Home buyers, what was your experience like after reaching an agreeable offer with the seller?

The home inspection and the termite inspection are usually the places where the big surprises lurk.

The surprises are usually the home inspection, as @bkcunningham mentioned, and as far as reacing the closing, the other surprises are usually done by the buyer, so since you are the buyer it is doubtful any surprises will come up.

Most things found at inspection can be fixed fairly easily, so the majority of the time it isn’t a huge deal. Does the contract stipulate “as is” or has the seller agreed to make repairs up to a certain percent/dollar amount?

So aside from freak things in nature like lightening strking the house, God forbid, things should go smoothly.

Just because you are pre-approved for the loan these days doesn’t necessarily mean the bank has to approve the loan. You still have alot of hoops to jump through to actually get the mortgage and you will be on pins and needles until you sign that document at the lawyers office.

I also wanted to say congratulations to you, @Seaofclouds. It is exciting.

Another suggestion. I’m always at the inspections. I want to see what the inspector is checking or not checking. Just because you have an inspection, it doesn’t mean that everything is checked. We flip houses. We had an inspection done on a house we were buying. The inspector found x, y, z. We negotiated a few of the items with the seller and eventually bought the house. We completely renovated the house and had it back on the market in about 30 days. An offer came in the first week.

Although the home had been inspected so recently, the buyer wanted their own inspection. The buyer’s inspector found two somewhat minor things our inspector hadn’t found. We had no recourse because of the way the inspector’s contract was written. We are ALWAYS present at inspections when buying houses now.

I assume you signed a contract (with a few conditions, such as inspections, validity of title etc.) A contract is a promise. If it is broken for reasons other than those stated in the conditions, you can take legal action. Since most people do not want to get involved in such stuff when they are trying to sell a house (especially in this market) you can probably expect pretty smooth sailing. Under similar circumstances, I have never had a problem.

My friend’s niece just bought a house in Las Vegas, but before the deal was finalized and the escrow had cleared, and before she took possession of the property, someone stole the air-conditioning unit out of the back yard. I’m not sure if the sellers had any obligation to replace it, probably not, so the niece, just paid for a new unit herself. I’m not sure what the deal is if the house is vandalized before it legally changes hands. Maybe one of the jellies knows.

The home inspection and the appraisal. You want to be there during the home inspection.

You do a final walk through on the day of closing for that very reason, @Kardamom. The homeowner would be responsible to replace the air-conditioner or compensate for the loss if the buyer so desired.

There will be inspections, appraisals, title insurance perhaps with issues, surveys, and anything else the mortgage company can think up. That’s why closing costs are so high when you finance. And really, who can pay cash for a home? Hopefully you will only have one or two issues to deal with and everything else will flow smoothly.

@karamom Once you sign a sales agreement you are the equitable owner of the house pending the closing and you take the risk of loss on the house. Some contracts stipulate that the ROL remains with the legal owner until closing. If it isn’t mentioned, it lies with the buyer. The buyer should insure the house as soon as they have a contract for sale if there is no clause stating the ROL stays with the seller until closing. I think most states’ standards real estate contract now have a clause in the preprinted forms that relieves the buyer of the ROL. Just READ READ READ those real estate contracts.

@PurpleClouds What state do you live in? I never heard of such a thing. The buyer is obligated to the contract, but if something happens like, as I mentioned above, lightening striking, that is the seller’s problem, not the buyers. The seller sold the house in a certain condition, and it needs to be delivered that way or there is justified reason for the deal to be off. Escrot dispursements might be held up for a little bit, but the buyer is going to get his money back, I don’t see how it would go any other way. I have never heard of or advised a buyer to take out insurance before they have closed on a contract. That is like saying the seller can let go of his insurance, which is absurd. More problems happen with a buyer cancelling a contract than a seller. The seller owns it, until closing when he doesn’t anymore. The only sticky situation is when a buyer moves in before closing, but it is always advised to do an official rental contract in that case, because the seller still owns the property, but the buyer occupying the property can make things messy. (Also, each state has an official law about when ownership actually officially happens, usually midnight the morning of or midnight the night of the closing day, depending on the state).

A buyer couldn’t get insurance on a house they don’t own. The buyer doesn’t own the house until closing. I agree with you, @JLeslie. I always have to show the HUD settlement paperwork for any of the houses we’ve bought, even cash deals, before I can get the insurance finalized. The insurance starts on the day of closing when I own the home. Many, many people buy houses with cash.

Thanks everyone! We will be scheduling the inspections in the next couple days, we have a list of ones that we have to get done in the next few weeks. We definitely plan to be there during the inspections.

The appraisal was another good point that was brought up. If the house does not appraise well the whole deal falls through unless the price is renogotiated.

@JLeslie It’s basic contract law and prevails in the absence of a ROL clause or state law, including real estate sales agreements. The doctrine is called Equitable Conversion and you can use a search engine if you like.

“RISK OF LOSS

In a sales transaction (esp. real estate) many states consider the buyer to be the owner of the land once the sales contract is signed, and the “owner” just to be “babysitting”. Therefore, in some states, the “risk of loss” in case of destruction of the property is passed to the buyer, even though they have not paid for the property. ” http://www.lectlaw.com/def2/q056.htm

Many real estate contracts I have seen had a ROL clause placing risk of loss back on the seller. If there is no clause and the state hasn’t adopted the Uniform act or made similar provisions in the contract statute, the ROL stays with the buyer. Some states (a minority) have adopted the Uniform Vendor and Purchaser Risk Act which automatically places ROL on sellers.

There also should be a clause in the contract saying that either the seller or buyer will maintain insurance on the property from execution until closing.

People should read every word of a contract and agents better know where the risk lies if the seller or purchaser asks them. Do not assume. You may be a real estate agent in your state but you cannot assume your one state is representative of the nation. The common law and the doctrine of Equitable Conversion still rules in most states. Since you aren’t familiar with this, I’ll assume your state has adopted in part or in full the uniform code.

And for bk, in the scenario where the ROL is with the buyer, the buyer (who is the equitable owner) may insure the property. In the event of a claim (if I remember correctly) the claim disbursement will be to the legal owner who would sign it over to the equitable owner). This is to protect against fraudulent insurance claims. You would certainly let the insurance company know the state of ownership when discussing coverage.

@PurpleClouds I never assumed anything about all states; that is why I asked what state you live in. Now I am curious to look at a contract and see what it does state regarding this very topic. Possibly it is not law in FL that the seller is responsible, but rather standard in our contracts? Now I am questioning it. It has been years since my real estate license has been active. This is the very reason people should get lawyers for real estate transactions. I, as a licensed real estate agent, took a one week course, took a class test, and then a state test, and then officially could join the realtors association and sell real estate. The legal stuff freaked me out. I never wanted to be a lawyer, and now there I was supposed to be up on real estate law. 90% of the time it was a standard contract submitted, which I did study line by line, literally you go over every clause in the required follow up class to maintain your license after initially become licensed. I just think I might have mixed up what is protecting the buyer in FL, the law, or the contract.

It seems to me that if a house sustained loss before closing while a contract is at play, and if the burden is on the buyer, then the buyer can choose to not close and just lose escrow money. I guess the seller could come after the buyer for the amount of the whole contract, but how often does that happen?

In FL there are delays in closing if hurricanes are within a certain amount of miles because the buyer cannot secure insurance. This is another reason I am thinking the buyer does not bear the responsibility until closing, but I am going to see if I can find the law in my books tomorrow, I didn’t find it in a quick google search. I realize just because an insurer won’t insure, doesn’t mean the law protects the buyer.

My broker was a real estate attorney, he would have added that clause to contracts for our buyers if they weren’t protected. Especially the ones who paid him to represent them as their attorney.

They ‘Lectric Law Library, @PurpleClouds? Your source is the library that “has been Certified ‘FAMILY FRIENDLY’ [by the Manson, Addams & Homer Simpson families]
WARNING!! The Library has been Designated a PsychoHazard by U.N. Joint Resolution #10186 WARNING!!” Seriously?

@bkcunningham You can look this up in Blacks if you like. It was not my source. Law school is my source. The ROL section was correct on the online thing, which I’ve never used professionally of course. Don’t be so touchy about being wrong.

I’m just laughing at your link as a source, @PurpleClouds. Not being touchy. Just laughing.

@JLeslie If you put Equitable Conversion into Goggle you’ll get 4.9 million results. This is not an obscure legal doctrine.

I found on page 182 in Florida Real Estate: Principles, Practices, and License Laws
By Sam Irlander that Florida has adopted the Uniform Act.

http://books.google.com/books?id=w5tfQMgmXDgC&pg=PA182&lpg=PA182&dq=florida+vendor+and+purchaser+risk+act&source=bl&ots=TSEQYQFyj1&sig=yWXGxFezfdLN2Mt9fMzvS9OyYcw&hl=en&sa=X&ei=IyDIT4J4xYGAB7u1yFo&ved=0CHUQ6AEwCQ#v=onepage&q&f=false

:

Page 182 says the seller is at risk, @PurpleClouds.

@PurpleClouds I never said it was obscure. I said now you are making me question my own thoughts on why I think it was the seller who was responsible. I completely believe you, I am not questioning you.

I never did pull out my real estate class books nor the contracts. Thanks for the link :) I can’t read the whole thing because of how it shows on my iPad. I can read it tomorrow on my laptop.

@bkcunningham You aren’t paying attention. That is why I sent the book source to JL so she will know that her state, Florida, has adopted the Uniform Code which replaces the doctrine of equitable conversion and leaves the risk with the seller until closing. Only a handful of states have adopted the uniform code. Good Gosh!!

@JLeslie I just sent the book source so you could relax because Florida has adopted the Uniform Code and the seller retains the risk until closing, absent language to the contrary in the contract. Only a minority of the states have adopted the Uniform Code and the others still live with equitable conversion in contract law.

You probably never learned equitable conversion in your RE classes so the whole concept was foreign to you.

@PurpleClouds Did it say what year it was adopted?

Thanks for all the answers everyone. The inspections are all completed and I’m happy to say there wasn’t anything really major that came up. There are a few things we are asking the seller to take care of before we go to closing, but none of those things are deal breakers. The seller has verbally already said he was going to take care of them, we are in the process of adding an addendum to our agreement so that it’s in writing. Our agreement has had stipulations in it about the inspection and several other things from the beginning (to protect us). We still have just under 2 months until closing, so there’s plenty of time for everything to get taken care of. Now we just wait patiently for closing to get here.

That’s great, @Seaofclouds.