Checklist For Buying Real Estate
Real estate checklist for all buyers to consider:
- Does the purchase price meet its fair market value? Have you hired an appraiser, or looked at an FHA or VA appraisal?
- Review the exceptions sections of the seller’s old title insurance policy to determine if any easements or restrictions of record will interfere with your intended use of the property. Make a copy of the legal description (located in the “Lot—Block—in_____’s Addition” section) and give it to the city treasurer and city engineer.
- Confirm with the city engineer and planning department that there are no future zoning assessments planned for the property or adjoining property.
- Confirm with the city treasurer if there are any outstanding assessments that you will assume upon ownership (i.e., curb paving, sewer, etc.).
- Confirm that any recent renovations or major improvements to the property are complete, and all materials, labor and contractors have been properly paid.
- Ensure that the sellers are over the age of 21, that they are competent and have a good reputation.
- If any mortgage is to be assumed, confirm that it is included in the stated amount.
- Talk to all residents who pay rent on the property to determine their rights, and review their rental contracts.
- Verify that your fire insurance coverage is set to go into effect the moment you assume ownership, take delivery of the deed.
- Only deliver earnest money if you have a contract. Ensure the money is held by the broker or seller’s attorney, not the seller.
- Ensure that all movable property being sold with the property is included in the contract to pass with the purchase.
- When purchasing an apartment building or commercial property, confirm there are no outstanding chattel mortgages, and any property tax concerns are clearly stated.
- Is there a pest or termite problem? Are there shared sewers with an adjacent property? Does the property have paths, roads or pipelines used by others?
- Does your contract list specifically how payment is to be made for contracts fees, escrow charges, outstanding assessments, title insurance, transfer taxes and mortgage assignment charges?
- Are you purchasing vacant land on installment? If so, confirm that your real estate contract is properly recorded. I do not recommend installment land contracts.
- If you are taking over the seller’s insurance policy, make sure you obtain all the necessary information at closing. Also, if the property is occupied by tenants, obtain copies of all leases, and initiate transfers of their security deposits.
- When the receipt and option contract is ready, have your attorney evaluate it before signing.
- Will you need mortgage insurance? Check with a lender about your situation. Mortgage insurance may not be required if the loan amount is less than 75 percent of the property’s value.
- Buyers should consider sanctioning a home inspection for structural integrity, aluminum wiring, plumbing and electrical systems, lead pipes, lead in paint, radon gas and asbestos. An EPA environmental audit must be performed on properties, other than single-family residences.
- Buyers must understand that Real Estate Commission-approved forms typically state that the property will be purchased in “as is” condition. Speak with your attorney if you have any questions, or to discuss potential consequences.
- Always ask your attorney to review any and all documents before signing any contracts.
The above information is not, nor is it intended to be construed as legal advice. If you need legal advice concerning your individual situation, please speak with a qualified Colorado real estate lawyer.