Common Real Estate Practices in the Cookeville area
Agency Disclosure and Election
When you purchase a home in the state of Tennessee, the relationship between brokers, buyers and sellers must be disclosed to all parties in the real estate transaction. American Way Real Estate Co., Inc. offers agency relationships to both buyers and sellers and can provide materials to help you decide which agency relationship best meets your needs.
Offers to Purchase
The offer to purchase is usually provided by the selling broker. This instrument should cover all terms of the proposed transaction and must be accompanied by an earnest money check from the purchaser. Once the offer is fully negotiated and signed by all parties to the agreement it is a legally binding (enforceable) contract. Both purchasers and sellers should make sure they understand all terms and conditions of the offer before signing it and should seek legal counsel if they have doubts or concerns.
The earnest money deposit made by the purchaser at the time the offer is written must be an amount acceptable to the seller. A personal check is acceptable. If the seller accepts the offer, the earnest money is immediately thereafter deposited in the broker’s escrow account. It is held there until closing, at which time it is applied toward the purchaser’s down payment and/or closing costs. If the offer to purchase is not accepted by the seller the earnest money check is never deposited and is returned.
Contracts are generally contingent upon the purchaser’s ability to secure financing described in the contract within a specified period of time.
Closing and transfer of title generally take place within 60 days after acceptance of the contract to purchase. The date when closing is to take place is negotiated and agreed upon by buyer and seller in the contract to purchase. There are occasionally unavoidable delays in securing loan approval. You should be aware that even the most diligent agent will have no control over the situation once your loan application is submitted.
A specific date of occupancy is negotiable and is a term of the contract.
Closings generally take place at a bank or an attorney’s office with all parties to the transaction being present. The listing and selling agents and/or brokers are also present.
Mortgagee’s title insurance, which protects the lender only, is required by all lending institutions in an amount equal to the amount of the loan. Purchasers are encouraged and advised to obtain owner’s title insurance for the full value to the residence, or to discuss this matter with legal counsel.
An attorney representing either a bank or a mortgage company, whose fee is paid by the mortgage company/bank and is part of the closing costs, handles most closings in this area. This closing attorney is responsible for the title examination, recording of the documents, etc. Buyers and sellers are encouraged to seek private counsel to resolve any legal questions regarding the transaction; however, in most instances this is not necessary. In those instances where no mortgage company/bank is involved, the purchaser may engage, at his expense, an attorney he chooses to handle the transaction. Most real estate companies in this area also close some deals in-house also.
Purchasers are required to bring a policy for fire and hazard insurance to the closing and, if applicable, a flood insurance policy. The minimum value of this policy should be equivalent to the loan amount. One year’s premium must be paid prior to, or at, closing and the policy must contain a loss payable clause in favor of the lender. Should you pay for the policy prior to closing, you must furnish the paid receipt at closing.
Most real estate contract require the seller to warrant that at the time of closing the Property will be in the same condition as it was on the date the agreement was signed by the seller. It is the purchaser’s responsibility to check that all appliances remaining with the premises and the heating, air conditioning, plumbing and electrical systems be in normal operating condition prior to closing, as the seller’s responsibility ceases at closing.
Purchasers may have a home inspection performed by a professional home inspector if they choose. Costs on these inspections vary by inspector; the purchaser usually pays this cost. The correction of any defects determined by the inspections is usually negotiated between the purchaser and seller.
Lead Based Paint Disclosure
Federal law requires that individuals receive certain information before renting, buying, or renovating pre-1978 housing. Sellers and Landlords have to disclose know information on lead-based paint hazards before closing on a house or before leases take effect. Leases and sales contracts will include a federal form about lead-based paint in the building. Buyers will have up to 10 days to check for lead hazards. Renovators will also have to provide a pamphlet before starting work. A buyer may waive the 10-day inspection period if they choose to.
Pest Inspection and Clearance Letter
Property is to be inspected by a licensed and bonded pest control company, at Seller’s expense, and any infestation of termites or other wood-destroying insects, or structural damaged caused by such infestation, or by wet rot, or by dry rot, or by fungus shall be corrected at Seller’s expense. A current certifying letter shall be furnished to the purchaser at closing. Neither seller nor agent(s) will be held responsible after closing.