Real Estate is picking up again.  For those of you who have the Real Estate bug, remember the following to help you avoid any unnecessary or even costly pitfalls:
 

1.      Carefully discuss your purchase or sale contract with either your Real Estate Agent or your lawyer.  Never sign a private agreement without having it reviewed by a lawyer.  The cost is very minimal, and can save you a world of grief later on.

2.      Get an inspection report on your new property.  Make this a condition of your agreement.  Whenever possible, attend the inspection, so that you will know the quality of work of the inspector.  Point things out to the inspector if they catch your eye, and have them included in the report. 

3.      Be sure to leave yourself enough time to obtain financing for your purchase – this can be done by placing a new financing condition in your contract.

4.      Avoid a closing date for your sale and your purchase that fall on the same date.  Having everything happen on the same day can cause potential problems in paying for your new home, if the sale of your old home has problems or delays.

5.      If possible, allow yourself more time before a possession date.  There is a lot of work for your bank and for your lawyer in the purchase or sale of a home, and you need to allow sufficient time for your bank and your lawyer to complete their work for the transaction. 

6.      Consider asking your lawyer for title insurance on your purchase.  This insurance will protect you from mortgage fraud, and from any potential compliance problems with your new property.  It is reasonably priced.

7.      Be sure to shop around for your mortgage.  Even a portion of a percentage point can make a huge financial difference over the term of your mortgage.

8.      Be sure to let your real estate agent, and the other party know who your lawyer will be, so that communication can occur efficiently, avoiding delays in the transaction.

9.      Be sure to allow for associated costs. 

• Legal fees vary from lawyer to lawyer but on average it is safe to allow $750 - $1100 for legal fees and another $100- $400 for disbursements such as registering the deed etc.
• An inspection report costs about $400. 
• $200 for title insurance (if necessary).
• $700 for a Real Property Report  (for sellers, if the old one is older than 10 years, or unavailable).
• About $75 for each utility hook up.  Tax adjustment: The owners of the home you are buying have paid yearly taxes to the municipality. You will be required on closing to reimburse them for the taxes they have prepaid for the year. For example if they had paid $2,000 for the whole year and you were closing June 30th you would be required to pay the owner half of the taxes prepaid or $1,000. Count on 1/2 a year's taxes and you will be more than safe. 
• Fire/Homeowners insurance – approximately $600 to $800 per year. 
• Mortgage application fees - $300 to $400.

 Adam Letourneau is owner of Letourneau Law.