Buying and Selling Real Estate
Buying Residential Real Property
Buying a piece of real estate is often one of the most important family decisions. It usually involves real estate agents, mortgage brokers and attorneys. The purpose of real estate agents is to make the best deal for you. The mortgage brokers’ s job is to find you a loan under the best terms possible based on your financial picture and credit score. The attorney’s job is to make sure that the terms of contract you signed actually represents what you have agreed to do, that you are adequately legally protected, to explain the loan and other legal document and make sure that the closing goes smoothly.
Real Estate Contract
Often, when a deal is done, a real estate agent will present you with a contract for your signature. You are very excited, do not really listen to the agent explaining some of the terms of the contract, or frankly do not care. It is very similar to buying that new car you always wanted. Let me just sign it and get the house. Well, every contract is a legally binding document, and if attention is not paid, bad consequences may result. For example, almost every contract should allow you to perform a professional inspection of the property within so many days after you offer has been accepted. If something is wrong with the property you may cancel the deal or request the seller to fix the problems. However, if you miss the time frame for the request, you are out of luck. Likewise, you are generally given certain number of days to obtain mortgage. If you do not get a mortgage by a date certain, you can either a cancel the deal or request an extension. If you do not do either, you must proceed with the deal anyway or cancel the contract in which case you will lose the earnest money.
Property Taxes
Property taxes are always paid for the year that had passed. In other words, in 2007, we are paying property taxes for 2006. In Cook County, for example, taxes are paid twice a year, by March 1 and September 1. In March we pay for the first six month of the last year. In September we pay for the second six months of the last year. The first tax installment is always 50% of the previous year’s total tax bill. The second installment is always more than that and that is why the buyer almost always gets credit for unpaid taxes at closing at more than 100% of the last year’s tax bill.
Why Credit for Property Taxes?
Let say you are closing in August of 2007. First portion of 2006 taxes was paid by the seller in March of 2007. However, the second bill is not out yet and the seller cannot pay it. Therefore, you will have to pay taxes after the closing. That is why you have to get credit for the second installment of 2006 taxes, plus credit for taxes from January 1, 2007 through the date of closing as those taxes will be paid in 2008.
Costs of Buying
Apart from the obvious, the purchase price, you must pay at the closing various lender’s fees, title company costs, and possibly local authority transfer tax. For example, when you purchase property in Chicago, you must pay at closing $7.50 per each thousand of the purchase price.
Selling Real Estate
Your job is to find a buyer. We take care of the rest. Prepare a contract, order necessary documents, and arrange for the closing of the deal.
Costs of Selling
If you used an agent for the sale, you must pay commission. You also have to purchase a title insurance policy for the buyer, pay State of Illinois Tax ($1.00 per each thousand of the purchase price) and County Tax ($0.50 per each thousand of the purchase price. If you are selling a house, you will have to pay for a new survey. If the local authority requires the seller to pay local transfer tax, you must pay that before the closing as well. For example, in Oak Park the seller pays $10.00 per each thousand. Some local authorities require a Village inspection before sale (Berwyn, Cicero, Forest Park, etc.)
