Things to Remember When You Consider Selling or Buying a Second Home | Real Property Law
Perhaps you are seeking a vacation retreat, a new investment opportunity, or are starting to plan for retirement; there are many reasons you may be in the market for a second home. As a real property lawyer in Bakersfield, over the past 28 years, I have been involved in a wide variety of real property sale transactions. Whether the transaction involves residential or commercial real property and whether it is the buyer’s or the seller’s side of the deal, well-orchestrated transactions and closings seem to have common factors. Accordingly, if you’re selling or buying a second home, here are some suggestions to make the transaction smoother which I have observed over time.
Both sides of the transaction are well advised to each hire a good real estate agent familiar with the area where the property is located. For example, if you’re buying coastal or mountain property, hire an agent who knows the area where the property in located. An out of town agent is less likely to know local issues involving property.
Some transactions are between the seller and the buyer without the use of an agent. These for sale by owner transactions save the seller the brokerage fee (usually 6 %); however, they can get a little risky for the unwary so unless you are experienced in buying or selling real estate, have a real property law attorney review any purchase agreement and/or escrow instruction presented to you for signature.
Your real property law agent (or attorney) will assist with the parties in entering into the purchase agreement covering the major deal points in a sale which customarily include:
- the sales price consistent with values in the area and confirmed by your experienced agent or appraiser;
- the amount of earnest money deposit large enough to matter and becoming non-refundable after the due diligence period expires;
- establishing a due diligence period to review the condition of the property usually 15 to 30 days;
- financing the purchase by a third party lender or the seller carrying back part of the purchase price with a note secured by a deed of trust; and
- review of title based on the preliminary title report and removing unacceptable liens and exceptions.
The due diligence to be performed by the buyer is more than a review of the preliminary title report and an inspection of the land. It should also include a review of documents such as:
- building permits from local building department
- copy of plans and specs from architect or builder
- any survey of property
- list of personal property going with sale
- loan documents for pay off to bank
- last pest control report
Following these guidelines should allow you to enjoy your second home with greater peace of mind. Plus I have observed that over time, many real estate acquisitions appreciate in value.
Michael A. Kaia is a partner at Young Wooldridge, LLP with 28 years of real estate law experience. This article was originally published in the April 2015 Issue of Bakersfield Life Magazine