If you're familiar with how homes have been bought and sold in North Carolina, you'll see a few fairly signicant changes. The changes are pointed out below. These took affect January 1, 2011.
Typically the residential sales offers are written by real estate agents using standard forms provided by the North Carolina Association of Realtors, in this case, the Offer to Purchase and Contract form. These "fill in the blanks" forms were developed by attorneys and comply to our state laws. The new forms are handled the same way and titled the same.
Home inspections normally take place after the contract is accepted by all parties. Inspections are typically paid for by the buyer, although it is becoming more common for home sellers to have an inspection performed in advance to listing the home. Consider this action to be proactive. Making repairs prior to listing may ease the process of selling in some cases.
Prior to 2011, basic home and pest inspections were a part of the main body of the contract. Dates were inserted to indicate when buyers will complete inspections and when requests for repairs, if any, will be given to the seller.
Also prior, contract contingencies for some types of inspections, such as those for septic systems and radon levels, were added by including a special addendum with the offer. The same was true for many other contingencies, such as appraisal requirements, buyer possession before closing, seller financing and more.
Other standard contingencies included financing provisions, placing deadlines on loan commitment.
Many of the above inspections and contingencies have been removed from the body to simplify the contract. Certainly the buyer should perform the above, but with regard to the contract, we now insert just one deadline. The buyer is essentially performing due diligence of the property and seeking funding. The forms now call for a Due Diligence Period or characterized as a deadline. This becomes the period in which the buyer pursues loan approval, performs inspections and negotiates with the seller any repairs to be performed. Up to 5pm that day, the buyer, may for any or no reason terminate the contract. The Due Diligence Period may be described as a period of time to make the decision of whether not the buyer wishes to go ahead with buying the home. In summary, no multiple dates to track or dealines for repairs request and responses, etc.
Sounds one sided, doesn't it? The buyer has the freedom to walk away and lose nothing, while the seller must sit back and hope they carry through with the sale.
Actually the seller benefits in two ways. First, negotiating a Due Diligence Period is coupled with negotiating a fee to have that time frame. The Due Diligence Fee is made payable to the seller. The fee is non-refundable should the buyer walk. (If the sale goes through, it is credited toward the purchase price.) Second, the home may be placed on a contingent status rather than pending, allowing the home to be marketed and shown to other potential buyers.
Aside from how the forms are now organized, this is the most significant change.
NC law requires that most sellers furnish a residential property disclosure that describes the condition of all systems in the home.
Buyers may pay for surveys. Some sellers may be nice enough to provide a relatively recent copy. Most lenders do not require a survey, but it is recommended.
Attorneys do title searches, acquire title insurance for buyers, and handle the, now called, Settlement Transaction - formerly called the Closing. The terminology has changed to properly describe the signing of documents with the attorney as the Settlement. The attorney then will process the transaction and ultimately record the deed, putting a "close" to the process. The Closing Date now refers to that final completion of the transaction.
With the new Offer to Purchase and Contract, it is now the Settlement Date which is negotiated.
Attorneys and real estate agents work with lenders to coordinate the Settlement, making sure everything is handled on time.
Attorneys prepare deeds for sellers.
In our area of North Carolina, it is typically the buyer who contracts with the attorney of their choice. Attorneys specializing in real estate are processors and a source of knowledge for the buyer and seller when documents are signed. Their role is to ensure the transaction is legal and performed properly.
3. Their share of yearly property taxes, property association dues, and other similar fees (prorated for date of settlement)
4. Fees for a title search and duties performed by their attorney, title insurance policies, hazard insurance for a year, downpayment and lender fees, flood zone certification fees
5. Cost to record the new deed
6. Funds to open lender escrow accounts for property taxes and insurance that will be paid by lender the following year
1. Deed preparation (attorney fee)
2. Tax stamps, an excise tax based on sales price
3. Their prorated share of: property taxes, property association dues, other similar fees
4. Real estate commission if an agency is involved
5. Fees associated with loan payoff or transferring funds into a checking account (overnight fees, electronic fund transfer)
6. Any costs they've agreed to share with the buyer
1. Buyer makes offer, seller accepts (that sure sounds easier than it actually is!)
2. Buyer's earnest money (good-faith deposit) is typically placed in the listing agency's trust fund
3. Lender orders appraisal (buyer or agent might order it for a cash purchase)
4. Inspections are ordered after an acceptable appraisal is received (If time is a factor and confident the home will appraise, inspections may be done earlier)
5. Any repair issues are negotiated with the seller
6. Termite inspection is ordered (should be within 30 days of settlement)
7. Surveys are ordered after a successful appraisal and inspections--buyers don't want to invest too much into the property until they are sure it's a go
8. Buyer applies for hazard insurance and the information goes to the lender and settlement attorney
9. Nearing settlement, buyer arranges for utilities to be switched over
10. Settlement takes place at the office of the buyer's attorney
11. Buyer gives attorney certified funds to pay for settlement and signs loan papers and other required documents
12. Attorney records new deed at the courthouse and disperses funds due to all parties
13. Keys are exchanged from seller to buyer!