by Bruce L. Dorner
The apple blossoms are on the trees and spring cleaning has convinced you that it’s time for a new house. The classified pages of the local paper are on the kitchen table and there’s a really nice four bedroom listed in a great neighborhood for only $299,000. Gee, I wonder how much I can get for my present house?
The American society has become more mobile than the days of the pioneers. It seems that the average term of home ownership is about twelve years, then we up and move again! Some move from an apartment to a condominium. Others move from a condominium to a house, and others sell a house to get away from mowing the lawn and move to a managed condominium. I’m truly amazed that people who make decisions about hundreds of thousands of dollars expect that it’s all part of a “standard contract” for the sale or purchase of a house.
Permit me to dispel one great myth. There is no such thing as a standard contract! Allow me the liberty to repeat this premise. There is no such thing as a standard contract. Yes, the New Hampshire Association of Realtors has a very good form they use. It is an excellent starting point, but it does not cover all issues. That’s why there are a number of blanks on the form and a special place for “additional provisions.” Yes, it is a good idea to work with a licenced real estate broker. They have specialized training and experience to help you market your present house and find the right new home for your family without wasting a lot of time deciphering cryptic classified advertisements. Brokers are also very capable to help you compute just how much of a house you can afford and then connect you with several choices for banks and lenders.
However, consider that if you are a buyer, the broker is usually working for and is being paid by the seller. Their job is to find a qualified buyer. We are seeing more people using a “buyer’s broker” to establish a more level playing field. In either event, you may want to have your own attorney review any offer or contract before you sign it. Believe it or not, this is the most critical document in the entire house purchasing paper blizzard and the one where a little caution can go a long way to protecting your investment.
Sure, you can use the Internet, and it’s a growing trend. However, use caution as the documents offered over the Internet are often about as valuable as what you pay — nothing!
I’ve recently encountered a few house transfers from the Internet. Clients have come to my office with nicely formatted contracts which have conflicting terms and are subject to governance by the laws of another state. I don’t know about you, but I’m not too keen on the idea of traveling to court in Nebraska to work out a problem with my house in Londonderry!
Sometimes I see a document with a title “Offer to Purchase.” I am asked what’s the difference between an Offer and a Contract. Well, in practical terms, they’re about the same. In some states buying a house is a two-step process where they start with a short form offer and then follow it up with a more elaborate contract after a basic understanding is reached. In Londonderry, it’s quite common to go directly to a fully detailed contract to cover both steps. No matter which pattern you follow, these are legally binding contracts and each word has special meaning. Most people don’t appreciate the fine points of real estate agreements and the risks of poorly drafted contracts.
Let’s cover a few of the basics which are often left for a “fill-in-the-blanks” form. First, be sure you have all the names and addresses inserted correctly and the proper reference for the deed. I have had a few people try to sell houses they didn’t own. It was in the name of their parents. They didn’t think that detail was important. Second, be sure to have an adequate description of the location of the house so there’s no problem identifying the property by someone who drives by the front door. Next, price and terms are important. Do you need to make a large deposit? How long do you have to obtain a purchase money mortgage so you can pay for the house, and at what rate? Is the entire deal conditioned upon the sale of your present house? If so, by what date? When do you want to sign the papers so you can have the keys to your new castle?
What inspections of the house do you want to conduct? If there’s a problem, what standard governs if something needs to be repaired or if you want to back out of the deal? Also consider what items of personal property remain with the house. Do you want the washer and dryer as part of the transaction? Is the homeowner going to dig up their favorite apple tree from the back yard? Is the crystal chandelier in the dining room staying? I caution sellers that if an item is not specifically excluded from the sale, and it’s screwed, bolted, growing in earth or connected to the wall, floor or ceiling it stays! That’s a conservative position, but it’s saved a few of my clients over the years.
What happens to your money if there’s a problem along the way? What happens if your bank says the house is overpriced? What happens if termites have established residence under the porch? What do you do if the water has radon? What happens if the sale of your present house falls through the cracks? These are but a few of the questions you should explore with your attorney. Remember, you’ll probably never make a single purchase for this much money in your lifetime. Seek professional assistance. Don’t try to be your own expert.