REAL ESTATE FAQS
We have assembled a list of frequently asked questions and answers regarding buying and selling North Carolina real estate that you may find helpful.
REAL ESTATE TRANSACTIONS
OFFERS TO PURCHASE
When you have found a property that you would like to purchase, who provides the offer to the seller, and what is needed in the offer?
The offer to purchase is usually provided by the selling broker. This instrument should cover all terms of the proposed transaction and must be accompanied by earnest money and due diligence money from the purchaser. Once the offer is fully negotiated and signed by all parties to the agreement, it is a legally binding (enforceable) contract. Both purchasers and sellers should make sure they understand all terms and conditions of the offer before signing it and should seek legal counsel if they have doubts or concerns.
What is earnest and due diligence money?
An earnest money check is normally written out to the closing attorney and they will hold this money until the end of the transaction. Think of earnest money as a deposit. Due diligence money is written out to the seller of the home and if the purchaser backs out of buying the property during the due diligence period this is the money that can be lost. If the purchaser backs out after the due diligence period he/she will also lose the earnest money. If the purchaser moves forward and closes on the home the due diligence money and the earnest money will be credited back to them at closing.
What happens to a contract if the buyer cannot secure financing after making an offer?
Contracts are generally contingent upon the purchaser’s ability to secure the financing described in the contract within a specified period of time and may be rescinded by the purchaser if, after diligent search, the loan described is not available.
When does the actual closing take place after the seller accepts an offer?
Closing and transfer of title generally take place within 30 - 45 days after acceptance of the contract to purchase. There are occasionally unavoidable delays in securing loan approval. You should be aware that even the most diligent agent will have no control over the situation once your loan application has been submitted.
FUNDS REQUIRED FOR CLOSING
What funds are needed from the purchaser and in what form at the closing?
Down payments and closing costs are to be provided in the form of a wire transfer sent to the attorney's office. Closing costs include but are not limited to: home inspection costs, appraisal fees, loan origination costs, attorney fees for preparing the deed, and insurance. An estimate of closing costs may be obtained at the time the loan application is made.
What is title insurance and whom does it protect?
Mortgagee’s title insurance, which protects the lender only, is required by all lending institutions in an amount equal to the amount of the loan. Purchasers are encouraged and advised to obtain owners’ title insurance for the full value of the residence or to discuss this matter with legal counsel.
What is hazard insurance and is it required for purchasers to have at closing?
Purchasers are required to obtain a policy for fire and hazard insurance and, if applicable, a flood insurance policy before closing. The minimum value of this policy should be equivalent to the loan amount. One year’s premium must be paid prior to, or at, closing and the policy must contain a loss-payable clause in favor of the lender.