Understanding a Real Estate Transaction for Homebuyers
By: Tilden Moschetti
Before proceeding to buy a house, there are several things that hopeful homeowners must take into account. This can range from monthly payment, funds in escrow, good faith estimate, homeowners insurance policy, and other paperwork prepared by lenders for borrowers. It is not just about monthly payments and interest rates. In certain instances, legal representation is crucial.
If you are a first-time home buyer or seller, you might be overwhelmed with the process. Buying a house involves a lot of money, and this is on top of the down payment and monthly mortgage payment. As such, diligence is required throughout the entire home buying process. A final walk through with your realtor is not enough. Negotiations between home buyers and sellers are crucial, but they can be quite complex. Legal advice from an experienced Calabasas real estate attorney is also necessary to ensure that you are not victimized by scams and that the home purchase is pursuant to state law and federal housing guidelines.
Homebuying and real estate brokerage
Contact your real estate brokers (or real estate agents). Doing so is the first step to owning and buying a home. Your real estate broker will give you lots or houses that are up for sale, with a purchase price that would eventually be agreed upon. Afterward, you have to fulfill your obligations as a borrower, and mortgage payments are just one of the many things that you have to carefully take into account. For this reason, all real estate transactions must be taken seriously.
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. While your real estate agent could 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 work on are outside of the scope of their work.
Escrows and the escrow process
Unknown to some, an escrow agreement plays a vital role once an aspiring homeowner starts to negotiate for the real estate property being eyed. Here, the services of an escrow company or escrow agent are crucial for the home sale and purchase agreement to be finalized. Our Calabasas real estate attorney can give you a walk-through of escrow instructions and other relevant processes.
A mortgage lender would usually ask for an escrow deposit or money that is placed in an escrow account and is essentially held by a third party. Such deposit is held in escrow until both parties involved in the transaction meet the conditions that were set. Since an escrow fund involves a neutral third person or a neutral third party, all parties benefit from the security it provides.
Disclosures and things that should not be taken for granted
Endangered animal species such as the California gnatcatcher, the red-legged frog, or the fairy shrimp may not seem relevant when transacting real estate. However, if any of these are on a property that you intend to build on (say, fairy shrimps in vernal pools), there is a possibility that you will not be able to develop the lot.
The presence of endangered animals should be part of what is disclosed during the escrow period. If you are planning to buy a lot for a single-family home, this should not be a major problem. However, there are some projects (depending on their size or potential impact, as determined by the rules under the California Environmental Quality Act) that may require an environmental review.
Another issue that arises is the presence of open space, which is a designated area in subdivided rural parcels that cannot be built upon. Common examples include areas around a natural feature, such as a stream.
The need for closing documents
If the buyer can prepare all that must be prepared before closing, he or she is closer to getting his or her new home. The escrow period and the actual closing are extremely crucial in real estate settlement. Before closing, work on everything that you are obligated to do, particularly those involving lenders, your closing agent, and the title company. Consult with a trusted Calabasas real estate attorney to know all that you need to do.
After closing, the earnest money that was deposited by the homebuyer shall be released and may be applied to real estate closing costs.
The need for a reliable real estate lawyer
Keep in mind that there are several factors to consider when buying real estate. A four-acre lot could indeed be ideal for a four-bedroom dream house. However, if two of the four acres were designated as open space, or if the presence of some rocks cuts down the available space for the required septic system, such a lot could not be the best option.
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.