By Tammie White
We have the privilege of working with many home buyers relocating from other states. There is always a lot of confusion about what is standard in Tennessee versus the state where buyers currently reside.
You finally found the right house. You're under contract to buy a house in Tennessee, what's next?
We want buyers to feel confident in their home purchase. As such, we would rather provide them with too much information than not enough.
There are a few things you should know about buying real estate in Tennessee.
Attorney Review: We do not have attorney review of our contracts. For example, in Illinois buyers and sellers have a 5-day attorney review period in which their attorney can change any of the details of the contract except the price. In Tennessee, we don't have that review process. Once all parties have agreed to all the stipulations as spelled out in the written contract and signed it, we have a legally binding agreement. Nothing can be changed in this document without the seller's approval which also must be done in writing.
Survey: Many states require a survey be completed by the sellers on every real estate transaction. That isn't required in Tennessee. Buyers can request a survey at their own expense, however, sellers here aren't accustomed to this request. If you add it as a contingency to your offer, don't be surprised if they take a pass. The only time we usually see buyers perform a survey is when they are buying a home with a lot in excess of one acre.
Property Taxes: Property taxes in Tennessee aren't broken down into different taxing districts, ie. school district, library district, park district, fire district, etc. Our services all fall under the county's jurisdiction where you'll reside. That's how Tennessee is able to keep property taxes so low.
Depending where you live in Tennessee, your tax bill may show County taxes and City taxes and in some cases, an additional school tax: Franklin Special School District for example. Taxes are paid in the arrears here. The seller's taxes will be prorated and a credit issued to the buyers at closing. The buyers will then pay the entire tax bill at the end of the year.
Transfer Taxes: Transfer taxes and revenue stamps are paid by the buyers in Tennessee, not the sellers. In some states, that is the seller's responsibility.
Contract Performance Dates: Buyers will have a specified number of days to make their loan application (3 days) and complete all home inspections. These must be completed within the specified calendar days, not business days. If a contract performance date falls on a Sunday or holiday, then it is extended to the next business day. Pay close attention to all your contact performance dates.
Split Closings: In Tennessee, you won't be sitting across from the sellers at closing. That's because Tennessee allows buyers the ability to choose their title company. In all likelihood, the sellers will use a totally different title company to close. Not to worry, your agent will be able to refer you to a title company. Buyers of new construction may want to close with the builders title company, otherwise you may not get keys at closing.
Earnest Money: Earnest money is NOT your down payment. Earnest money is a deposit that you offer to the seller to prove you are financially solvent. Your earnest money check will be cashed within 48 hours of receipt. These funds will be deposited into an Escrow Account with the listing brokerage or the seller's title company.
The seller does NOT get this money until close. Your funds will stay in the brokerage Escrow Account or the title companies account until you close. If your deal doesn't go through because of one of your contingencies, the listing brokerage/title company will issue a check back to you. They must reimburse you within 21 days from the date of a signed Mutual Purchase and Sales Agreement Release and Disbursement of Earnest Money. However, most listing brokerages will release your funds within a few days of cancelling the contract.
Home Inspections: All inspections must be completed and a Repair/Replacement Proposal submitted by 11:59 p.m. the day specified in your agreement. That includes home, termite, radon, HVAC and any other inspections you opt to perform.
Radon is an invisible gas that has been known to cause cancer. This test is not required and is at the discretion of the buyers. However, it is prevalent in our area and a Radon Test should be carefully considered. There is some debate whether a Radon Test is necessary when a home is on a slab. You should thoroughly research Radon before making a decision. The machine that takes the readings must be left in the house for a minimum of 48 hours. Be sure to allot enough time for this test.
Those are just a few of the differences you'll find when buying Tennessee real estate.
Tennessee Association of REALTORS® Purchase and Sale Agreement
Tennessee Purchase and Sale Agreements are designed to protect buyers. They have lots of contingencies built into this document that provide buyers with an opportunity to get out of their contract with a full reimbursement of their earnest money. Typical contingencies include home inspection, financing, appraisal and sale of home. The less obvious contingencies include spousal approval, surveys or review of homeowner's association documents. Be sure to ask your agent for guidance on contingencies to include when writing an offer
If you are looking a buy a home in Franklin or Williamson County Tennessee, contact Franklin Homes Realty LLC at (615) 495-0752.