So you want to buy or sell property… Here is some helpful real estate information.
Who Real Estate Agents Represent
When buying or selling real property, you will find it helpful to obtain the assistance of a real estate agent who is a member of the National, State and local Association of REALTORS®. Real estate agents (brokers) are licensed and regulated by the North Carolina Real Estate Commission. REALTORS® are licensees that also adhere to a strict code of ethics.
In today’s real estate market, sellers can ask their broker to be a “seller’s agent”, representing only the seller. Buyers can hire an agent to be strictly a “buyer’s agent.” In many cases, sellers prefer to allow their “seller’s agent” to also bring prospective buyers to the property, thus, in those situations, the broker becomes a “dual agent.” The same “dual agent” status occurs when a “buyer’s agent” shows the client a property that is listed by that agent or his or her firm. Dual agents must strictly adhere to the rules of agency regarding full disclosure of material facts while not disclosing non-material facts.
If you choose to have an agent represent you, the agent must promote your best interests while also being fair to both parties in a transaction. Your agent must also be loyal to you and follow your lawful instructions; exercise reasonable skill, care and diligence; account for all funds he handles for you; and disclose any information to you which could influence your decision in the transaction.
Before a real estate agent can represent you, the agent must have you acknowledge the receipt of a brochure (Working with Real Estate Agents) written by the North Carolina Real Estate Commission informing you about the three types of agency. At that point, the agent can represent you verbally; however, that agent may require you to sign a written agency agreement before continuing to help you. In either case, a written agency agreement must be in place prior to submitting an offer on a piece of property. Real estate agents must disclose to all parties involved who they represent.
A General Overview of the Real Estate Process in North Carolina
The Agreement
An “Offer to Purchase Contract” is completed with a broker’s assistance, signed by the Buyer and may be accompanied by an earnest money deposit, traditionally 1-2% of the sales price. Using the current “Due Diligence” contract, the earnest money is often deferred until the end of the due diligence period since the buyer has the right to withdraw from the contract for any reason during the due diligence period. Since the buyer has the right to withdraw, the seller most likely will require the buyer to pay a non-refundable due diligence fee for that right. Earnest money deposits are held until closing in a non-interest bearing legally approved trust account, and both the earnest money and the due diligence fee are credited toward the purchase price at closing.
During the Due Diligence Period, the buyer is expected to obtain all of the information necessary to make an informed decision about purchasing the property, including obtaining an inspection, negotiating inspection results, securing a loan, getting an appraisal, a survey, insurance, examining covenants and home owner association documents, and obtaining all other information possible.
Mortgage
Most buyers will find it helpful to visit with a mortgage lender prior to beginning their house search in order to understand the loan process and to find out what amount they are qualified to borrow. Even though there is no such thing as a guaranteed loan approval, the lender needs to make the buyer confident that the loan will be there at closing. The deadline for obtaining this degree of confidence is the end of the Due Diligence Period. Lenders are required to furnish written estimates of all loan costs as well as other closing costs.
Closing (Transfer of Title)
A typical real estate transaction will usually span 30 to 60 days and conclude with a closing. The closing process has several parts. The most prominent part is the “settlement conference” which is normally held at the office of the buyer’s attorney. In North Carolina, closings are conducted by attorneys and not title companies. At the settlement conference, all papers are signed and down payments are made. Items that need to be pro-rated, such as taxes and loan interest, are computed to this date.
After the settlement conference is conclude, the closing attorney must verify that the loan funds and other cash have been received, pay all outstanding liens, and record the necessary deeds and deeds of trust. Once the deed is recorded, the buyer can receive the keys and take possession of the property. Prior to the closing the buyer is advised to arrange for the conversion of all utilities.