Home Buying Tips

Home buying guide for the first time home buyer

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An Offer to Purchase appears hopelessly complicated, but individual paragraphs are easily understood by anyone who takes the time. Audrie's trick is to examine no more than three paragraphs at a sitting.

Below is a sample offer of $150,000 for our sample house at 134 Harbor Place.

Check below the butterflies for explanations

1. PURCHASE AND SALE. The undersigned buyer ("Buyer") agrees to buy and the undersigned seller ("Seller") agrees to sell the property described below under the terms and conditions hereinafter set forth, which shall include the standards for real estate transactions set forth within this Agreement.
Location of property:
ADDRESS __________134 Harbor Place _____________________________________
CITY_____Bakersfield____COUNTY___Orange_
STATE____California__________
BLOCK and LOT number if available __________________________________________________

This is as easy as it gets

Our Buyer has filled in the address of the house he wants to purchase at 134 Harbor Place.

2. PURCHASE PRICE AND METHOD OF PAYMENT.

The purchase price to be paid by the Buyer at closing is: A hundred & fifty thousand__ dollars, $_150,000_____.

This agreement is made conditioned upon Buyer's ability to obtain a mortgage loan in the principal amount of __80__ % of the purchase price within 30 (or_45_ ) days after Acceptance of this Agreement. Mortgage loan amount: $__120,000__________.

Buyer has made an earnest money deposit of $___1,000_____ to be held in trust by:
____Nixon & Nixon Realty_________________________________

Buyer warrants that Buyer will at closing have additional cash in the amount of, $_30,000__, to complete the purchase.

The Buyer is offering to pay $150,000 for the home.

He plans to buy the house with a $30,000 down payment plus a $120,000 mortgage loan.

He is offering $1,000 as a cash deposit to prove that he is serious. His $1,000 deposit will be returned if he is unable to get the $120,000 mortgage loan.

3. CLOSING (or CLOSE OF ESCROW). This Agreement shall be closed and deed and possession shall be delivered on or before _20th_ day of ____June________________,__200x_____(year), unless extended by other provisions of this Agreement. Closing shall be held at the office of the escrow holder, the Seller's attorney, the title company, or as otherwise agreed upon.

Nothing tricky here
	The Buyer has stipulated that the Closing, the date when the purchase price is paid and the deed to the property is transferred from the Seller to the Buyer, shall be on or before June 20th.
	In practice, the Closing date depends on when the Seller Accepts this Agreement and is typically 30 to 45 days from when seller signs the agreement.
	In California, the Escrow Agent hosts the Closing, and handles all the legal details of transferring the deed to the Buyer. In other states, this function is performed by the Mortgage Lender's attorney, the Seller's attorney, or a Title Company officer.

4. DOCUMENTS FOR CLOSING. At Closing, Buyer shall receive a deed conveying title (or, for stock cooperative or long-term lease, an assignment of stock certificate or of Seller's leasehold interest), including oil, mineral and water rights, if currently owned by Seller. The closing attorney shall prepare deed, note, mortgage, Seller's affidavit, any corrective instruments required for perfecting title, and closing statement, and submit copies of same to Buyer or his attorney, and copies of closing statement to the Seller and the broker, at least two days prior to scheduled closing date.

no need for more explanation

5. RESTRICTIONS, EASEMENTS, LIMITATIONS. Title shall be subject to all encumbrances, easements, covenants, conditions, restrictions, rights, and other matters which are of record; including: (1) Zoning, restrictions and requirements imposed by government authority, (2) Restrictions and controls appearing on the plat or common to the subdivision, (3) Public utility easements of record,, provided said easements are located on the side or rear lines of the property, (4) Taxes for year of closing, assumed mortgages, and purchase money mortgages, if any, (5) Other: ______________________
_________________________________________________________________________.
Title shall not be subject to any liens against the Property, and Seller warrants that there shall be no violations of building or zoning codes at the time of closing.

The deed to property usually comes with some restrictions.

Examples of restrictions:

A subdivision might not allow homeowners to cut down trees

A historic district might forbid enclosing a front porch

Easements

Power and telephone companies have the right to run cables across your property.

Sewage and water departments can dig up the front edge.

"Other" restrictions are rare in today's market. Common examples of the past are:

"Tobacco Allotment:" Rights to grow tobacco previously sold to a neighboring farmer.

An oil company owns the rights to oil deposits under the property.

The Buyer is responsible for unpaid property taxes for the current year. Buyer is not responsible for bills incurred by the Seller.

6. CLOSING AND POSSESSION

Seller occupancy: Possession and occupancy shall be delivered to Buyer at _3_ AM/PM, PM on the date of Closing or ___ no later than ______ days after Closing .

Tenant occupancy: Property shall be vacant, unless otherwise agreed in writing. Seller has the responsibility to (1) comply with rent control and other Law necessary to deliver Property vacant, and (2) determine whether timely vacancy is permitted under such Law.

At Closing Seller assigns to Buyer any assignable warranty rights for items included in the sale and shall provide any available copies of such warranties.

Seller shall provide keys and/or means to operate all locks, mailboxes, security systems, alarms, and garage door openers. If Property is a unit in a condominium or other common interest subdivision, Buyer may be required to pay a deposit to the Homeowners' Association ("HOA") to obtain keys to accessible HOA facilities.

This paragraph specifies when the Buyer takes possession of the property. The Buyer has opted in this case to take possession by 3 PM on the day of the Closing (Close of Escrow in California).

Seller must turn over keys and warranties for appliances, and if there are tenants, the Seller must get them out of the property.

7. BUYERS INVESTIGATION OF PROPERTY CONDITION: Buyer's Acceptance of the condition of the Property is a contingency of this Agreement. Buyer shall have the right at Buyer's expense, unless otherwise agreed, to conduct inspections, investigations, tests and surveys, including the right to inspect for lead-based paint hazards and for wood destroying insects. No Inspections shall be made by any governmental building or zoning inspector, or government employee, without Seller's prior written consent, unless required by Law. At Seller's request, Buyer shall give Seller, at no cost, complete Copies of all Inspection reports disapproved by Buyer. Seller shall make Property available for all Inspections. Seller shall have water, gas and electricity on for Buyer's Inspections, and through the date possession is made available to Buyer.

The Buyer has the right to conduct several inspections of the property and can pull out of the contract (and get his deposit back) if the Seller refuses to correct defects found by the Buyer.

The Seller must give the Buyer and his inspectors access to the property.

Buyer is not allowed to call in government inspectors (who might, for instance, cite the Seller for zoning infractions).

The Seller can get copies of inspection reports paid for by the Buyer.

Sections A, B, C and D, E, F describe specific inspections.

GENERAL INSPECTION. The Buyer or his agent may inspect premises of the property at least 15 days prior to closing. Inspection may include appliances, heat and air conditioning systems, electrical systems, plumbing, machinery, sprinklers and pool system included in the sale. Seller shall pay for necessary repairs. Within 72 hours before closing, buyer shall be entitled, upon reasonable notice to Seller, to inspect the premises to determine that said items are in working order.

GENERAL INSPECTIONS: Buyer pays for inspection of building and appliances. Seller pays to repair defects and Buyer gets to inspect the repairs.

TERMITE INSPECTION. ___ Buyer X_ Seller shall pay to have a licensed exterminator examine the property at least 15 days prior to closing. If there is evidence of live termite or other wood-boring insect infestation on said property, or substantial damage from prior infestation, the Seller shall pay up to three (3%) percent _____ of the purchase price for treatment and repairs required to remedy such infestation; but if the costs for such treatment or repairs exceed three (3%) percent _____ of the purchase price, the Buyer may elect to pay such excess. If Buyer elects not to pay, the Seller may pay the excess or cancel the Agreement.

Seller usually pays for TERMITE INSPECTIONS and is required to pay up to 3% of the purchase price ($4,500 on a $150,000 house) to repair termite damage.

ROOF INSPECTION. _X_ Buyer ___ Seller shall pay to have the property inspected by a licensed roofer at least 15 days prior to closing. In the event repairs are required either to correct leaks or to replace damage, Seller shall pay up to three (3%) percent ____ of the purchase price for said repairs which shall be performed by a licensed roofing contractor; but if the cost for such repairs exceed three (3%) percent ____ of the purchase price, the Buyer may elect to pay such excess. If Buyer elects not to pay, Seller may pay the excess or cancel the Agreement.

Buyer has opted to pay for a special ROOF INSPECTION. Seller must pay up to 3% of the purchase price to repair leaks or other damage to roof.

(If checked, the inspections in 7D, 7E, and 7F are contingencies of this agreement)

X_ Buyer ___ Seller shall pay to have septic or private sewage disposal system inspected.

___ Buyer X_ Seller shall pay to have domestic wells tested for water potability and productivity

___ Buyer X_ Seller shall pay for a natural hazard zone disclosure report prepared by ____________________________________

Sections D, E and F are optional, but in this case the Buyer has agreed to pay to have the septic tank inspected and is requesting that the Seller pays to inspect the well and get a hazard zone report.

Properties with municipal water and municipal sewers don't need Septic tank inspections.

Hazard zone disclosures are required in California and other states with earthquakes, mudslides, forest fires and other recurring hazards.

8. REPAIRS: Repairs shall be completed at least 5 days prior to Closing unless otherwise agreed in writing. Repairs to be performed at Seller's expense may be performed by Seller or through others, provided that work complies with applicable Law. Repairs shall be performed in a skillful manner with materials of quality and appearance comparable to existing materials. It is understood that exact restoration of appearance or cosmetic items following all Repairs may not be possible.

The Seller's repair of defects found by the Buyer:
	Must be of good quality and comply with local laws
	Need not completely restore the original appearance
Seller must keep track of repair costs and provide details to Buyer on request.

9. SELLER PROTECTION FOR ENTRY UPON PROPERTY: Buyer shall: (1) keep Property free and clear of liens; (2) hold Seller harmless from all liability, claims, damages and costs; and (3) Repair all damages arising from Inspections. Buyer shall carry, or Buyer shall require anyone acting on Buyer's behalf to carry; policies of liability and other applicable insurance, defending and protecting Seller from liability for any injuries to persons or property occurring during any inspections or work done on the Property at Buyer's direction.

Property damage or personal injury are extremely rare during an inspection, but if either happens, the Buyer is responsible.
	Buyer or his inspectors should carry insurance to cover injuries taking place on Seller's property

10. ALLOCATION OF COSTS

___ Buyer _X_ Seller shall pay for smoke detector installation if required by Law. Prior to Closing, Seller shall provide Buyer a written statement of compliance in accordance with state and local Law, unless exempt.

___ Buyer _X_ Seller shall pay the cost of compliance with any other minimum mandatory government retrofit standards, inspections and reports if required as a condition of closing escrow under any Law.

Sections inserted by the Buyer

B2.

Seller shall pay Buyer's cost of obtaining a mortgage loan, including appraisal fees, credit reports, loan points, and underwriting fees. Such cost not to exceed $__3,500___ .
Buyers initials _J.B.___ Seller's initials _____

B3.

___ Buyer _X_ Seller shall pay closing costs, including attorney fees, title search, title insurance, and document insurance. Such closing costs not to exceed $__1,000__ .
Buyers initials__J.B.___ Seller's initials ________

---

___ Buyer _X_ Seller shall pay for owner's title insurance policy, issued by __________________________________

(Buyer shall pay for any title insurance policy insuring Buyer's Lender, unless otherwise agreed.)

___ Buyer _X_Seller shall pay County transfer tax or transfer fee. _________________________________________

___ Buyer _X_Seller shall pay City transfer tax or transfer fee.

___ Buyer _X_Seller shall pay HOA transfer Fees _____________________________

___ Buyer _X_Seller shall pay HOA document preparation fees._________________

___ Buyer _X_Seller shall pay the cost, not to exceed $ __250__________, of a one-year home warranty plan, issued by ______Prudential Home Warranty__

This is an Offer prepared by the Buyer so the cost of installing smoke detectors and other minor costs are all allocated to the Seller.
	The Buyer has also inserted clause 10-B2 and clause 10-B3 assigning all closing costs to the Seller.
	These are additions to the standard Offer Form so the Buyer places his initials below each clause and leaves a space for the Seller's initials.
The Seller may agree to these conditions, but more likely his Counter Offer will ask the Buyer to pay for some of these items.

11. SELLERS DISCLOSURE STATEMENT AND OTHER DISCLOSURES WITH CANCELLATION RIGHTS:

Within the time specified in paragraph 14, a Seller's Disclosure Statement, including natural hazard disclosure, military ordnance disclosure, and lead-based paint disclosure shall be completed and delivered to Buyer, who shall return Signed Copies to Seller. If required by Law, Seller shall (1) disclose if Property is located in special flood hazard Areas; potential flooding areas; very high fire hazard zones; state fire responsibility areas; earthquake fault zones; or seismic hazard zones; and (2) provide Buyer with any earthquake guides or environmental hazards booklets required by state law.

In the event Seller, prior to Closing, becomes aware of adverse conditions materially affecting the Property, or any material inaccuracy in disclosures provided to Buyer of which Buyer is otherwise unaware, Seller shall promptly provide a subsequent disclosure, in writing, covering those items.

Seller shall (1) make a good faith effort to obtain a disclosure notice from any local agencies which levy a special tax on the Property; and (2) promptly deliver to Buyer any such notice made available by those agencies.

The Seller is required to tell the Buyer about known problems with the property. The Seller does this by answering yes and no questions on standard Disclosure forms.

All states require answers to basic questions about the condition of the property, plus for older homes, questions about lead based paint hazards.

California and several other states require the Seller to tell the Buyer if the property is in an area of hazard for:

Floods

Forest fires

Earthquakes

Mudslides

Unexploded military ordinance

Special property taxes

The seller is required to disclose only what he or she knows. If the Seller learns something new about the condition of the property he or she is required to tell the Buyer and formally amend the original Disclosure forms.

___ (If checked) CONDOMINIUM/COMMON INTEREST SUBDIVISION: Property is a unit in a condominium, or other common interest subdivision. Seller shall request from the Home Owners Association (HOA), and upon receipt provide to Buyer: (1) Copies of any documents required by Law; (2) disclosure of any pending or anticipated claims or litigation by or against the HOA; (3) a statement containing the location and number of designated parking and storage spaces.

NOTICE OF VIOLATION: If, prior to Closing, Seller receives notice or is made aware of any notice filed or issued against the Property, for violations of any Law, Seller shall immediately notify Buyer in writing.

SPECIAL OFFENDER DISCLOSURE NOTICE: Many local law enforcement authorities maintain for public access a data base of the locations of persons required to register as convicted sex offenders. Buyer may contact law enforcement authorities for information about the presence of these individuals in the vicinity of the property.

RADON GAS DISCLOSURE: "Radon Gas" is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present a health risk to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in _______________________________. Contact your county public health unit for additional information regarding radon and radon testing.

Many new homes are part of subdivisions with tennis courts and swimming pools maintained by fees levied by a Homeowners Association (HOA). Condominiums are governed by similar homeowners associations.

The Seller must provide the Buyer with rules of the HOA, plus all real and threatened legal actions against the HOA.

Buyer may contact law enforcement authorities for information about the presence of convicted sex offenders in the vicinity of the property.

Buyer must be told if Radon gas found in local buildings exceed Federal or State guidelines.

12. CONDITION OF PROPERTY:

Unless otherwise agreed, (1) Property is sold (a) in its PRESENT physical condition on the date of Acceptance and (b) subject to Buyer inspection rights; (2) Property, including pool, spa, landscaping and grounds, is to be maintained in substantially the same condition as on the date of Acceptance.

The property is sold in its condition as of the date the Seller accepts the Offer and must be kept in good condition until the Closing when the deed is turned over to the Buyer
	The above is subject to the Buyer's inspection (Seller must repair defects or the deal is off).

13. ITEMS INCLUDED IN SALE:

All existing fixtures and fittings that are attached to the Property, are INCLUDED IN THE PURCHASE PRICE (unless excluded in paragraph 13C below), and shall be transferred free of liens and without Seller warranty. Items to be transferred shall include, but are not limited to, existing electrical, mechanical, lighting, plumbing and heating fixtures, fireplace inserts, solar systems, built-in appliances, window and door screens, awnings, shutters, window coverings, attached floor coverings, television antennas, satellite dishes and related equipment, private integrated telephone systems, air coolers/conditioners, pool/spa equipment, garage door openers/remote controls, attached fireplace equipment, mailbox, in-ground landscaping, including trees/shrubs, and (if owned by Seller) water softeners, water purifiers and security systems/alarms.

ADDITIONAL ITEMS INCLUDED: The following items of personal property, free of liens and without Seller warranty are included in the purchase price: _Basement Work bench_
Buyers initials ____J.B.__________ Seller's initials ___________________

ITEMS EXCLUDED FROM SALE________Outdoor Gas Barbecue
Buyers initials ____J.B.__________ Seller's initials ___________________

Everything physically attached to the property is included in the sale unless otherwise stated
	Work benches are not usually nailed to floor or walls so are not included in a sale unless specified as in this case.
	The Buyer initials this line because it is a change to the standard Offer Form. To accept this condition the Seller must initial this line
	If connected to the house by a gas line, a gas barbecue is included in the sale unless excluded as in this case.
	As above, the Buyer initials this line and leaves a space for the Seller's initials.

Paragraph 14 - removal of contingencies and cancellation rights
Paragraph 15 - Final inspection / verification of condition
Paragraph 16 - Sale of Buyer's property
Paragraph 17 - Default by Buyer
Paragraph 18 - Default by Seller
Paragraph 19 - Dispute Resolution
Paragraph 20 - Prorations of Property Taxes and other items
Paragraph 21 - Equal Housing Opportunity
Paragraph 22 - Scope of Agreement; Changes

Paragraphs 14 - 22 are self explanatory and seldom reason for dispute between seller and buyer.

23. DEFINITIONS: As used in this Agreement:

"Acceptance" means the date the offer or final counter offer is accepted in writing by the other party and communicated in accordance with this Agreement or the terms of the final counter offer.

"Agreement" means the terms and conditions of this Offer to Purchase Agreement and any counter offer and addenda.

"Days" means calendar days, unless otherwise required by Law.

"Days After" means the specified number of calendar days after the occurrence of the event specified, not counting the calendar date on which the specified event occurs, and ending at 11:59PM on the final day.

"Closing" or "Close Of Escrow" means the date the grant deed, or other evidence of transfer of title, is recorded. If scheduled Closing falls on a Saturday, Sunday or legal holiday, then the Closing date shall be the next business day after the scheduled Closing date.

Most of these definitions are clear so we expand on only three.

"Acceptance" is the date the Seller accepts the Offer by signing it at the bottom of paragraph 28, but most negotiations involve offers and counter-offers, so "Acceptance" can also be the date the Buyer signs paragraph 26 of the Seller's counter offer.

"Closing" or "Close Of Escrow" is the date when:

Buyer receives his deed

Outstanding balance on mortgage loan is paid

Seller receives the purchase price minus amounts to pay off his mortgage and other expenses.

"Closing Attorney:" In many states the mortgage lender's attorney is the "Closing Attorney." In other states the Seller's attorney, or the Escrow Holder or a Title Company officer performs the functions of a "Closing Attorney."

"Closing Attorney" means officer who hosts the Closing, prepares the deed, pays outstanding bills, and transfers title to the Buyer. In some states the Escrow Holder or a Title Company officer performs these functions.

"Copy" means copy by any means including photocopy, NCR, facsimile and electronic.

"Law" means any, law, code, statute, ordinance, regulation, rule or order, which is adopted by a controlling city, county, state or federal legislative, judicial or executive body or agency.

"Repairs" means any repairs, alterations, replacements, or modifications, (including pest control and retrofit) of the Property.

"Signed" means either a handwritten or electronic signature complying with applicable state Law.

Singular and Plural terms each include the other, when appropriate.

These definitions are pretty clear so we expand on only F, the Closing Attorney.

In many states the mortgage lender's attorney is the "Closing Attorney." In other states the Seller's attorney, or the Escrow Holder or a Title Company officer performs the functions of a "Closing Attorney." He or she:

Orders a title search and prepares the deed for closing day.

Pays property taxes and other outstanding bills, prorates them and assigns them to Seller or Buyer.

Provides an accounting of all cash and expenses (in the form of a "Closing" or "Settlement Statement").

Transfers deed to the Buyer.

24. INSTRUCTIONS TO CLOSING ATTORNEY (OR ESCROW HOLDER):

This Agreement constitutes the Instructions of Buyer and Seller to the Closing Attorney, which Closing Attorney is to use, along with any additional mutual instructions, to close the transaction. Buyer and Seller will execute additional instructions, documents and forms reasonably necessary to complete this transaction as provided by Closing Attorney (or Escrow Holder). If required by law or local practice, a copy of this Agreement shall be delivered to Escrow Holder, Title Company attorney, or other attorney or person responsible for the closing, within three business days after the date of Acceptance of this Agreement.

26. OFFER: This is an offer to purchase the Property on the above terms and conditions. All paragraphs with spaces for initials by Buyer and Seller are incorporated in this Agreement only if initialed by all parties. If at least one but not all parties initial, a counter offer is required until agreement is reached. Unless Acceptance of offer is Signed by Seller, and a Copy of the Signed offer is personally received by Buyer, or by ______Gus Agent__ who is authorized to receive it, by (date) ___May 15, 200x___, at ___3 PM__ AM/PM, the offer shall be deemed revoked and the deposit shall be returned. Seller has the right to continue to offer the Property for sale and to accept any other offer at any time prior to communication of Acceptance as above. This Agreement and any supplement, addendum, or modification, including any Copy, may be Signed in two or more counterparts, all of which shall constitute one and the same writing.

BUYER __Jim Buyer___________
BUYER _________Mrs. Joan Buyer_____

John and Joan Buyer signed this Offer at the bottom of paragraph 26
	Any changes must be initialed by both the Buyer and the Seller
	The Seller can accept the offer by signing at the bottom of paragraph 28 and delivering it to the Buyer or to the Buyers agent by May 15th.
	The Seller can continue to deal with other Buyers until he or she signs this Offer.
	Signed copies of this agreement will be treated as if they were originals.

28. ACCEPTANCE OF OFFER: Seller warrants that Seller is the owner of this Property, or has the authority to execute this Agreement. Seller accepts the above offer and agrees to sell the Property on the above terms and conditions. Seller has read and acknowledges receipt of a Copy of this Agreement, and authorizes Broker to deliver a Signed Copy to Buyer.
___ (If checked) SUBJECT TO ATTACHED COUNTER OFFER, DATED ______________
SE LLER_______________________________________________ Date ____________
SE LLER_______________________________________________ Date ____________

By signing the Offer at the bottom of paragraph 28, the Seller:

States that he owns the property and has the right to sell the property.

Agrees to the purchase price and other terms contained in the Offer.

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Home Buying Tips

Sample offer to purchase a home