In each market throughout the United States, home sales are dealt with differently. Indeed, the process can be different from town to town on the East End, and Shelter Island is no exception.
Here is a step-by-step primer in how a home is purchased on Shelter Island once price and terms have been negotiated.
A “Memorandum of Sale” or “term sheet” is generated by the listing agent noting the parties involved, the property, contract price and contingencies.
Contingencies – The following are typical contingencies: a satisfactory home inspection, satisfactory termite/wood boring insect inspection, potable water and financing.
Inspections – Within a day or two of the handshake, home and termite inspections are conducted. Water test results can take over a week, so contracts provide for a period of time after contracts are executed for the outcome.
Attorneys – There are many attorneys in the region who can do real estate closings, but depending on the property, there are times when an attorney who has a good working knowledge of the Shelter Island Building Code is particularly valuable to both Seller and Buyer when questions or complications arise that are specific to the property.
Contracts – Theses are generated by the Seller’s attorney and delivered to the Buyer’s attorney. Each attorney uses their own template so not all contracts are alike, although there are basic tenets in each contract.
Financing – Once contracts are fully executed, the Purchaser sends them to their mortgage provider and they find a program that suits them. Sellers generally do not begin packing and moving until the bank gives a commitment to the Purchaser.
Appraisals – Once the contracts have been signed by both parties, the bank orders an appraisal, selecting a NYS licensed appraiser from a pool of approved professionals. Guidelines have changed post recession so that the banker or mortgage broker cannot select the appraiser or have contact with them. The appraiser inspects the house and does research to arrive at a valuation.
Surveys – Most banks require new surveys be done or that surveys done recently are re-certified to the title company. Surveys can take several weeks and this is one item that can be overlooked until a closing date is scheduled, sometimes resulting in a delay in closing.
Title search – The Buyer’s attorney orders a title report which outlines details about the property. “Abstracts” or reports on older homes can be very interesting as a result. The title company calls the Building Department on Shelter Island to obtain copies of Certificates of Occupancy. If the house or pool (and accompanying gates and alarms) have not been inspected recently, the Building Department will request a walk-through for safety compliance issues, including smoke and CO detectors.
Walk through – Prior to the closing, as close to the time of closing as possible, the buyer performs a “walk through” of the property, testing appliances, heating and cooling, and overall condition of the house.
Closing – When the bank has completed its due diligence, it will announce that the file is “clear to close”, at which time a date, time and location of the closing is coordinated. Generally the Buyer, Seller, both attorneys, and title closer are present, and sometimes the real estate agent(s). Years ago, closings were much more formal than they are today with a room full of people around a table; Many buyers and sellers today sign a power of attorney which obviates their needing to attend.
Transactions where all parties involved cooperate and do their respective jobs is a real gift. All too frequently there are surprises that complicate the process, but with a willing seller and buyer, things always manage to work out in the end. Good preparation on the part of both Seller and Buyer, diligence in communication by all parties, and working toward a common goal are key, as is working with a real estate agent who can guide the process and help solve problems that may arise along the way.