A real estate transaction can be overwhelming, whether you are a home buyer or seller. Buying a house involves a lot of money, and both buyer and seller are obligated to do certain things. It is not just about giving down payment and agreeing on the amount and terms of the monthly payment. On top of making payments to your lender each month, you have to pay your mortgage insurance premium and make real property tax payments, among other things. In certain instances, expert legal representation is necessary.
Aspiring homeowners must take into account several things before proceeding to buy a house. It is not just about monthly payments and interest rates. One has to be familiar with funds in escrow, monthly mortgage payment paperwork, good faith estimate, homeowners insurance policy, and other things required by lenders for borrowers. With all these things that you must take into account, it is not surprising for a homebuyer to commit certain mistakes.
What this article focuses on are common mistakes related to real estate transactions, that include:
Not knowing what real estate agents or brokers cover
Before you have to worry about your obligation as a borrower, and way before you have to think about making mortgage payments, you first need a licensed real estate broker who will give you lots or houses that are up for sale in the local real estate market. Crucial here is the sale price and the actual purchase price that would eventually be agreed upon. This is where their services usually end.
One of the first steps to owning and buying a home is to get in touch with real estate brokers or agents. However, even if it is likely that the licensed real estate agent you contact will also help you get a mortgage company to approve your mortgage loan (with the principal and interest for the total amount owed), the majority of the other things you need to process are beyond the scope of their work. Do not commit the mistake of expecting too much from agents and brokers.
Not taking escrows and the escrow process seriously
The services of an escrow company or escrow agent are vital for the home sale and purchase agreement to be finalized. However, a lot of buyers commit the mistake of not knowing how an escrow agreement works and how important it is for the would-be home loan. Before an aspiring homeowner starts to negotiate for a certain real estate property, he or she should take escrowed funds into the account.
A mortgage lender would usually ask for an escrow deposit or money that is placed in escrow accounts and is held by a third party. Such deposit is held in escrow until both parties involved in the transaction can meet specific conditions. Because an escrow fund involves a neutral third person or a neutral third party, all parties benefit from the security it provides. As such, it is important to take time to know how these would work.
Not fulfilling obligations before closing
After dealing with disclosures and placing an earnest money deposit into an escrow account, an aspiring homeowner must then need to work on closing documents. Both the escrow period and the actual closing is extremely crucial in real estate settlement. Our hands-on Calabasas real estate lawyers can give you a walk-through of escrow instructions and other relevant processes.
If the buyer can prepare all that must be prepared before closing, he or she will be able to get his or her new home without further complications. After closing, the earnest money that was deposited by the buyer shall be released and may be applied to real estate closing costs. However, if you are not able to settle everything with lenders, your closing agent, and the title company before closing, things might become extra stressful for you.
Becoming too emotional or impulsive
Aspiring real estate property owners often become emotional or impulsive about buying a property for sale. There is a tendency to rush things and ignore the need for appropriate diligence when going through the home buying process. A first-time homebuyer would often fall victim to the axiom stating that ‘buyers buy with emotion while sellers sell with logic’. Try to avoid this at all costs.
An impulsive home buyer would often erroneously think that a real estate investment is a passive investment. This is rarely the case since real estate investments require considerable hands-on active management. This is true even if there is a property manager tasked to carry out daily tasks since the owner would still need to be aware of the entire process to make informed decisions. As such, it is vital to consult with trusted Calabasas real estate lawyers who can help you every step of the way.
The need for reliable Calabasas real estate lawyers
Keep in mind that there are several factors to consider when buying real estate. Negotiations between home buyers and sellers are crucial but could be very complex. Legal advice from an experienced Calabasas real estate lawyer is also necessary to ensure that the home purchase is pursuant to state law and federal housing guidelines.
At Moschetti Law Group, our practice serves the needs of Founders by providing real estate law and real estate syndication attorney services to Founders. Whether you are the Founder of a real estate empire or building a business and need assistance with purchase and sales, real estate transactions, or real estate litigation, we serve Los Angeles County, eastern Ventura County, and North Orange County from our office in Calabasas. We also have a primary focus on helping Real Estate Syndication Founders throughout the United States with forming their syndication, understanding crowdfunding, private placement memorandums, and operating agreements.