Tuesday, May 24, 2005

Q: I'm a first time home buyer and have a lot of questions.

My buddy and his wife just bought a house and I was amazed at the paperwork. Why does it take all of those addendum's and pages of disclosures and even warnings on every page?

A: Our purchase and sales agreements have grown in length and complexity, especially over the last ten years. Most of this is a result of case law and an effort by the Washington Association of Realtors and others to be guided by consumer protection legislation. It's intended to help you, but does take some education.

Your real estate agent should be willing to explain the entire process to you as well as walk you through the documents prior to making an offer. There are many addenda and you and your agent can chose which ones are appropriate depending on the property and on your situation.

Most sales are contingent on financing. Unless you have cash in the bank to cover the cost of the home, you need to get pre-approved for a loan. I recommend you do this before you even start looking to buy. It's important to know what you're qualified to borrow and have your down payment lined up well ahead of looking for a home.

Next in importance, I believe, is the inspection contingency. Use a reputable, licensed inspector who is very experienced. Keep in mind that you're trying to discover serious defects. Sometimes you can negotiate repairs being done by the seller, which is great. But more important is to find out if there are serious issues that would cause you a great deal of expense.

I also recommend the title addendum. Although the basic purchase and sales agreement says that you have to have marketable title, there are often title issues, especially in a rural area, that are a serious concern.

There are many other forms that might be appropriate to your sale and it would be good to go over those and have your questions answered before you start looking to buy.