lawyers needed at any stage, and if so, what do they do?

rpjs

Well when we just bought in NYS the only federal paperwork we had to deal with was for the FHA 203K (renovation) mortgage we took out. All the paperwork to do with actually buying the property and securing title was purely state.

Weeze

1. Yes, here you do. You can't arrange viewings without one.
2. They do a market analysis of properties in the area to help gauge the price you should offer. They do the negotiations for you.
3. Lots. They are not supposed to, but we have experienced and been told of offers not being passed on, selling to friends, misrepresenting properties...

Ray

State laws and some federal

no ..

to get as much money as possible from you
3-7%

Use a buyer agent the seller use a seller agent ..
they split the commisssion

yes ..it varies by state

All realtor are snakes

lawyers maybe

WEBlue

We've been househunting in 3 states (CT,RI,MA) and we've had the above experience in all three. You need a buyer's agent/realtor and the seller must have a seller's agent/realtor. It's supposed to prevent the conflicts of interest that happened in the "bad" old days, and often does...but as Weeze says in #3, the reality is sometimes different, especially in small towns where all the realtors can be very cosy with each other, sometimes to the detriment of the buyer.

Nutmegger mentioned requesting a disclosure (of faults in the house) from the seller. We always do this. In CT & RI we got them, but we were shocked to be told that MA does not require sellers to provide disclosures. I'm still amazed at this, but it seems to be true. So this is something that may well also vary from state to state.

The city-data forum is a good place to research how to buy a house in your state. It has separate forums (fora?) for each state. I use it a lot, to do searches on any questions I have. They also have forums on working on houses. Anybody new to househunting should be a regualr reader of city-data IMO. it can help speed up the learning curve quite a bit.
http://www.city-data.com/forum/

Weeze

Here you need a sellers disclosure. Our realtor told us he never lets his sellers see an inspection report from a buyer. If they haven't opened it and read it, they don't need to disclose it.

Michael

Regulations are at the state and local level.

Over 95% of the homes sold in the US are listed on the MLS (Multiple Listing Service). If you go to web sites such as Trulia, they show all homes for sale in the US that are on the MLS.

Real estate agents normally sell homes on the MLS but could possibly have exclusive listings only to that broker (an occasional seller lists exclusively to one broker to get a better rate on commissions). The seller pays 100% of the real estate commissions (both buyer and sellers commissions and is normally about 5%-6% of the selling price). Usually if the buyer and seller real estate agent is from the same brokerage, the commission is about a 1/2% less than their normal advertised commission. The MLS indicates the commission and how commissions are split (50%-50%, 60%-40%, etc.) between the selling agent and the buying agent.

Probably no more than 2% of the homes sold in the US are sold without a real estate agent (sold by the homeowner). A private seller can pay to be listed on the MLS and may indicate 0% commission which means that real estate agents will not show that home to clients or could possibly indicate 2.5% with 100% paid to the buying agent to get buying agents to show their home. Of the few private sales (no buying or selling agents) that are listed on the MLS, you may think you should be able to do a private purchase and save some money but generally private sellers want all the savings themselves. Web sites sell private seller packages from about $99 (6 months MLS listing only) to about $3,000 (MLS, signs, document preparation service, phone and email advice, and possibly other services). However if the seller is trying to save money by not using a title company, the risks are very high and title company fees are pretty low (the seller may be trying to sneak something into the documentation such as having the buyer pay for fees that the sellers is supposed to pay for or sell property without title searches, title insurance, or city transfer fees). In fact the risk of something going wrong is much greater from a private sell than when using agents even if the intentions are honest since the buyer may have signed a non standard purchase agreement and must have more knowledge of the process.

Normally in the US, real estate attorneys are not used but instead your real estate agent assists you in closing. Usually most transfers of property are done through a title/escrow company which is a neutral party that prepares documentation that is designed for your locality. The title company know who pays which fees and the amount of the fees (city transfer tax, title insurance, and other fees could be paid by either the seller or buyer depending on the local laws). The title company also does a title search to make sure that the title is clean, sells title insurance, creates an escrow account, transfers all monies to the correct parties, holds back money in some cases (ex. rent buyback), prepares all documents including title transfer and includes mortgage documents, and has a summary of all costs to each of the parties. During the day of the closing, each agent along with their client goes to the title company at separate times to review the documents (primarily the summary) looking for mistakes and signing documents. Prior to that day, the title company will notify the buyer of the costs and a wire transfer has to be set up by the buyer to pay for the down payment and/or costs. The seller is also notified but normally he doesn't need to wire transfer any money since the title company will deduct costs prior to paying off the sellers mortgage and the mortgage company will either write a check or transfer money directly to the sellers bank account.

I believe that most states do not require real estate agents or even title companies but are highly recommended. Large commercial sales use real estate agents and title companies but are also likely to have real estate attorneys due to the complexity of transfers and non standardization of documentation for large commercial properties.

Normally a real estate attorney isn't needed since the documentation is standardized for your locality.

Normally in most states, the seller must disclose any known defects and any recent incidents or outside influences that could possibly affect the value of the property such as a recent murder in the home, a garbage dump is going to be built next to your house, the roof on all homes in a HOA have bids out to replace roofs at an approximate assessment to the homeowner, or the HOA has a pending lawsuit against the builder. For a HOA, the buyer must be provided the CC&Rs for the HOA.

Title companies are bonded. If the title company is a large company, the primary difference is the amount they charge for title insurance.

If an agent is representing both the buyer and seller, the seller generally gets a discount on the commission. The seller can object to the an agent representing both and then that agent cannot represent the buyer. In most states the agent has to disclose which relator the other agent is working for.

Normally when using an agent, you sign a contract to use that agent for a specific period of time. Sometimes the contract states that the buyer agent gets a commission even on a private sell that you found yourself. However I have never signed a contract with an agent (they never asked me to sign a contract) and therefore I could purchase a private sell, sell privately, or even use another agent if I was dissatisfied with my agent.

Generally most sellers that use a real estate agent have a lock box attached to the front door with front door key inside. All agents can open the box and is recorded which agent entered the home at which time. Generally an agent will call the home before showing the house to determine if it is ok to show the home. Some homeowners won't allow a locked box and the home can only be shown when the homeowner is home.

An offer is more binding in the US then the UK. Generally a "good faith deposit" is given to your agent and put into an escrow account either at the time of the offer or the time that the offer is accepted. If one of the buyers contingencies (inspections, bank loans, etc.) doesn't work out, the check is torn up but if the buyer backs out, the "good faith deposit" can possibly be kept by the agent/seller. For instance, I had a coworker whose husband put a "good faith deposit" on a home in the east foothills for his father just before the Loma Prieta earthquake that knocked out the San Francisco bay bridge and the father backed out and the deposit was lost since there wasn't any damage to the home. Sometimes the buyer may find out that he can get a better interest rate from another lender and delays closing but normally there isn't any penalty although the seller is generally upset (generally the agent doesn't like to enforce things like that since they could get a bad reputation).

If an inspection finds major problems (problems are classified in three categories from very minor, to moderate, to critical) and normally very minor is not a reason to back out (a beer can in the crawl space or one of 1000 cross members under the house is missing). Moderate problems (toilet is not fastened down correctly or doors squeek) normally are negotiated as to who pays and critical problems (rotten decks, leaky roofs, termites, or rotted support members) are usually paid for by the seller or the buyer can back out.

Closing typically occurs between 60-90 days after an offer is accepted and is agreed upon in the purchase agreement.

Generally if you are selling a home and buying a new home and use the same agent for both, you can normally get a kickback from your agent on his/her buying commission.

Sally Redux

I think lots of deals go on behind the scenes with realtors having inspectors who give a favourable report to speed things along. You're at their mercy really in a strange new environment.

HarryTheSpider

Again, thanks for the additional info, esp. Michael!

Michael

Sometimes the sellers real estate (charged to the seller) hires an inspector to inspect the home. Although all inspectors have to report accurately, this was done in my last home since I had one small rotten deck on the second floor out of five decks and she asked the inspector to not inspect the decks to save me money. The two biggest decks on the first floor were replaced in the previous year with treated beams. The original decks did not have treated beans and that was what caused the problem since decks are exposed to water unlike beams under the house which can also rot if exposed to water. The decking itself was fine since that was redwood and can take a large amount of exposure to water without rotting. Post should also be redwood or treated (ugly looking because it has a lot of blemishes where they injected the treatment so redwood is preferable) but the original decks didn't have redwood or treated posts. Railings don't need to be redwood or treated since those are easily replaceable. Another way to eliminate rot is to use synthetic material for the decks but they aren't very attractive. Even though the deck was very small, it was very high up and the home hung over the slope of the hill so it would have cost quite a bit to replace and I didn't have the ability do it myself. The inspector created the report indicating that the decks were not inspected. She sold most of the homes in the HOA and redwood decks started to become a problem after 20 years so that was her tactic to try to save the seller some money. Sometimes it worked and other times it did not.

The buyer to save money did not hire his own inspector and didn't notice that the decks were not inspected. So the best rule is that the buyer should always hire his own inspector or at least check the inspection report very well.