Archive for the 'Contracts' Category
Amy & Kyle Bergquist’s Home Buyer’s Guide
Kyle and I are proud to announce the release of our brand new Home Buyer’s Guide.
We are dedicated to sharing as much information as possible about the real estate markets and the process of buying and selling homes. This website is one way in which we communicate, telling stories, analyzing data, and reporting on real estate related events. We try to make it interesting, and we try to be timely.
The Home Buyer’s Guide is a new way for us to share information. It focuses on challenges that home buyers face as they search for a property in Greater Hartford. The guide is broken down into two sections. The first walks through the purchase process in an orderly manner. It helps buyers plan appropriately and know what to expect each step of the way. The second section elaborates on important concepts and discusses topics that buyers often ask about during the purchase process. It serves as a resource, giving buyers a place to start their research when they have questions.
Our Home Buyer’s Guide is available as both a Preview Edition and a Complete Edition. The Preview Edition provides basic information needed to get started on a home search, and is available to everyone. The Complete Edition is 26 pages and thoroughly covers the entire home buying process, and is available exclusively to our clients.
Kyle and I are both full-time agents that provide a high level of service. In our experience, buyers who take the time to learn about the purchase process have a better overall experience than those who start looking at homes without any preparation. We’re always happy to sit down and talk – feel free to give either of us a call.
And if you know anyone considering a purchase, please pass on the Preview Edition of our Home Buyer’s Guide as an example of how we try to go above and beyond for our clients.
Hiring a Real Estate Attorney
A good real estate attorney is an important and necessary person to have on your team when you’re thinking about buying or selling property. Closing attorneys work with lenders and the buyers and sellers to account for all of the funds involved, manage the title insurance and title search process, and provide general guidance throughout the transaction.
Sellers typically understand the importance of closing attorneys because they’ve worked with real estate attorneys in the past when they purchased their home. But I’m finding more often that I have a hard time convincing buyers that they should hire an attorney sooner, rather than later, during the purchase process.
For some reason, buyers tend to think that getting an attorney involved in the transaction will become costly. They believe the attorney is going to charge by the hour and don’t want to start the meter ticking by engaging them early on. Fortunately, most real estate attorneys that you could work with just charge a flat fee for their work in closing your purchase. The sooner you hire them, the sooner you’ll have an additional resource available to you that can provide advice.
While we do use a standard purchase and sale contract in the Greater Hartford area, it may be a good idea to have your attorney review all of the terms and conditions before it becomes a finalized document. There may be additional clauses that should be added specifically related to your purchase. Or your attorney may recommend that specific language be removed related to your situation. You may also look for guidance during the inspection phase of your purchase or related to a host of any other issues that could arise.
Buyers often come to me during a transaction and have questions where they are actually seeking legal advice. These questions range anywhere from “What verbiage should we add to the contract when requesting that the sellers have an in-ground oil tank removed” to “I’ve decided I don’t want to buy this house anymore, how do I get out of this contract…”
These are legal issues and unless your real estate agent is also an attorney, they should not be providing you with legal advice. What I’ll typically request in these situations is that my client and I have a conference call with their attorney so we can understand the best way to proceed given their specific situation.
Without involving legal representation, clients can potentially expose themselves to higher levels of risk in their transaction. This can best be avoided by hiring your real estate closing attorney prior to even writing a contract or putting your house on the market. Your real estate agent should be able to give you several recommendations on closing attorneys. Friends and colleagues may also be a good source for attorney referrals. Just make sure the attorney specializes in real estate though, as they’ll be current on that area of law in order to best represent you.
West Hartford Sales Contracts
Real estate activity in West Hartford feels like it has really picked up over the past few weeks. Agents are buzzing around like busy bees, and houses are going under contract. We’re seeing some homes sell very quickly after they are offered for sale, and we’re seeing multiple buyers compete for properties. There is clearly still broad interest in living in West Hartford.
I was curious to see if the data supported our “feel” for the market, so I decided to try to look at the number of homes that went under contract in the town of West Hartford since the beginning of the year. My initial plan was to plot the number of contracts written on a week-by-week basis and then compare that to last year. Unfortunately, I was foiled by the MLS data source. We are only allowed to see the date on which a property went under contract after the listing agent moves it to “Deposit” status.
Properties flow through five standard categories in the MLS during the sales process. They go from “New” to “Active” to “Show” to “Deposit” to “Closed.” The “New” status helps flag new inventory for agents and lasts for a maximum of 7 days before a property is automatically moved to “Active.” Homes that are considered “for sale” are in either “New” or “Active” status. Once an offer has been accepted, the listing agent sets the status to “Show,” which means that buyer’s agents can still show the home to other potential buyers just in case the current deal falls apart. Since most deals stay together, we don’t typically show properties in “Show” status. There are no formal rules about when a property moves to “Deposit” status, but most agents wait until the mortgage commitment contingency has been satisfied.
Which brings me back to my data problem. Most of the recent contracts have not achieved “Deposit” status, so I’m not allowed to see the date on which it went under contract. All I can see is that of the 176 contracts that have been accepted so far in West Hartford in 2009, that 52 have closed already, 53 have reached Deposit status, and the remaining 71 are in Show status. Circumstantial evidence that there has been a flurry of deals, but nothing concrete.
The research got me thinking about the number of contracts written each month versus the number of closings during that month. Agents do a lot of work in the spring, but the results don’t show up until later when the closings actually happen. And West Hartford in particular seems like a town where people like to close during school summer vacation. Below is the number of contracts written versus the number of closings for each month in 2008.
From January through May, the number of contracts exceeded the number of closings by a considerable margin. In June, the number of closings nearly doubles, setting the stage for more closings than contracts through September. Contracts written has a final hurrah in November, followed by a spike in December closings.
The real estate market is busiest when buyers and sellers are agreeing to contracts. That’s when the action is for the agents too – we have to be able to keep up with all of our buyers and sellers. Once the contract is in place, the focus shifts to the inspection, mortgage and legal team members as buyers work through their purchase contingencies on their way to closing.
The time between a buyer and seller signing a purchase contract and the actual closing can vary considerably. What’s hidden in the chart above is that contracts written earlier in the spring tend to close more slowly than average. And contracts written over the summer tend to close more quickly than average.
Although every situation is different, contracts written during March, April and May take noticeably longer to close than those written in July and August. There’s not really any way to prove motive, but the trend seems to support the hypothesis that closings are intentionally scheduled within the summer school vacation if possible. Deals negotiated in the spring extend the closing, while deals negotiated during the summer accelerate it. Deals negotiated when the summer school vacation is not in play cluster around 40 days to close.
So there we have it – a meander through real estate purchase contracts, MLS statuses and days to close. The data seems to support my mental models about both when the real estate market is most active and that West Hartford buyers and sellers tend to work around the summer school vacation. Hopefully I’ll remember to look into my initial question once the 2009 data is available…