Amy Hoag - Real Estate Professional

Answer: Buying a home, however, is far more complicated than buying a car. Plus, you're not likely to take title to a home as quickly as you can drive new car off the showroom floor. How long it takes to close a sale varies from one home purchase transaction to the next. Closing occurs when title to the property transfers from the seller to the buyer. The closing date is one of the many elements of a home purchase contract that are negotiated by the buyer and seller. The buyer usually proposes a closing date in the initial offer. If that date is unacceptable to the seller, a counteroffer can be made with a different closing date. The closing date can be any date, other than a weekend or holiday, that is mutually agreed on by the buyer and seller.

From a practical standpoint, closings tend to be 30 to 60 days following the date that the purchase contract is ratified. A contract is ratified when it and any counteroffers and addenda are accepted and signed by both the buyer and seller. Practical considerations usually determine how long the closing will take. Most home purchase contracts include contingencies that must be satisfied before closing can occur. The most common are contingencies for the buyer's financing, inspections of the property and examination of title to the property.

Most buyers finance a portion of the purchase price with a mortgage. It can take two to four weeks to approve a new purchase mortgage depending on market conditions and how far along in the process the buyer is when the contract is ratified. Pre-approved buyers can close quickly because they are already approved for the mortgage they need before they make an offer. A buyer who is paying all cash with no mortgage can close in a matter of days. However, it's wise to have any property you buy thoroughly inspected before closing. Inspections can take one to two weeks to complete, depending on availability of inspectors and other factors.

Question: What is included in a home sale?

Answer: It's helpful to understand the difference between real property and personal property. Real property refers to the land and anything that is permanently attached to it, such as a house, trees, shrubs and a fence. Personal property is movable--things that are not permanently attached to real property. Furniture, clothing, art work and potted plants are examples of personal property. A fixture is an item of personal property that is attached to the real property and is therefore treated as real property such as plumbing and light fixtures. Fixtures typically transfer to the buyer with the real property unless they are specifically excluded from the sale. Personal property, however, is not usually included in a home sale.

Buyers sometimes assume that an item of personal property is included in the sale because it appears to be a fixture -- that is, it looks like it's permanently attached. For example, a microwave oven can appear to be built-in when it is actually only set into an opening in a cabinet. If it's not permanently attached and the sellers are not including it in the sale, it is the seller's personal property. A decorative mirror hung on a hook, like a piece of artwork, is personal property. Even though the mirror might at first glance appear to be a fixture, it's not unless it's permanently attached to the wall. The attachment issue is critical. A toilet is personal property when it's sitting on display at a home renovation store. It becomes a fixture and part of the real property when it is permanently installed in someone's house.

Answer: The ideal time to do a final walk-through inspection is during the week before closing. The main purpose of the inspection is to verify that the property is in substantially the same condition as it was when you agreed to purchase it. Home purchase contracts usually require the seller to maintain the property until they turn it over to you. The seller shouldn't let the property run down as soon as the pending sale sign goes up.

A walk-through also allows the buyer the opportunity to confirm that any work the seller agreed to do before closing has been done or is in the process of being completed. If the seller agreed to leave certain appliances, the buyers can confirm that they haven't been moved out. Unless the property is vacant at the time of the walk-through, it's impossible to know how the property will look after the seller moves out. Most purchase contracts require that the sellers remove debris and all their personal property, except for items that are specifically included in the sale. Cleanliness standards only require that the property be broom swept when the seller delivers possession to the buyer.

Question: What is a home warranty? Should I offer one as a seller? Should I get one as a buyer?

Answer: A home protection plan--also called a home warranty-is an insurance policy that insures homeowners against defects in the major systems of their home. Precisely what is covered will vary from one company to the next. Most policies cover the heating, plumbing and electrical systems as well as built-in appliances like the stove, dishwasher and garbage disposal. Some companies will cover movable appliances like the refrigerator, washer and dryer for an extra charge. And some policies even include roof coverage-if you pay an additional fee. Policy terms are usually for one year and they are renewable. The annual cost of a policy varies but you might expect to pay about $400 for a moderate-size home. Protection plans are available for both single-family residences and condominiums.

Home protection plans are popular in the home sale industry because they provide a relatively inexpensive way to take care of home defects that develop soon after the home sale closes. For example, let's say the water heater quits working the day after closing. A new hot water heater can cost a buyer several hundred dollars. However, if there is a home protection plan in place at closing, the hot water heater will probably be replaced for the nominal cost of a service charge. Home warranty service charges vary but they are often in the range of $30-35 per call. Some sellers offer to pay for a home protection plan to cover the home for the buyer for one year. If problems arise during that year, the buyers simply call the warranty company and pay the service charge. The warranty company pays for the repair or replacement.

Be sure to read the policy carefully because there are exclusions from coverage. For example, pre-existing conditions are not usually covered. So if the furnace hasn't worked properly for years, it probably won't be covered by the buyer's home protection plan. Also, there are limitations on coverage. For instance, some policies offer roof coverage, but only up to $1,000 of work. Seller coverage is also available to cover the home during the listing and sale period. Seller coverage works the same as buyer coverage except that there are usually more limitations on the coverage. For example, the furnace is usually covered under both buyer and seller coverage. But, the amount of coverage offered under seller coverage is often less than the amount that's available to the buyer if the furnace breaks down after closing. One seller who had signed up for seller coverage was able to have some of the defects that were discovered during the buyer's inspections fixed by the home protection plan company for the cost of a service charge. This was a great deal for the seller because it saved him money and he didn't have to pay the policy premium until closing.

Answer: Radon gas is discharged from the soil nearly everywhere, producing low levels of concentration in our atmosphere. When radon emission occurs beneath a building, it can reach higher concentrations because it is being contained within the enclosed space of a structure. The air pressure in most buildings is less than that of the outside environment, and radon gas is highly attracted to low pressure indoor areas. Over-reaction to the presence of radon has become quite common, mainly due to inadequate information. If such fears were warranted, we might tremble at the thought of entering any building that has not been tested. To maintain a reasonable perspective, we should remember two basic facts: · The effects of radon are based upon very long-term exposure (approximately 30 years of repeated contact); · Radon mitigation is neither complicated nor unduly expensive.

Fortunately, this natural attraction to low pressure areas can be used to draw the radon away from your home. The most common mitigation method is to install a PVC shaft, extending from beneath the floor to the open air above the roof. The shaft is usually concealed in an obscure location, such as the corner of a closet, where it extends through a small hole in the slab. Once the shaft is in place, it is equipped with a quiet electric fan, designed to operate continuously and permanently. The low pressure created by the fan draws the radon from the soil beneath the building and discharges it through the opening above the roof. The cost for this type of radon mitigation is approximately $1200 to $1500; not pocket change, but certainly reasonable if it renders your home safe and saleable.

Answer: With a home inspection, most repairs are subject to negotiation between the parties of a sale. Typically, buyers will request that various conditions be repaired before the close of escrow, and sellers will usually acquiesce to some of these demands. But with most building defects, sellers make repairs as a matter of choice, not obligation; to foster good will or to facilitate consummation of the sale. There are, of course, those few rigid sellers who will flatly refuse to fix anything, even at the risk of losing the sale. Fortunately, this response is the exception, rather than the rule. Sellers maintain the legal right to refuse repair demands, except where requirements are set forth by state law, local ordinance, or the real estate purchase contract.

Before you make any demands of the seller, try to evaluate the inspection report with an eye toward problems of greatest significance. Look for conditions that compromise health and safety or involve active leakage. Most sellers will address problems affecting sensitive areas such as the roof, fireplace, gas burning fixtures, or electrical wiring. Routine maintenance items warrant a lesser degree of concern and should not be pressed upon the seller. If the house is not brand new, it is unreasonable to boldly insist upon correction of all defects. Such demands can alienate the seller and kill the sale. Your willingness to accept minor problems may persuade a seller to correct conditions of greater substance. The purpose of a home inspection is not to corner the seller with a repair list. The primary objective is to know what you are buying before you buy it. All homes have defects; it's not possible to acquire one that is perfect. What you want is a working knowledge of significant defects before you close escrow. As the old sea captain once said, "It doesn't matter if your boat has a leak, as long as you know it's leaking."

Answer: RI Law does not require that properties be surveyed before conveyance to a new owner. The majority of the time, a property is not surveyed. Rather, the seller signs an affidavit attesting that he knows of no property line disputes and that there are no undisclosed easements, encroachments, burial grounds, etc. Due to the expensive nature and length of time it takes to have a survey done, this is often a good alternative.

Answer: The amount of money required for an earnest money deposit is negotiable; however, 5% of the sales price is a customary deposit in Rhode Island. Typically, upon making an offer a $1000 good faith deposit is presented. When the offer is accepted, this amount is increased to 5% of the total sales price. This is only customary and often is not possible when a buyer is putting $0 down on a mortgage. An adequate amount of money is needed to make a seller feel comfortable in taking his/her property off of the market. The amount that will make a seller comfortable varies from seller to seller.

Frequently Asked Questions