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BUYER GUIDE

Buying property involves a seemingly endless number of details. This guide is designed to make the process easier to navigate and understand. We hope it serves as a valuable reference, and ultimately supports you in finding your special place in The Berkshires.

1. REALTORS, AGENCY & COMMISSION

CHOOSING A REALTOR®

Buying a property is more than a business transaction. It’s personal. And it involves a seemingly endless number of details. Your realtor® is your guide for the entire process. Make sure your real estate agent is a REALTOR®, which means they have pledged to uphold a stringent code of ethics.

When choosing a realtor® to work with, be sure they…

  • Listen carefully and “get” you.
  • Understand your priorities, taste and budget—your vision.
  • Are personable and easy to be with—you may be spending a lot of time together!
  • Have a strong sense of integrity—you should feel confident they will effectively advocate for you during negotiations.
  • Know their territory.
  • Have a good handle on market conditions.
  • Have community connections to additional professionals (such as attorneys, inspectors, and contractors) that you will need to reach the closing table.

Depending on your search criteria, you may find plenty of properties you want to see, or very few. Your realtor can guide you by helping you focus on properties that fit your vision, or by generating ideas you may not have thought of. Don’t simply ask your realtor to make appointments at properties you’ve seen online—discuss the options together.

AGENCY RELATIONSHIPS – WHO REPRESENTS WHOM?

State law requires your realtor® to present you with the MASSACHUSETTS MANDATORY REAL ESTATE LICENSEE-CONSUMER RELATIONSHIP DISCLOSURE at your first personal meeting. (This is a disclosure, not a contract.) Once you have asked them be your buyer’s agent, they will check “BUYER’S AGENT” on the form. But if you have not yet engaged them as your buyer’s agent, and you are looking to see a property listed by them or their company, they will check “SELLER’S AGENT,” indicating that they represent the seller. Here is a link to the form >>. Legal definitions are on page two.

When you view a property that your buyer’s agent (or their company) represents, this creates a dual agency. By signing the BUYER’S CONSENT TO DUAL AGENCY form, you acknowledge that this may occur. A dual agent must be neutral with regard to any conflicting interest of the seller and buyer. Our company does a substantial number of dual agency sales. So that both buyer and seller feel equally and accurately represented, we make sure that each party has an agent communicating on their behalf.

If you submit a Purchase & Sale Agreement in a dual agency situation, you will include the BUYER and SELLER NOTICE OF DUAL AGENCY. Referring back to the consent forms previously obtained, this form notifies all parties that a dual agency is in fact occurring.

REALTOR® COMMISSION

The seller pays the commission. It is then split between the listing brokerage and the brokerage that brings the buyer (or it is split internally, in a dual agency sale.) The commission is then split again between the brokers and the agents participating in the sale. Your agent receives no compensation until closing.

2. Be Ready to Make an Offer

When you find the right property, you want to be ready to act. Even in a slow market, desirable, well-priced properties can sell quickly. Sometimes properties that have languished on the market can suddenly receive multiple offers. Here are four recommendations:

KNOW WHAT YOUR BUDGET IS

A bank may offer to loan you more money than your budget allows. You need to be comfortable with your monthly housing expenses, which include not just the mortgage payment, but also property taxes and insurance, plus condo or homeowner/road association fees. Also take into consideration that the interest you pay on your loan is deductible (up to $750K as per December 2017 tax bill).

TALK TO A LENDER ASAP

We highly recommend you choose a local bank. They are often much easier to work with, and are familiar with the the particulars of Berkshire real estate. Run financing scenarios with them. If need be, your lender can advise you on how to repair your credit.

Getting pre-qualified gives you a general idea of what you are able to buy. Getting pre-approved is a more in depth process that gives you the specific amount you can borrow, and what the monthly payments will be. Getting pre-approved enables you to make an offer as soon as you find the right property.

See Section 7, The Loan Process, for a guide to what happens once you submit a mortgage application.

Important:

During the loan process, do not make any big purchases or use credit cards excessively, open or close banking or credit accounts, or change jobs. This will negatively impact your credit, and could cause your loan to be denied.

PREPARE YOUR CURRENT PROPERTY

If you need to sell your current property in order to buy, is it listed—or at least fully prepared for market? If not, it will hamper your ability to make an offer on a new property, as most sellers will not consider a home sale contingency. (You may want to refer to our Sellers Guide for info on getting your house listed.)

ENGAGE AN ATTORNEY

You will need to engage an attorney to review contracts and associated documents, check title, advise you about title insurance, and guide you through the home stretch to closing. If there is no survey or plot plan on the property you end up buying, your attorney may order a plot plan for you. Occasionally attorneys will handle tricky negotiations along with or instead of your realtor®.

3. Your Search Criteria

Use the following questions to focus your vision.

Location, location, location

  • What towns are you drawn to? Rural or with a vibrant town center? If rural, how far from town is acceptable?
  • What school district?
  • How important is commute time, whether to work or school?
  • If you’re a weekender, how important is drive time to your primary residence?
  • How close do you want to be to recreational activities like hiking and skiing, or cultural venues like Tanglewood and theaters?
  • Consider water source: Private well, town water, or a private water company.
  • Consider: Town sewer vs septic system
  • Consider: Not all towns have high speed internet. Some now have broadband, while a few have only satellite internet. Some have DSL or cable. What type of internet do you need?

Helpful Hint:

Get a feel for the area by walking the town centers, and driving around the countryside.

Style, Age and Condition

The Berkshires has diverse housing stock—from antique farmhouses and colonials to mid-century and 1980s contemporaries to newer construction. Some homes are move-in ready, while many have deferred maintenance issues, and others require extensive renovations.

  • What style and vintage do you prefer?
  • Is “move in ready” important? Are you willing to make cosmetic updates? Mechanical updates? Are you willing to take on a major renovation?

Helpful Hint:

When you visit a home for the first time, be objective and put your filters on. You’re not buying the decor. You can change the stained shag carpet and the Pepto-bismol wall color. Those formica counters and that avocado green refrigerator can go!

You will almost always paint, decorate, and make minor improvements to suit your personal needs and taste.

If you don’t have a good imagination, ask your realtor for help envisioning how the property could work for you, or bring in a designer or builder.

House Amenities

  • Do you seek one-level living?
  • Do you require a first-floor master? Must it have an en suite bathroom?
  • Open floor plan, or intimate and cozy? Any must-haves like a mudroom, office, space for guests/inlaws?
  • Do you prefer wood floors or carpet?
  • How important is natural light to you?
  • Is a screened porch a must? Deck or patio?
  • How important is having a fireplace or wood/propane/pellet stove?
  • Are you looking for a property with green features such as energy efficient windows, passive/active solar design or reclaimed materials, or do you want a property conducive to adding them?
  • Homes typically are heated either by hot water baseboard (boiler) or forced air heat (furnace). Some have electric baseboard. Newer or renovated homes may offer radiant heat in some areas. Split units are becoming more and more prevalent. What are your preferences?
  • Air conditioning. In the Berkshires, relatively few homes feature air conditioning. Is it important to you?
  • Most of the time, older homes are fueled by oil, some contemporaries with electric. Natural gas is found only in a couple of village centers. Newer and renovated homes may feature propane fuel, or even solar. What are your heating fuel preferences?
  • What are your preferences regarding where laundry is located?
  • Some houses are built on a slab or have only a crawl space. Is a basement important? Must it be finished or have the potential to be finished? What about interior/exterior access?
  • What about off-street parking? Garage? If so, how large? Attached or detached? Finished? Extra space for storage or workshop?

LAND

  • Is a large, level yard important so kids/grandkids can play? Or do you prefer being tucked in the woods with little or no grass to mow?
  • Surprisingly, there are relatively few “view properties” in the Berkshires. How important are big views?
  • Do you want to garden? Do you seek natural features like ponds or streams?
  • How much privacy from other homes do you desire?
  • How sensitive are you to road noise? Do you want to maintain and plow a long driveway?
  • Is a pool an asset or a liability?

4. The Nitty Gritty

This section introduces you to a variety of practical details you may encounter during your search.

FINANCIAL CONSIDERATIONS

The following items can affect your budget. Let your realtor know if you want to take any of them into account.

  1. Property Tax Rates. Property tax rates differ from town to town.
  2. Homeowner and/or Road Association fees.
  3. Insurance. If the house is on a river or lake, you may be required to get flood insurance in addition to your homeowners insurance, which increases annual costs.
  4. Energy efficiency. Green features can help the budget by lowering annual operating costs.
  5. Rental Potential. You may want to take advantage of properties that lend themselves to generating rental income.

ASSESSED VALUE, MARKET VALUE & APPRAISED VALUE

It’s useful to understand each of these terms.

Assessed value is what the town uses to calculate your property tax.

Market value is what a buyer is willing to pay and a seller is willing to accept for a given property. The CMA (Comparative Market Analysis) shows what buyers have recently paid for comparable properties. Along with their gut knowledge of what the market will bear, a realtor uses the CMA to help you get an idea of market value.

Appraised value is a licensed appraiser’s version of the realtor’s CMA. It is used by the bank to make sure the mortgage is in line with the value of the property.

COVENANTS AND RESTRICTIONS

Some developments have covenants and restrictions to regulate the use, appearance and maintenance of the community. If you don’t want to be bound by these, you should look elsewhere.

CONDO DOCUMENTS

A savvy condo buyer scrutinizes the financial health of the association. You will also review additional documents such as the Master Deed, the Bylaws, and Rules & Regulations. Your attorney can help you with this.

SURVEYS AND PLOT PLANS

A survey is a detailed, reliable depiction of all the boundaries and dimensions of the property, as well as the position of any structures—house, sheds, fences, etc. It also shows any encroachments and easements. A plot plan is a less precise version, focusing simply on the placement of the structures and the boundaries.

If a seller has an existing survey of the property, they will provide it. But in many cases, they don’t have one. Typically, your attorney will order a plot plan for you—not just for your own benefit, but because most lenders will require one.

HEATING, COOLING & DOMESTIC HOT WATER

Heating and cooling systems—both type and fuel—are key components of your search. Here are the options:

HEATING

  • Hot water baseboard (boiler)
  • Forced air heat (furnace)
  • Electric baseboard
  • Radiant (provided by hot water, or sometimes electric, under the floor)
  • Direct (Wood stoves, pellet stoves, propane stoves/fireplaces)
  • Ductless mini-split and whole house multi-split systems (both heat and A/C)

COOLING

  • Central Air (using ductwork throughout the house) or
  • Ductless mini-split and whole house multi-split units

Relatively few homes in the Berkshires feature air conditioning. Central A/C can share ductwork with forced air heating systems, so when a given home has forced air heat, air conditioning can be added as long as the ductwork is insulated. (Older systems lack insulated ductwork.)

HOT WATER

  • An independent hot water heater (electric, propane, natural gas, solar) or
  • “In line” with a boiler (oil, propane, natural gas).

Of course, as with anything, there are pros and cons. From an energy conservation standpoint, operating the boiler all summer for the sole purpose of heating domestic hot water is inefficient.

SEPTIC SYSTEMS

Town sewer is found only in a few village centers. Properties in most of the county use septic systems to treat household waste. Commonly, they consist of a tank, a distribution box, and a soil absorption field where effluent is slowly leached into the soil.

Of course there are many variations depending on the idiosyncracies of the property. If the field can only be located above the tank, a pump is used. On small properties that lack space for a conventional field, or properties near natural bodies of water, high tech septic systems are used.

TITLE 5

Title 5 is the part of the Massachusetts State Environmental Code that regulates private septic systems. A passing Title 5 (or a Certificate of Compliance for a newly installed septic system) is required for most closings. Few banks will approve a mortgage on a property that failed septic inspection. That said, in some cases, careful provisions can be put in the contract for the buyer to install a new system, usually including escrowing 150% of the estimated cost. If you are a cash buyer, you can purchase a property that has failed Title 5, but you must upgrade the system within two years of the inspection.

If the seller doesn’t already have a passing Title 5 report on hand, they will need to hire a licensed excavator to inspect the septic system. The contract specifies a date by which they must provide you with the Title 5 Report. The system may pass, pass with conditions, or fail.

If the system is given a conditional pass, this means it requires some relatively minor repairs. The seller will receive the passing report after they complete the necessary repairs.

If the system fails, in many cases, the seller commissions any major repairs required to bring the system into compliance, or has a new septic system designed and installed. Sometimes, the seller won’t be willing or able to do this. They may ask you to do it, or perhaps ask you to share the expense of a new system. In any case, if the system fails to meet Title 5 regulations, the P&S agreement allows you, the buyer, to cancel. If you don’t cancel, and you reach an agreement with the seller, all parties will sign a revised P&S.

TOWN SEWER

Properties with town sewer offer the convenience of “out of sight, out of mind” regarding sewage—no septic system to periodically pump or maintain, and no need to keep cars or heavy equipment from driving over it. However, one potential issue is associated with town sewer—old sewer systems can be susceptible to damage by tree roots or deterioration from age. If it is determined that the sewer connections are older, a sewer scope is recommended to make sure the lines are in good repair.

RADON

Radon is a naturally occurring radioactive gas, relatively common in the Berkshires. Exposure to decaying radon particles can damage lung tissue, and thus increase the risk of lung cancer.

You should hire your inspector to test the radon level in the home. They will set the detector in the lowest living area of the home—in other words, the lowest space in which you might spend at least 7 hours a week.

If your radon test result is higher than 4 PCi/L (picoCuries per liter of air), the EPA recommends you have a mitigation system installed. There are two kinds of mitigation systems. One draws the radon gas through a PVC pipe to a fan, and vents it out of the home. The other continually flushes the affected area with fresh air. Here is a link to more information >>

WOOD STOVE PERMITS

Just because a property has a wood stove doesn’t mean it’s permitted or safe. You will often hear from showing agents that a wood stove conveys, but will be disconnected at closing. This puts the liability for connecting and operating the stove on you. Consult the building inspector to see whether your installation can be permitted. Stoves that are not UL-listed are simply too old to be permitted.

SOLAR PANELS

If you’re considering a property that has solar panels, find out whether they are owned, financed, or leased. Carefully scrutinize any contracts and make sure they’re transferable. Solar panels have a lifespan—typically 20 years. Roofs, too, have a lifespan—30-year architectural shingles are most common. Verify that the roof was either new or recent when the solar array was installed. (The installation may have affected the roof warranty.)

PROPANE TANKS

Propane fuel may be used to power kitchen stoves, clothes dryers, propane stoves, fireplaces, boilers or furnaces. Usually your fuel company owns and maintains the tank, but some people opt to purchase their own. If you buy a property with a resident-owned propane tank, take into account the added responsibility and insurance liability.

OIL HEATING SYSTEM REQUIREMENT

In 2011, Massachusetts enacted a law to prevent leaks from tanks and pipes that connect to home heating systems. The system must be equipped with an oil safety valve or a protective sleeve must be installed around the oil supply line.

BURIED OIL TANKS

It is rare, but an older property could still have a buried oil tank. In this case, if you’re still interested in purchasing the property, the seller should professionally remove the tank, and test the soil to ensure no contamination occurred (as per Massachusetts regulations).

ENERGY EFFICIENCY / MASS SAVE

Mass Save is an invaluable program to help homeowners reduce their energy usage. The first step is a free energy assessment. Then, you may take advantage of various rebates and incentives available through the program. The result is you save money and the planet benefits, too.

RIGHT TO FARM

Most communities in South Berkshire County have passed some form of Agricultural Farming bylaws, many of which include a “right to farm” provision. When selling property in these towns, sellers must inform buyers that the property they are about to acquire lies within a town where farming activities occur. Such farming activities may include, but are not limited to, activities that cause noise, dust and odors. This is done using a Right To Farm disclosure form.

WETLAND CONSIDERATIONS

The Massachusetts Wetlands Protection Act (MGL Chapter 131, Section 40) protects certain types of wetland areas and activities in those areas. Many Berkshire towns have additional wetland by-laws. If you want to make changes like removing trees or adding structures in protected areas, you should bring in a knowledgeable wetlands consultant and/or land engineer.

FLOOD INSURANCE

If the property is in a high-risk area for flooding, find out if the seller currently carries flood insurance. Because FEMA flood maps are periodically updated, even if they don’t currently have coverage, you may be required to. Your insurance agent will likely need an Elevation Certificate (EC) to determine your flood insurance premium. An EC documents the elevation of a dwelling compared to the estimated height floodwaters will reach in a major flood. It determines flood risk and the cost of flood insurance. If the insurance company requires it, and the seller doesn’t have one, it will have to be commissioned, and this can take time, and can cost hundreds of dollars. Here is a link to more information >>

SMOKE & CO DETECTORS

At closing, the seller is required to deliver a Smoke & Carbon Monoxide Detector Certificate of Compliance (“Smoke Certificate”). This indicates that the fire chief has inspected the premises to make sure units are installed everywhere they are supposed to be, are functioning, and are not too old.

RENTED EQUIPMENT

Occasionally you will view a property that has a rented hot water heater. Check the details of the rental contract to see if you want to assume it. Otherwise, you’ll need to negotiate an alternative.

5. Making and Negotiating the Offer

Ready to make an offer? Here is what we will submit:

  • Property Transfer Notification Certification (“Lead Paint Form”) for houses built before 1978
  • Purchase and Sale Agreement
  • Buyer and Seller Notice of Dual Agency if needed
  • First Deposit Check
  • Land Rider if needed
  • Condominium Rider if needed

LEAD PAINT DISCLOSURE

Massachusetts and federal law requires all parties (sellers, realtors®, buyers) to comply with federal and Massachusetts lead-based paint disclosure requirements for homes built before 1978. They must fill out and sign the Property Transfer Lead Paint Notification before signing a P&S agreement. Here is a link to the form, FYI >>

THE PURCHASE AND SALE AGREEMENT

A legal contract consists of a written offer and a signed acceptance of that offer. (Verbal offers aren’t worth the paper they’re not written on.) In Berkshire County real estate transactions, the Standard Berkshire County Multiple Listing Service Purchase and Sale Agreement—aka the P&S—is what we use.

This section highlights the key components we focus on when writing an offer. Once you’re under contract, you’ll refer to the Purchase and Sale Timeline.

1&2. PARTIES & DESCRIPTION. Of course the document begins by naming the parties involved, and describing the location, using deed and/or assessor map references.

3&4. PURCHASE PRICE & CLOSING DATE. This is crux of it: what you want to pay and when you want the keys.

  • Price you wish to pay
  • Amount of your earnest money deposit (typically 1% of purchase price, or a round number like $1000 or $5000)
  • Amount of second deposit, to be submitted after the inspection contingency (typically, this amount brings your total deposit up to 5 or 10 percent of the purchase price)
  • Balance to be paid at closing.

The listing broker holds the deposits in an escrow account.

5. CONTINGENCIES. The contract contains four contingencies to protect buyers. If despite diligent efforts, you…

1. don’t get the loan you’ve applied for
2. aren’t able to obtain a satisfactory insurance binder or
3. your home inspection is unsatisfactory

…you may cancel the agreement.

4. If the seller submits a failed Title 5 report, you may cancel the agreement.

10. INSPECTION. The purpose of the inspection is both for you to familiarize yourself with how the property functions and to scrutinize it for any safety, mechanical or structural defects. Inspections typically take 2-4 hours, depending on the inspector and the property. After reviewing the report, you will determine whether…

  1. The inspection was satisfactory, and you wish to move forward.
  2. The inspection was unsatisfactory, and you wish to cancel the agreement.
  3. The inspection was unsatisfactory, but you still want to purchase the property if you can negotiate an agreement with the sellers to resolve the issues. You will either ask them to address any safety, mechanical, or structural issues, or you will ask for a monetary concession to address those issues yourself, which allows you to be in control of the repairs. Heads up: You will need to distinguish between “improvements” you wish to make, and safety, mechanical or structural defects. These defects should be dangerous or costly enough to warrant a request.

 

Occasionally an extension is warranted if professional estimates need to be obtained as part of this negotiation process.

Assuming an agreement is reached, all parties will sign a revised P&S. If there has been an extension, the second deposit is typically delayed until agreement is reached.

13. FIXTURES. This paragraph states that whatever is physically attached (i.e. nailed or screwed in) or used in connection with the house is included in the sale. (The listing agent should specify if sellers have excluded any fixtures. Double check what appliances are conveying.) Often we reiterate the full list of appliances here.

30. BUYER’S DEFAULT. This is one of the few protections for the seller in this contract. If you fail to fulfill your obligations under the contract, you sacrifice the amount specified in paragraph 30. Standard practice for Buyer’s Default in this area is 5 percent of the purchase price.

35. SPECIAL CONDITIONS/ADDENDA. This section is used to add conditions that weren’t specified in the rest of the P&S. It is standard practice to insert an attorney review here—usually three or five business days. This is handy for when you’re writing a contract over the weekend. You won’t risk waiting to submit the offer, confident that your attorney can review it on Monday or Tuesday.

36. TERMINATION OF OFFER. Generally, we give sellers 2 days to respond to your offer.

RIDERS. Sometimes, when submitting a contract to purchase a piece of land or a condo, we will attach a Rider, detailing additional terms.

Of course, as with any legal document, we recommend you have your attorney review it.

NEGOTIATING

Your realtor® will submit the necessary documents along with your deposit check to the listing agent. If the seller signs, great news—you are under contract! Otherwise, whether they make a counter offer or they choose not to respond at all, we will discuss strategy, and formulate a counter offer. As you move through the negotiation, your realtor® will advise you, and advocate for you. If/when an agreement is reached, the P&S will be revised, and signed by all parties.

Multiple Offers: There are many potential scenarios in multiple offer situations. The seller may simply sign one right away, but more often they will make a decision only after asking all parties to submit their “best and final” offers for review.

Heads up Regarding Purchasing Personal Property: The P&S contract pertains to the sale of real estate, not personal property, such as furnishings, lawn mowers, etc. Particularly if you are getting financing, personal property must not be mentioned in the P&S contract. If you are purchasing furnishings or other personal property from a seller, we will draft a separate agreement.

Once you’ve submitted an offer, please use the BUYER P&S TIMELINE as your guide.

6. Buyer P & S Timeline

CONGRATULATIONS! The seller has signed your Purchase & Sale contract! Your realtor® and attorney will help keep track of the deadlines, and will of course negotiate on your behalf as you move through the process toward the closing table. Here is an overview of key deadlines and components we hope you’ll find helpful. (Numbers in bold refer to the relevant paragraph on P&S.)

Since the loan process occurs within the P & S Timeline, also see section 7, The Loan Process >>

5.2 – APPLYING FOR A MORTGAGE. Submitting your loan application is the first step. You promise to do this by the mortgage application date—typically 5-7 days from signed contract.

THE LOAN PROCESS. Since the loan process is concurrent with the P & S Timeline, also refer to section 7, The Loan Process. In order to get your loan approved, four things need to happen. The bank will…

1. Verify your income and expenses (using tax returns, W2s, pay-stubs, etc.).

2. Verify the source of funds you will use for down payment & closing costs.

3. Run a credit report to be sure you meet the requirements of the loan you are applying for.

4. Order an appraisal to make sure the mortgage is in line with the value of the property. (If the property does not appraise, you can cancel, or try to renegotiate the price.)

Important: During the loan process, do not make any big purchases or use credit cards excessively, open or close banking or credit accounts, or change jobs. This will negatively impact your credit, and could cause your loan to be denied.

5.3 – MORTGAGE CONTINGENCY DATE. If for any reason, despite diligent efforts, you are unable to obtain a commitment letter from your lender, we need to submit a written cancellation notice and a copy of the mortgage denial letter by the mortgage contingency date.

5.4 – INSURANCE CONTINGENCY DATE. You need to make sure the property is both insurable—and insurable at an acceptable cost. If for any reason, despite diligent efforts, you are unable to obtain a satisfactory insurance binder, we need to submit a written cancellation notice, and a copy of proof of insurance application by the contingency date.

5.5 – INSPECTION CONTINGENCY DATE. Inspections typically take 2-4 hours, depending on the inspector and the property. The purpose of the inspection is both for you to familiarize yourself with how the property functions and to scrutinize it for any safety, mechanical or structural defects. It typically takes a couple of days for the inspector to give you a written report. You have until the contingency date to convey whether the inspection was satisfactory. After reviewing the report, you will determine whether…

  1. The inspection was satisfactory, and you wish to move forward.
  2. The inspection was unsatisfactory, and you wish to cancel the agreement.
  3. The inspection was unsatisfactory, but you still want to purchase the property if you can negotiate an agreement with the sellers to resolve the issues. You will either ask them to address any safety, mechanical, or structural issues, or you will ask for a monetary concession to address those issues yourself, which allows you to be in control of the repairs.

Heads up: You will need to distinguish between “improvements” you wish to make, and safety, mechanical or structural defects. These defects should be dangerous or costly enough to warrant a request.

Occasionally an extension is warranted if professional estimates need to be obtained as part of this negotiation process.

Assuming an agreement is reached, all parties will sign a revised P&S. If there has been an extension, the second deposit is typically delayed until agreement is reached.

3 – SECOND DEPOSIT. You must submit second deposit by the date shown in this paragraph.

5.6 – SEPTIC SYSTEM INSPECTION DATE. A passing Title 5 (or a Certificate of Compliance for a newly installed septic system) is required for most closings. Otherwise, careful provisions must be put in place, usually including escrowing 150% of the estimated cost to install a new system.

If the seller hasn’t already done a septic system inspection, they will need to hire a licensed excavator to do so. We specify a date by which they must provide us with the report—typically 2 to 3 weeks.

The system may pass, pass with conditions, or fail.
If the system is given a conditional pass, this means it requires some relatively minor repairs. The seller will receive the passing report after they complete the repairs.

If the system fails, you, the buyer, may cancel the agreement. But in most cases, the seller has a new system designed and installed. They may also ask you to offset the expense of a new system. Assuming an agreement is reached, all parties will sign a revised P&S.

24 – SMOKE AND CO DETECTORS. The seller must obtain a Smoke & Carbon Monoxide Detector Certificate from the Fire Chief, to be delivered at closing. The Fire Chief will make sure the detectors are installed where they are supposed to be, are functioning, and are not too old.

For wood/pellet stoves: If the seller has a wood stove permit, you’ll be given a copy by closing. If they do not, the pipe will probably be disconnected before closing, and it will be up to you to make sure it is installed to code, or use the stove at your own risk.

For DSL properties only: If the property you are buying is served by Verizon DSL, we will ask the seller NOT to cancel service before making careful arrangements with you. We know from experience that if the seller closes their account, DSL service can be lost, resulting in the buyer being put on a waiting list.

FUEL. In most cases, the seller will have the oil or propane tank filled the week before closing, and you will pay for a full tank at closing. You can ask for the fuel gauge to be read, and pay for a partial tank, but this method is less accurate, and is rarely used.

HOME STRETCH. Your attorney will guide you through the home stretch to closing. Make sure you are in touch with her/him. Set up accounts with service providers, and arrange for utilities and insurance to begin as of closing day.

22. – WALKTHROUGH. Within 24 hours of closing—most often, the morning of—you will do a walk-though. This is largely a formality to ascertain that the property has been left broom clean, with all personal property and rubbish removed. (If this is not the case, we will ask the sellers to resolve any issues.)

Heads up: the property may look different from the last time you viewed it. Now that it’s free of furnishings, you may see imperfections in walls and flooring, and nail holes where pictures used to hang.

CLOSING. Closing typically occurs at the buyer’s attorney’s office. Sometimes, it is held at the Registry of Deeds. If you are getting financing, you will arrive before the seller to complete mortgage documents with your attorney. Your attorney will guide you through the closing, which typically takes about an hour. Cash closings can take as little as 15 minutes. (See The Loan Process below for details)

7. The Loan Process

Important:

During the loan process, do not make any big purchases or use credit cards excessively, open or close banking or credit accounts, or change jobs. This will negatively impact your credit, and could cause your loan to be denied.

Pre-approval, Choosing a Loan Product & Applying for your loan. Presumably you have already obtained a pre-approval letter, chosen a lender and chosen a loan product. But whether or not you have, once the sellers sign the contract, you will apply for the loan, which officially begins the loan process. Para 5.2 of the P&S sets the deadline by which you promise to do this—typically 5-7 days.

The Essentials. In order to get your loan approved, four things need to happen. Your mortgage advisor or broker will guide you through all the steps in this process, as they…

1. Verify your income and expenses (using tax returns, W2s, pay-stubs, etc.).

2. Verify the source of funds you will use for down payment & closing costs.

3. Run a credit report to be sure you meet the requirements of the loan you are applying for.

4. Order an appraisal to make sure the mortgage is in line with the value of the property. (If the property does not appraise, you can cancel, or try to renegotiate the price.)

If the bank isn’t satisfied with any of the above, and declines to give you the loan, you will cancel the P&S agreement by the contingency date (Para 5.3 of the P&S) and get your deposit back.

Commitment Letter & Clear to Close. Your lender will issue a loan commitment document. This is a bit of a misnomer, because this letter often contains conditions. You will review any conditions with your attorney by the mortgage contingency date.

The clear to close letter is what you’ve been waiting for! Now that your loan has been fully approved (all conditions have been satisfied), the attorneys can schedule the closing.

Walkthrough. Within 24 hours of closing—most often, the morning of—you will do a walk-though. This is largely a formality to ascertain that the property has been left broom clean, with all personal property and rubbish removed. (If this is not the case, we will ask the sellers to resolve any issues.)

CLOSING

Massachusetts is a “Closing Table State,” meaning that the buyer’s attorney, the buyer and the seller (or their representative) actually sit together at the closing table. Closing typically occurs at the buyer’s attorney’s office. The lender and the title insurance company don’t attend the closing—they are represented by the buyer’s attorney.

MORTGAGE

You will spend about 30 minutes with your attorney signing mortgage documents before the seller arrives. Typically, the entire closing will take about an hour. Here is what happens:

  • You sign a tall pile of mortgage documents
  • You review the Closing Disclosure form, which outlines all the details of your loan, and adjustments for items already paid by the seller (taxes, fuel, condo or HOA dues, etc.)
  • You review plot plan (if you ordered one)
  • You buy title insurance (if you choose to)
  • Seller (or their representative) delivers smoke certificate and passing Title 5 (or Certificate of Compliance for a newly installed septic system)
  • Seller is paid, and checks are exchanged for the various adjustments
  • Seller conveys deed to you (If they’re not present at closing, they pre-sign the deed.)

Then—drum roll please!—you’re given the keys! Appreciate this moment fully—though it’s recommended you change the locks. Congratulations—applause and hugs all around.

After closing, your attorney brings documents to the Registry of Deeds to be stamped and recorded, and then distributes copies of the recorded documents to you and the bank.

CASH

Cash closings can take as little as 15 minutes. Here is what happens:

  • You review costs and adjustments for items already paid by the seller (taxes, fuel, condo or HOA dues, etc.)
  • You review plot plan (if you ordered one).
  • You buy title insurance (if you choose to)
  • Seller (or their representative) delivers smoke certificate and passing Title 5 (or Certificate of Compliance for a newly installed septic system)
  • Seller is paid, and checks are exchanged for the various adjustments
  • Seller conveys deed to you. (If they’re not present at closing, they pre-sign the deed.)

Then—drum roll please!—you’re given the keys! Appreciate this moment fully—though it’s recommended you change the locks. Congratulations—applause and hugs all around.

After closing, your attorney brings documents to the Registry of Deeds to be stamped and recorded, and then provides you with copies.

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