If you are buying a home in New York, you will need to hire an attorney to negotiate the contract of sale and to represent you at the closing. Although attorneys aren't a required part of real estate transactions in many states, the local custom in New York is for both buyers and sellers to be represented by their own counsel. You might also want to hire a buyer's agent to help you find a home to purchase and advise you when making an offer.
This article explores the specific roles that a buyer's agent and attorney play in a New York home purchase.
Although you are not required to use a buyer's agent when purchasing a home, many buyers hire one to help them find a home and guide them through the process of making an offer. A buyer's agent can help identify and show you homes that meet your requirements, advise you on "comps," or the prices for which comparable homes sold, and help you to determine the price at which to make an offer.
Your agent will then negotiate with the sellers' agent on your behalf on the basic terms of the deal. These terms include the price offered, whether closing is contingent on you obtaining a mortgage, and any personal property to be included, or fixtures to be excluded, from the purchase. Your agent can help you to fill out a one-page offer form provided by the sellers' agent, which varies from firm to firm. Unlike in other states, the offer form is not a legal document and does not obligate you to go through with the purchase.
Once a seller has accepted your offer, your agent will accompany your home inspector when he or she inspects your home and advise you of any problems identified. Going forward, your agent will also work with your lawyer to communicate with the sellers, negotiate any issues that arise in the drafting of the contract, and facilitate the scheduling of a closing. (Note that the seller is not obligated to move forward with the sale until that contract is signed.)
It is customary in New York for the sellers' attorney to prepare the first draft of the contract of sale. Most sellers' attorneys start with a standardized form and then add a rider with additional terms to be negotiated with the buyers. Your attorney likely will also add an additional rider to the contract with terms to be negotiated with the sellers.
Once the attorneys have finalized the contract, you and the sellers will sign it, and you will send the sellers' attorney a downpayment, which (similar to what's called "earnest money" in other states) you may lose if you walk away from the deal without a reason contemplated by the contract. Typically, in New York State, the downpayment is for 10% of the purchase price, and the sellers' attorney will deposit this amount into an escrow account.
After the contract is signed, your attorney will need to do several things to prepare for a closing. First, the attorney will order a title report to see if there are any issues that sellers must resolve before a closing. These may include liens or violations against the property.
Second, your attorney will work with you to provide information and documents requested by lenders in connection with your mortgage applications. Third, your attorney will calculate the amounts that you will owe at closing to the sellers, the sellers' lender, and the title company, among others.
Finally, your attorney will represent you at the closing, reviewing and advising you on the documents that you are signing, such as the deed, transfer tax returns, and mortgage documents, and making sure that all payments are accurately made.