A home purchase is a team effort.
Bethany and Niel are your team builders and leaders. This is a partial list of the players who may be called upon for a role in your real estate transaction.
Mortgage
Whether you are buyer or seller, financing is almost always a component of the transaction. Our job is to ensure that our buyer client establishes a mutually supportive relationship with a lender. If we represent you as seller, our job is to ensure that what the buyer says about the financing to be used is appropriate for the transaction. In all cases, we want everyone to have confidence that the lender can meet necessary deadlines that buyer and seller set for themselves in the purchase and sale contract.
Mortgage Roles
While costs of obtaining financing are commonly seen as a buyer responsibility in Anchorage, it is not uncommon for some form of cost sharing to be negotiated.
Unlike most major real estate brokerages in Anchorage, Coldwell Banker Endeavor Realty, and Bethany and Niel, have no affiliated business relationships with any mortgage lenders. This freedom enables us to work for our buyer clients, to ensure they find the lender and loan product that is most suitable and competitive.
Home Inspectors
Every buyer has a “right and duty of inspection” otherwise known as the obligation to perform “due diligence” to ensure the property is suitable for buyer’s purposes. Inspection cost are routinely a buyer responsibility. Sometimes lightly referred to as a “free look”, these terms refer to the parts of the purchase and sale agreement where buyer and seller agree on how this inspection process is to be managed. Standardized purchase and sale agreements set deadlines for the inspection period, name the inspectors the buyer will use, and agree upon a timeline for negotiating repairs. Most importantly, the agreement almost always gives the buyer the right to void the contract with a full refund of earnest money if the buyer rejects the property based on inspections, or fails to secure an acceptable repair agreement. The choice of inspectors is always the buyer’s sole responsibility. Our role as either a buyer’s or a seller’s representative is to support inspectors whose qualifications are appropriate for what needs to be inspected. (Home inspectors must be licensed in Alaska, although a separate license is not required if the inspector is a PE, registered architect or licensed general contractor.) We also closely monitor and participate in the process of negotiating repairs, assisting buyer and seller to come to agreement whenever possible. The routes to agreement draw from a long list of options flowing from our many years’ experience in such matters.
Appraisers
Federal law requires that virtually all loans be supported by an appraisal of the property. (It is not always understood that the appraiser’s client is the lender, not the buyer or the seller.) It is common for buyer and seller to agree that buyer can seek to renegotiate the purchase price, or cancel the purchase contract without penalty, if the appraisal fails to support the agreed price. The appraiser only looks for market support for the purchase price, thus ensuring the security of the lender’s interest in the property. The appraisal also provides fail-safe against mortgage fraud, as where a buyer and seller conspiring to defraud a lender might negotiate an unsupportable high price that can lead to an unacceptable outcome for the lender or investor entity that might purchase the loan. Banking reform following the 2008 mortgage meltdown freed appraisers from appearances of improper relationships with lenders and other players in real estate transactions: appraisers now operate quite independently. Appraisal costs traditionally have been paid by sellers in the Anchorage market, a departure from most of the rest of the country, and even from other cities in Alaska.
Surveyors
An as-built survey of the property shows the property boundaries and corners, the locations of structures, driveways, easements for utilities and other purposes. Lenders and title insurers examine surveys: the former to be satisfied there is nothing that might threaten the security of the loan, the latter to enable them to determine the insurability of the property. Where an existing survey is one to which the seller can certify that nothing has changed, that survey is usually accepted without the need for re-certification. Buyers and sellers negotiate whether a survey is to be done, at what cost and at whose expense. As-built surveys typically do not include physically locating and flagging corners on the property itself, but some buyers who need that information, such as for a fencing company, will elect to pay for it separately.
Well and Septic Engineers
An Anchorage ordinance requires governmental sign-off of an engineering evaluation of private wells and septic systems prior to most property transfers. (Institutional owners, such as lenders that foreclose on property, aren’t always held to this requirement.) The process leading to the Certificate of On-Site Authority (COSA) has traditionally been a seller expense. Engineers test the well for flow rate, coliform, nitrate and arsenic. They test the functionality of the septic and determine whether the placement of all elements of the system are in compliance. If tests fail, engineers must determine the fix or replacement of such elements as septic tanks and drain fields. Testing of the well for other minerals is a service offered, often at no cost, by various private firms that market filtration equipment. While obtaining a COSA is a legal requirement and included as a condition of most purchase agreements, the results of more extensive water testing are typically not cause for terminating a purchase agreement unless such is explicitly agreed.
Title and Escrow
These are two quite different functions, but are for products and services that in Anchorage are normally provided by the same company. Customarily, the buyer specifies the firm to be used.
Little understood by the lay public, title insurance is necessary to protect both buyer, seller and lender from a host of unwelcome outcomes that might otherwise come to light after closing. Examples might be
- claims of ownership from people neither buyer, seller or lender knew about
- contractor liens against the property, such as a claim of non-payment for services or materials at the property
- unpaid loans secured by the property
- the interests of homeowner’s associations, including unpaid past assessments and dues
- liens against the property by taxing authorities, including the IRS or local property tax levying agencies, or by the Child Support Enforcement Agency
Before issuing insurance for the buyer, and buyer’s lender, the title company issues a Preliminary Title Report. It shows what the company will insure against, and what is excluded. For instance, the report may identify an item in the list above, which then must be cleared by someone, usually the seller, before the policy will issue. It would be a rare buyer who would accept a property without title insurance, and no lender would loan money, either, unless the lender’s interest was insured, and their loan, in most cases, was in the first lien position.
Our job, as real estate representative of buyer or seller, or both in some cases, is to review the “Prelim” and work with the parties to resolve any issues, so that at closing there will be title insurance in place.
Contractors and Handymen
We are often asked for references to individuals and firms who are qualified and well-suited for a variety of projects. These can range from something as simple as replacing a non-code electrical outlet identified by a home inspector, to the design and construction of an entire addition. As with mortgage companies, Coldwell Banker Endeavor Realty, and Bethany and Niel, have no conflicts of interest in such relationships: our recommendations are only based on historic arms-length dealings with firms our clients have found competent and reputable.