Whether you’re purchasing a first home or you are an experienced buyer there are several important concepts everyone should be aware of. Here are a few tips that may facilitate a future purchase or sale.


1. Remember the broker has been hired by the seller to sell the home and the broker’s commission is based upon the selling price of the home. So don’t rely on the broker as your only source of information on the home and the surrounding area. Most likely you intend to stay in this home for a while and it is important to ensure the home and the property will be able to provide for many years of use and enjoyment. Use common sense and do your research before signing any contract!

2. Be aware of all potential taxes that may apply to the property. (a) The “Mansion Tax” applies if the purchase price of the home exceeds $999,999.00 , the tax is 1% of the purchase price. (b) If the home is located out east on Long Island the “Peconic Bay “ tax will apply and must be paid by the purchaser, this is 2% of the purchase price. ( c ) The third tax only applies to purchasers who need financing to purchase the home. The tax can vary from 1%- 2.75% depending on which county the property is located in. In New York State it is required by law the bank or lending institution pay 25% of this mortgage tax, giving a $25 discount to residential purchasers.

3. Do not ever sign a broker’s fee agreement before reading it carefully and having an experience real estate attorney read it. Many people sign without reading and then end up with a broker fee that they are unhappy with. The important thing to look for in a broker’s fee agreement is that the commission ranges from 3-5% and is always negotiable and is not due until closing of title. Some things to be wary of in a fee agreement is when commissions are due even when the sale does not take place, no matter the reason or when the buyer decides not to purchase. Failing to be careful and thorough can be an expensive mistake for the un-knowing purchaser.


4. A binder is an agreement with a small monetary transaction designed to secure the purchaser’s offer on home. However, contrary to the semantics of the word a binder is not legally binding. Most real estate brokers do not use binders. In some cases the binder can replace a formal contract if it contains all the terms to constitute a legally binding contract and it is accompanied by funds known as consideration it should be reviewed by a skilled real estate attorney as it most likely is a binding contract.

5. Before you sign the contract always have the home inspected by a licensed engineer or architect. Some home buyers go one step further and have speciality inspections by professionals in specialized areas such as termites, lead, radon etc. Review the reports carefully as problems may allow you to negotiate a lower closing price. If you sign a contract before the inspections, the contract must include a contingency clauses allowing purchasers to cancel their contract if negative findings are discovered during the inspections. In March, 2001 the Real Property Condition Disclosure Act was legislated into law. The law states the seller must provide the purchaser with a complete questionnaire describing the condition of different parts of the home. If it is not provided the seller faces a $500 penalty or a credit of $500 is given to purchaser.


6. Title insurance is another important aspect of purchasing a home. Title insurers research the “chain of title,” or the legal history of the property dating back sixty years. They look for among other things liens on the property and whether the current owner is the legitimate owner. This insurance guarantees that the Seller is the legal owner of the property and no part of the property has been deeded over to someone else, they also check the status of taxes and municipal fees. Basically, they insure the successful transfer from seller to purchaser and play a key role in the sale of a home.

7. Certificate of Occupancy is another document to be aware of when purchasing a new home. Often referred to as a “CO”, banks or lending institutions used to only require them for the home itself and not for any other structures on the property such as garages, extensions or sheds. Now the banks want CO’s for everything on the property and may not give a mortgage to a purchaser if the seller cannot provide such paperwork.

8. The closing dates for most purchases are set 60 days after the contract has been executed because the mortgage contingency clause provides for 45 days to obtain financing. The wording of the contract is crucial, if the contract states the closing will take place “ on or before” the parties are not entitled to an extension of time to set the closing. If the language is “on or about” it is customary that the parties are entitled to a 30 day extension to set the closing from the date set. However, if you are able to obtain financing earlier than this you can immediately go forward with the closing.


9. Every contract of sale should include a clause which entitles the purchaser to access the premises within 24-48 hours prior to closing. This will be your final chance to ensure the house is in the condition in which it was bargained for in the contract.

10. If you find any problems during the walk-through there are some remedies. You may come to an agreement with the seller in which the seller gives the buyer a credit or the buyer may agree to allow the Seller’s attorney to keep some money in an escrow account until the problem has been solved.

11. Usually a seller does vacate the premises until after the closing date. So within the contract you can find the “possession agreement” which permits the seller to remain in the home for a period of usually five days after the closing. During this time the Seller will pay the taxes, utilities and any other adjustments inclusive of purchaser’s per diem mortgage interest.

12. Just before the closing the respective attorneys for both parties should discuss the real estate tax adjustments. Depending on when the closing is and who paid the taxes sometimes adjustments need to be made.

13. Remember it takes a lot of professionals to facilitate a closing. A experienced and skilled attorney will walk you through each step of the closing Whether you are buying or selling and explain the real estate process to you.



















*Silverman, Eric G. A Primer on Residential Real Estate Transactions, Nassau Lawyer. December, 2004.