Real Estate Frequently Asked Questions

Q. What is a binder?

A: After you find the home of your dreams, if a realtor is involved, you will sign a binder. The binder typically contemplates a more formal contract that is prepared by the seller’s attorney. A binder typically calls for a deposit of $500-$1,000. Once the binder is signed and a deposit is made, most brokers will no longer show the house or entertain new offers while a more formal contract is being prepared.

Q. Do I need an attorney?

A: You will find that an experienced local real estate firm in the area where you are purchasing will help smooth the process toward a successful and timely closing.

Q. Who is responsible for preparing the Contracts?

A: The Seller’s attorney typically prepares the Contract. If you are the Seller, there are a few items your attorney will ask you to provide in order to prepare a Contract. Those items include: a copy of your existing Deed (this gives the attorney the exact legal description of the property) and a copy of your property tax bill (this gives information needed to complete necessary real property forms to record the new deed). Also, if you provide a copy of your title policy, this can speed up the title search that will be ordered by the Purchaser. New York State law requires that a Seller either complete a Real Property Condition Disclosure form or give a Purchaser a $500 credit at closing. This form requires you to answer questions about the home. A copy of the form can be found at www.dos.state.ny.us. You can then type in “property condition disclosure” into the search box and it will bring you to the form for downloading. You should discuss with your attorney whether it is recommended that you complete the form or offer the credit. Lastly, if you have an existing mortgage, your attorney will need a copy of your statement so they can effectively request a payoff for closing. If you are an out of state seller, you will also be required to complete a form called an IT-2663 – an out of state tax form which requires non-residents to pay a separate New York State sales tax. Your attorney will provide you with the form and instruct you to discuss it with your accountant.

Q. What is the next step after the seller’s attorney prepares the contract?

A: The Seller’s attorney will mail out Contracts to the Purchaser’s attorney for review and signature. Usually, the Contract will call for the Purchasers to put 10% of the purchase price as a deposit when signing the contract. It is very important that you retain an attorney prior to signing the contract. You should review the contract with your attorney. Your attorney will prepare any necessary riders to the contract if the sale is contingent on anything, i.e. home inspection, mortgage approval, etc.

Q. What will my attorney do once he receives the contracts from the seller’s attorney?

A: If you are the Purchaser, your attorney will mail you the Contracts then will go over them with you via phone or in person. This is a good time to advise your attorney the name of your bank contact if you are obtaining a mortgage. This way, your attorney can provide them with anything they need from your attorney directly. If you decide to have a professional inspection performed, you should ask your attorney for a referral and you should schedule the inspection early on so that if there are any problems with this home, they can be addressed with the Seller’s attorney at once. If you desire an inspection, your attorney will add an inspection clause into the Contract to give you the right to do so. If there is a bank involved, a copy of the fully signed contract will be provided to your lender so they can process your loan request.

Q. Who signs the contract first?

A: The purchaser signs the Contract first. The signed Contract is then sent back to the seller for their signature.

Q. What is title insurance?

A: Title insurance is an insurance policy to protect your interest in the property. Once the contract is fully signed, the Purchaser’s attorney will order a title search, which will be handled by a title insurance company. This will ensure that there are no outstanding liens, judgments, etc. on the property and, if there are any, they must be paid at closing. The title search normally takes 14 days for receipt of a report. The title report will indicate what if anything the title company is willing to insure with respect to the property. If there is an outstanding mortgage, judgment, etc. acting as a lien against the property, the title company will insist that it be satisfied prior to closing. Your attorney will review the title report. If a bank is involved, the bank will also receive a copy of the title report for review.

Q. Do I need title insurance?

A: The short answer is that you do not have to order title insurance to protect your interest in the property; however, most attorneys would advise you to obtain title insurance. If a bank loan is involved, you will be required to purchase a title insurance policy to protect the bank’s interest. If you have a title insurance policy, it will protect your interest in the property in the event that at a later date some other party asserts that they have an interest in your property such as a judgment, mortgage, mechanic’s lien, etc. that existed prior to closing.

Q. How much is title insurance?

A: The State of New York, by statute, sets the amount that can be charged for title insurance. Your attorney should be able to advise you how much. New York is divided into two zones. Greene County is Zone 2. The rates for this Zone are as follows: $35,000 policy (minimum policy allowed) $402.00. For each additional $1,000 or part thereof, add $6.67 to the policy quote. Additionally, your bank may require specific endorsements to be added such as bankruptcy searches and Patriot Act searches. These endorsements can add up to $100 for each search.

Q. What is the Deed?

A: A Deed is the document that is used to convey ownership of real property in New York State. A copy of the original Deed is recorded by the title company in the County Clerk’s office. The original is typically returned to the buyer’s attorney who will then forward it to his client. A Deed is only signed by the seller.

Q. What is the purpose of an appraisal?

A: If a bank is involved, the bank will order an appraisal of your prospective home. The purpose of the appraisal is to determine the value of the home so, in the event there is a foreclosure proceeding, the bank will be confident that it will get its money back. Typically a bank will loan up to 80% of the appraisal value. In other words if the property appraises for $100,000, the bank would be willing to loan the buyer up to $80,000. In the rare instance that the property does not fare well in the appraisal process, you may want to hire an independent appraiser to do a second appraisal. Remember, the appraiser works for the bank, although they are supposed to be independent. You should consult with the bank before doing an independent appraisal.

Q: What is a percolation test?

A: A test performed on the soil to determine the type of septic system required. Most lands will support a septic system but some require a built up septic and the cost is a few thousand dollars more than the traditional septic system. (Most systems in the Greene County area are now done as built up systems). If you are buying vacant land and intend to build in Greene County, we recommend having this test done. This test is commonly referred to as a “perc” test.

Q. What should I do if there is an underground fuel tank?

A: If you are the buyer, we generally recommend that you have it removed prior to purchasing the property, even if the seller insists that you do so at your expense. It is only a matter of time before the tank leaks. If you install an above ground tank, you will know when it needs to be replaced.

Q. Will I need a survey?

A: The bank may require you to have a survey performed and may ask you to provide other documentation to complete your loan application. Your attorney can recommend a surveyor. If it is new construction, the bank will typically want the survey updated to show the location of the new house. A survey will indicate the exact location of the property boundaries as well as the acreage.

Q. What is the difference between a mortgage commitment and pre-approval?

A: To be pre-approved by a bank simply means that if everything that you have reported is correct, the bank will likely give you a mortgage. It is nothing more than an opinion. A mortgage commitment is a commitment by the bank to loan you a certain amount of money for a specified rate and term if certain contingencies are met.

Q. When will the closing take place?

A: If it is a cash deal, typically once the title search has been completed a closing date can be scheduled. You could close in as short a time as one to two weeks from that time but it could take longer. If you are obtaining a mortgage, once the bank finalizes its review process, it will advise your attorney that you are “clear to close”. Then the attorneys will schedule a closing date. With a bank closing, the timeframe is longer and depends on how effective your bank is in processing. Counting the time spent waiting on the Contract and the completion of the title search, a bank closing usually takes 12-16 weeks and is subject to the bank attorneys’ availability.

Q. Do I have to be present at the closing?

A: Closings today are being conducted with fewer people present. In the last few years, a trend has developed where closings are often done with only one of the parties being present. If it would be a hardship for you to attend, you can likely be excused if it is planned in advance. Closings for buyer’s on bank loans can be done via a Power of Attorney.

Q. What documents should I bring to the closing?

A: You should bring your driver’s license. If you are the buyer, also bring your checkbook. Often there are adjustments that are made at the closing. If you are the buyer, make sure that you know how much to bring in certified funds. Also, bring your homeowner's insurance binder and photo identification if you do not have a driver’s license. Your attorney will let you know if you need to bring anything else.

Q. Should I do a walk through prior to the closing?

A: If you are the buyer, it is a good idea to do a walk thru the day of or the day before the closing. If you are expecting furniture to come with the house, I would make sure that it is there prior to closing. You will make these arrangements with your realtor. Leave time available to obtain the certified check for the funds due at closing. Your Attorney will give you the exact amount required, usually the day prior to closing.

Q. What will my closing costs be?

a. Title insurance - see above
b. Attorney fees - In Greene County, typically range for $650.00 to $950.00 for residential closings. Commercial transactions are hourly.
c. Recording fees - see below
d. Often there are overnight mailing fees

Buyer Pays:
1. Recording deed (usually $37-$43 depends on page count)
2. Recording RP5217 ($75 for homes; $165 for vacant land)
3. Recording Mortgage (typically between $82 and $120 depends on page count)
4. Mortgage recording tax (The closing costs for mortgage tax in Greene County is ½ of 1%. If through a Bank, this calculates to $5 per $1000; if personal mortgage, $7.50 per $1000. This amount is calculated on the mortgage amount, not the sales price.)
5. Attorney Fees
6. Title Search and Policy Fee (cost based on purchase price and loan amount, see www.titlewavestitle.com for title estimates)

Seller Pays:
1. Recording TP584 ($5)
1. Transfer Tax Deed (Transfer Tax) is $4 per $1000, based on the actual selling price.
2. Recording mortgage satisfaction, if any.
3. Any realtor commission
4. Attorneys Fees

You will receive a closing statement, which outlines the fees and costs you will pay at closing. Adjustments are made for town, village, and school taxes that the seller has normally paid in advance. The seller will receive a credit for those days in the tax period that have been paid for in advance that you will now own the property. The items are adjusted as of the closing date. Your attorney will provide you with a closing statement for review along with instructions on what checks you will need to bring to closing.

Adjustments you may see on your closing statement:
1. Fuel
2. Water
3. Taxes
4. Rent
5. Security
6. Any homeowner’s association dues

Q. What can I expect to take place at the closing?

A: Typically the closing will go as well as the preparation before hand. If all of the parties work together and exchange all of the necessary information prior to closing, it should go well. At the closing you will receive the keys to your new home. Your attorney or the title company will file the Deed to your home with the County Clerk and will return the filed Deed to you. After the closing, it's all yours. You can, finally, move in. Congratulations!