FORT WAINWRIGHT, Alaska - PCS season is upon us. Many new service members will be moving to Alaska and many of those same service members will be looking to finally purchase a new home.
Service members looking to buy a home in Alaska face the same concerns that anyone else does. Extreme weather conditions, permafrost, rising heating costs and soaring home prices all work together to challenge home buyers in Alaska. But service members have help. There are free seminars and loan programs for service members that can make your purchase easier.
If you are looking for a home, consider contacting a qualified realtor to act as your representative. The realtor commission is normally paid by the seller to the listing real estate company. The listing agency in turn splits the commission with the buyer's realtor, so you can obtain your own buyer's representative at no additional cost to you.
A buyer's realtor will act on your behalf and in your best interests, but understand that realtors do not have a legal obligation to inspect the home, or to guarantee the condition of the home. Homes listed through the Fairbanks and Anchorage realtor associations are listed at www.realtor.com and/or www.alaskarealestate.com. In Alaska, most home sales are handled without a lawyer. The realtors, the lender and the title company will all work together to make the sale happen. An experienced Alaska realtor of your own can steer you clear of the problems in Alaska home ownership.
If you shop without a realtor, understand that "for sale by owner" may be a good deal, or it may be an invitation to disaster. Many of the FSBO purchase agreements do not give buyers a right of inspection - the right of the buyer to have professional inspectors to come onto the property to check for structural problems with the home. You should consider hiring a real estate attorney, if you are not working with a realtor.
Sellers must provide the "State of Alaska Residential Property Transfer Disclosure Statement" to prospective buyers. This form requires sellers to disclose the condition of the property and any known defects or problems including plumbing problems, water line freeze-up, soil problems, permafrost, noise, damage by insects or rodents and previous fires. A recent law requires licensed realtors to disclose any suicides or homicides that occurred at the residence within one year of the realtor's first showing of the home. Federal law requires disclosure of all lead-based paint in homes built before 1978.
A seller who negligently violates his obligations to disclose problems can be sued by the buyer for actual damages. A seller who willfully violates his or her obligations can be sued for triple damages and may be held liable for attorney fees and court costs.
Once you find a home you want, the realtor will prepare a purchase and sale agreement spelling out the terms of your offer. The offer will provide a timeframe in which the seller has to respond to the offer. If the seller does not accept or counter the offer within that timeframe, the offer is terminated. Real estate purchase contracts vary, so it is important to read the contract before signing it and to know your obligations.
When the buyer makes an offer, the buyer normally puts "earnest money" down on the contract. This money binds the buyer and will be credited to the buyer for closing costs, at closing. It is important to understand and adhere to the contract. If the buyer fails to meet the obligations and timeframes under the contract, the seller may be permitted to keep the buyer's earnest money.
If the seller defaults on the contract, the buyer may elect to cancel the contract and take back the earnest money, or the buyer may sue the seller in court for "specific performance," to have a judge order the seller to convey the property to the buyer under the terms of the contract. Sellers and buyers are simply not permitted to sign a contract, shop around and find a better deal and then break the contract without consequences.
Lenders will require appraisals of real estate before making a loan, but buyers should also hire a home inspector or engineer to examine the house for undisclosed damage and settling. In areas where permafrost or arsenic problems might exist, soil and water samples should be taken and any offer should be made contingent on good quality tests. Talk to the engineer who does the well and septic inspection as a septic inspection is a pass/fail test. It can pass by a mile or it can barely pass, but a "barely pass" may mean you should start budgeting for a new septic system.
While it may be possible to sue a seller for negligent or willful non-disclosure of problems, that seller may be long gone by the time the problem is discovered. A careful investigation of the largest purchase most of us will ever make is worth the money, up front! You should consider paying a structural engineer to inspect your home. Since 2004, home inspectors have been required to be licensed by the state. Make sure to hire one with "errors and omissions insurance" so that if they miss anything that should have been discovered, you have a right of recovery against their insurance. The inspector's fee is approximately $400.
First in a Four-part Series.
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