Although a home buyer signs and initials many documents en route to buying a home, the purchase and sale agreement, also known as the “P&S”, is the primary document that sets out the terms and conditions of the agreement between a buyer and seller.

The pre-printed document is titled “Standard Form Purchase and Sale Agreement,” but there isn’t anything “standard” about this document that a buyer most commonly signs first, followed by the seller.

Frankly, the standard P&S is written primarily to benefit the seller, and home buyers are wise to retain an attorney to make modifications to the P&S that will protect their interests. The following are just four things home buyers should be aware of concerning a P&S.

1. Under common law, the buyer bears the risk of loss, if the property is destroyed/damaged by natural disaster or fire between the signing of the P&S and closing. An attorney can add language that transfers the risk of loss back to the seller, who should have a home owner’s insurance policy that covers the property.
2. The standard P&S has a provision that gives the seller 30 days beyond the scheduled closing date to correct a title issue that may arise before closing. Without additional language added to the P&S agreement limiting the seller’s ability to extend the closing date, the seller could extend the closing date past the buyer’s interest rate lock date, which could result in the buyer paying a higher interest rate or no longer qualifying for the loan and risking the loss of his or her deposit.
3. Many times, through no fault of the buyer, lenders fail to provide the necessary financing in time for the scheduled closing date. Although the closing may happen only a day or two later, technically the buyer is in default and the buyer’s earnest money deposit is in jeopardy. A seller could decide to take the buyer’s deposit and put the home back on the market or decide not to sell. A simple provision providing the buyer with an additional two or three business days to close, if the buyer’s lender is not able to close by the closing deadline, could protect the buyer’s deposit.
4. The buyer should include a provision that the seller is representing that there is no unresolved litigation or regulatory hearings involving the property or any knowledge of complaints or notices of violations of local, state or federal by-laws, ordinances or laws concerning the property. Such a provision is important because a seller could fail to disclose such an issue, which could cloud the title, and then, if the seller could not resolve the issue, he or she could use their right to extend the date of delivery of the deed (closing date).

This guest blog post is courtesy of Rich Rosa, a Massachusetts lawyer and real estate broker, and Partner in the law firm, Rosa & Kres, LLP. For more information about Rich Rosa, read his About page on the real estate law and brokerage blog that he maintains.

Interested in buying a condo in a new Boston condo development? Have you considered working with a Buyer’s Agent, or do you want to buy directly from the development’s sales center staff (i.e. the seller)? You should think twice before moving forward without a Buyer’s Agent representing you exclusively.

If you’re a real estate agent yourself, or a professional real estate investor, it might very well make sense to “go it alone” when buying into a new condo development, but for the majority of the buying public, it’s wise to leverage a Buyer’s Agent not associated with the development’s sales center.

Why would you want to do this? Let’s look at some of the reasons why using an exclusive Buyer’s Agent is something that you should seriously consider.

• The price you pay is the same if you are buying a condo with Buyer’s Agent representation or through the sales center. It is oftentimes misunderstood that you will get a better price buying directly from the sales center without a Buyer’s Agent present – this is almost never the case since developers want to create a win-win relationship with the thousands of Buyer’s Agents and their clients across the city.

• Having an independent Buyer’s Agent (not directly affiliated with the condo development like someone from the sales center staff) protects you from being pressured into any one particular condominium project. Remember, the sales center staff are employed by the project developer and are compensated for selling only units from their development. An independent Buyer’s Agent, on the other hand, gets paid (not by you, but by the Seller) regardless of which development you buy, thus, advice and analysis of the entire market, including other developments, will be more objective.

• A Buyer’s Agent can assist in a lot of the legwork before you make your decision. Buyer’s Agents answer questions like what’s a fair price per square foot for this area and comparable quality, what do comparable condos now on the market look like, what new listings are on the horizon, is this a building all the agents are talking about as an investment for themselves, how would this specific unit and layout appeal to future buyers, etc.

• A Buyer’s Agent is also a project manager. Buyer’s Agents work on your behalf, representing your best interests exclusively, throughout the entire buying process.

All this sounds too good to be true, right? What’s the catch for the Buyer, how is the Buyer’s Agent getting paid for their work? The answer to this is simple; the Seller/Developer pays the Buyer’s Agent. When a Listing Agent (the party responsible for representing the Seller/Developer in marketing the condo development) takes the listing, the Listing Agent and the Seller agree upon an overall transaction commission, which includes payment for the Listing Agent’s services, as well as those of the Buyer’s Agent. That’s right, a Buyer does not pay any out of pocket expenses to have an expert exclusively represent them.

This all makes sense you say, so who do you work with? Boston Condo Guy is looked at and respected in the Boston real estate market as one of the top information sources for downtown condos and condo developments. Boston Condo Guy is recognized by not only Buyers and Sellers as a great information source, but Agents, Brokers, and Developers come to Boston Condo Guy to find out the latest information about the Boston condo market – this speaks volumes. Boston Condo Guy is a leader in online technology, and provides professional representation throughout the entire buying process. Learn more about Boston Condo Guy.

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Boston Condo Guy offers listings of the most recent condo developments in Boston proper, with general listing information, as well as photos and floor plans. Your search for Boston Condo Developments just got easier!

Before you buy a condo, contact the condominium’s board with the following questions. By getting these questions answered, you will find out a lot about your potential neighbors, and the building that you are buying into – a valuable step in preparing to buy a Boston condo.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date cannot rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have your real estate attorney review property docs, including the master deed, for you.

3. How much does the association keep in reserve? How is that money being invested?

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise, as appropriate, assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does (and does not) the monthly Homeowner’s Association (HOA) fee cover? Typical items that one finds included in their HOA fee include, but are not limited to, common area maintenance, trash collection, master insurance, exterior landscaping, snow removal, recreational facilities, water, and sewer. Depending on what type of development you live in, such things as valet parking, concierge, a pool, and security, could increase your HOA fee.

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.

7. How much turnover occurs in the building?

8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks are not in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you are buying, may require separate assessments.

Should you ever find yourself in a situation where, during the purchase of a home, the home appraisal comes in low, what do you do? Educate yourself with tips on disputing an appraisal on your home. To have a low appraisal come back from your Lender’s Appraiser is somewhat of a rare happening, but it does occur on occasion, so prepare yourself for dealing with a low appraisal.

Think of the buy-versus-rent relationship as akin to a price-earnings ratio for stocks. The housing ratio rises as rents fall, home prices climb, or both. Some markets sport historically high–maybe dangerously high–ratios. The P/E in Miami, where p is the median mortgage payment and e is the median apartment rent, has spiked from approximately 13.5 in 2001 to 24.3 in the summer of 2006.

Other similar markets: Boston, Los Angeles, Las Vegas, Phoenix, and Washington, D.C. Until these housing P/E ratios revert back to a more normal range (the national average is 15 ) you may find renting a bargain. These types of markets force homebuyers to take a hard look at their motivations for buying.

Buying a new home or real estate is exciting, but it can also be a bit stressful because it is a big step, especially if you have never purchased a home. Before you contact a Realtor there are several things that you should really consider so that the search for your new home will be a lot more fun and a lot less stressful. When you know what you want and need you can then direct your Realtor of choice to help you find the condo that is out there waiting for you.

Determine Your Needs

The first thing you need to do is determine what you personally need from a home. For instance, if you have a family of six you probably are not looking for a one or two bedroom home. Decide how many bedrooms you need as well as how many bathrooms would be desirable. Consider whether you can deal with more or less of either bedrooms or bathrooms. Also think about what type of yard you will want around your house. If you have a big dog, you may consider a big yard a necessity. Do you desire a specific type of floor plan? If you do not want stairs or you do want that second story that you have been dreaming of these are all things that you should write down on a list. You should also consider overall square footage. Many families simply need more space to spread out, and that is understandable, while others are looking to decrease the size of their homes after the kids leave! Really determine what your needs are so that you will be able to convey them to your Realtor.

Pick Your Location

It can be difficult to determine where you want to live if you are relocating to a new area, but if you have an area of town picked out where you absolutely know you want to live, that will help your Realtor do his or her job much more efficiently by searching for your needs and wants in a specific area of town. Location can also be important from a resale point of view because you want a home that will gain value, not lose value. It is a good idea to not only consider how close a certain neighborhood is to work and school and the grocery store, but how wise of an investment it is as well. If you are not sure about location, a good Realtor can always help you determine where the best place in town will be for you.

Know Your Finances

Now that you have determined your needs and where you want to live, you need to take a close look at your finances. Of course, this may seem like it should be the first step, but unless you know what you need it will be hard to determine if it will fit into your budget. Look at what you are paying now and determine if you want that to stay the same, be reduced, or if you can afford to pay more. Now, will the dollar amount that you want or need to pay each month for your mortgage mesh well with what you want from a home and where you want it? If so, you might want to look into getting pre-qualified for a home loan to streamline your house hunting process.

What You Want

Now is the fun part, you can think about what you want. Do you really want air conditioning? Do you want a pool? A fireplace? A wet bar? An upgraded kitchen? A spa tub in the bathroom? Make a wish list of the things that you would be thrilled to find in a home that is the right price, has the appropriate number of bedrooms and bathrooms, and is in the right part of town. This will help your Realtor show you homes that you will enjoy seeing and could really see yourself in.

Get a Realtor

Now it is time to find yourself a Buyer’s Agent and give them a list of all the things that you really want and need from a home. All of your planning will ensure that you spend time looking at homes that meet your criteria.

Buying a home is something that takes some planning, so try to be patient as you put all the pieces of the puzzle together for yourself and your Realtor. The more you know what you want or need, the more smoothly the process will run, getting you into your new home sooner.