Whether you want to work in real estate or just hope to own your own home someday, there are some basics you’ll need to know about real estate law. Deeds and mortgages, listings and offers, closings and walk-throughs. It may sound a little like a foreign language, but the basics of real estate law aren’t really that complicated. Here’s what you need to know:
Pre-Qualification: Before you can make a real estate purchase, you need to know what you can spend. You can work with your lender to determine how much you can realistically afford. Then, they’ll provide you with pre-qualification documents to present to the seller or their real estate agent. When you’re pre-qualified for a mortgage, you’re looked upon more favorably by sellers, so it’s really worth it.
Mortgage: No one can just plunk down huge sums of cash and buy a house. Instead, you’ll put down a deposit and finance the rest. That finance comes in the form of a mortgage. The bank or other financial institution gives you the money for your new house and you promise to pay it back over time, with interest. The mortgage document is the legally binding contract that has all the details of your agreement.
Offer to Purchase: Let’s say you’ve found the house of your dreams and it’s in a price range you know you can afford. The next step is to make an offer. The great thing about being the buyer is that you decide what you want to pay. The seller’s “listing” price is what they want, but you get to make the offer you feel is fair. Then, you submit it in writing, along with an earnest deposit, which is a small and refundable amount of money that demonstrates you’re serious.
Purchase & Sales: If the seller accepts your offer, the next legal document you’ll be signing is a Purchase & Sales Agreement. Among the items on the P&S are who’s selling, who’s buying, the cost of the property, the deposit, the sales commission, the mortgage amount, property inspection and walk-through details and dates about when everything will be due and done.
Closing: The closing is when all the legal documents come together along with all the parties involved in the real estate transaction. You’ll sign settlement agreements and financial documents and the property deed will be transferred from the seller to you, the buyer. Congratulations!
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