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Written Buyer Agreements: What You Need To Know

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When you begin working with a REALTOR® to buy a home, you will be asked to sign a written buyer agreement. Here’s what you need to know about these agreements:

What is a written buyer agreement and what does it do? 

A written buyer agreement is an agreement between you and your REALTOR® that outlines the services your REALTOR® will provide you, and what they will be paid for those services.

Why am I being asked to sign an agreement? 

Written buyer agreements became a nationwide requirement for many REALTOR® as a part of the National Association of REALTORS®’ proposed settlement of litigation related to broker commissions. The requirement went into effect on August 17, 2024.

Are these agreements new?

In some places, yes. Many states have required them for years, while some, including Illinois, have not. As a result, it is entirely possible you or others you know have not used them in the past. Regardless, they are now a nationwide requirement for many REALTORS®. 

Are these agreements negotiable? 

Yes. You should feel empowered to negotiate any aspect of the agreement with your REALTOR®, such as the services you want to receive, the length of the agreement and the compensation, if any. Compensation between you and your REALTOR® is negotiable and not set by law. In the written agreement, the compensation must be clearly defined (e.g., $0, X flat fee, X percent, X hourly rate), not open-ended or a range. It is important to sign only an agreement that reflects what you have agreed to with your REALTOR®. 

How do I benefit from these agreements? 

These agreements clearly lay out what services you, as a homebuyer, expect your REALTOR® to provide, and what your REALTOR® will be paid. These agreements make things clear and reduce any potential confusion at the outset of your relationship with your REALTOR®. 

When do I need to sign an agreement? 

You will be asked to enter into a written buyer agreement with your REALTOR® before touring a home with them, either in-person or virtually. If you are simply visiting an open house on your own or asking a REALTOR® about their services, you do not need to sign a written buyer agreement. 

Does this mean I have to pay my REALTOR® out of pocket? 

Not necessarily. While you are responsible for paying your REALTOR® what is outlined by your agreement, you can still request, negotiate for and receive compensation for your REALTOR® from the seller or their REALTOR®. 

Do agreements dictate a specific type of relationship I need to have with my REALTOR®? 

No—you are allowed to enter into any type of business relationship with your REALTOR® that is allowed in the state law where you live. 

Can I change or exit an agreement? 

Yes. You and your REALTOR® can mutually agree to change your agreement. Agreements may have specific conditions under which they can be exited, so read the text of the agreement and speak with your REALTOR® if you would like to change or exit your agreement.

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condo yard

What You Should Know Before Buying A Condo

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If you’re interested in buying a condo, here are some helpful terms and things to consider. 

No matter what, future condo homeowners should ask a few important questions when considering a unit: 

  • Who runs the condo association?
  • What are the rules and restrictions for living in the building?
  • How much are the monthly fees and what do they cover?

Condominiums, aka condos, are a common building type in major urban areas, and Chicago is no exception. Living in a condo might not be for everyone, but they’re often an excellent choice for first-time homebuyers or for those who wish to live in a more urban setting! 

condos in Chicago on a street

KNOW WHAT MAKES A CONDO A CONDO 

A condominium is an individually owned unit in a complex or building of units. You own the space inside your individual unit and share an ownership interest in the common property. This can be as extensive as roads and courtyards and as confined as a shared stairwell and roof. 

What’s the difference between a condo and an apartment? The former is owned while the latter is rented. What about a condo versus a co-op? In a co-op, you buy shares in a corporation that owns the entire building and get a stake-hold to a specific unit. 

MEET YOUR CONDO ASSOCIATION 

Maintaining and managing the common areas of the condominium are run by an entity called a Condo Association. The whole condominium is governed by a set of rules called Covenants, Conditions, & Restrictions (CC&R’s), which operate much like bylaws. 

A board runs the condo association and has the power to regulate and monetarily penalize owners for violations as decreed in the CC&R’s. Who sits on the board? Depends on the condo building. Some associations hire a third-party management company, which typically increases the cost of living in the building, and some are managed directly by the owners. Usually, buildings with fewer units are self-managed while large buildings with more units are managed by a company. 

condos in Chicago downtown

REVIEW YOUR CONDO DOCUMENTS 

The Illinois Condominium Property Act requires the condo’s seller to provide a number of important documents to the prospective buyer prior to close. These include the declarations, the CC&R’s, the financials and more. 

When you’re buying a condo, review these before making a final decision on your purchase! What should you look for in these documents? Here are a few questions to get started: 

  • What are the rules about pets, remodeling projects, leasing units and use of common amenities? 
  • Are there reserves, and if so, how much is in the reserves? 
  • What were the most recent major purchases or renovations? Are there any upcoming special assessments to cover these maintenance projects? 
  • What are the individual owners responsible for versus the condominium association as a whole? 

Don’t hesitate to go over these documents with your REALTOR® and your attorney. They can supply additional expertise and advice! 

UNDERSTAND THE HOMEOWNER’S ASSOCIATION FEES 

Most people who know about condos know about HOA fees. As intimidating as they may seem, they serve a very specific purpose! 

Homeowners Association fees, sometimes called monthly assessments or nicknamed “HOA fees,” are an additional cost beyond your mortgage or escrow payments that go directly to the condo association. They include several maintenance costs like water, trash, landscaping and beyond. 

Why are some HOA fees so much more than others? Here’s an overview of HOA fees. In the end, you should ask about the included services in your monthly HOA fees and the portion that is sent to reserves. 

If you’re buying a condo with many shared amenities like pools, gyms, rooftops, elevators, and movie theaters, anticipate higher monthly fees to maintain these features. 

KEY TERMS TO HELP YOUR SEARCH 

As you move forward with looking for your future condo, keep these key term definitions in mind. You’ll hear them a lot during the transaction! 

  • CC&R’s: stands for Covenants, Conditions, & Restrictions which regulate living in the condo association. 
  • Condo Association Board: the governing body which makes executive decisions about shared amenity renovations and repairs, monitors the reserves and determine if special assessments are required, and enforce the CC&R’s. They meet monthly. 
  • HOA Fees: the monthly assessments or costs for living in the association. 
  • Amenities: the shared features available to all association owners and residents. 
  • Special Assessments: additional fees billed to the condo owners outside of the monthly HOA fees. They’re typically passed if a large repair is needed for a shared amenity that cannot be covered by the reserves. 
  • Reserves: the condo association’s savings! These cover emergency repairs or regular maintenance costs for the shared amenities. 
  • Property Insurance: this is the association’s insurance for the shared amenities and common spaces, but it does not insure each individual unit or their contents. 
three people looking at documents

What to Expect During A Closing: Buyers

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A closing is when you, the buyer, sign the final ownership paperwork and officially, legally become the owner of your home! You will leave your closing with the home’s keys.

Your closing date will likely be listed on the purchase and sale agreement you will sign after your offer is accepted. On average, closings are scheduled within a month or two of signing this document.

LEADING UP TO THE CLOSING

As the buyer, the days leading up to the closing will include reviewing lots and lots of paperwork. Try not to stress! Your REALTOR®, your lender and your attorney are there to assist you.

One of these documents is the Closing Disclosure (also called the CD) which lays out your final loan terms and closing costs. You will get your CD from your lender at least three days before closing for you to review.

The CD will ensure there are no surprise costs for you at the closing table. Compare this with your initial Loan Estimate when you applied for the loan, and if you see significant discrepancies, contact your lender at once.

What is the difference between closing costs and your down payment? While your down payment goes towards your home loan, closing costs are typically one-time fees that go towards all the other services that take place during the transaction such as:

  • Loan application fees
  • Appraisal fees
  • Title search fees
  • Your attorney’s fees
  • Recording fees
  • Lender costs such as underwriting, credit report and origination fees
  • Commission for both the buyer’s and the seller’s agent
  • Property taxes

If you’re nervous about how to accurately anticipate the closing costs, consult your loan estimate. It includes estimates for each of these line items. Also, Nerdwallet has a free, online calculator.

couple signing documents

WHAT TO EXPECT DAY-OF

You will attend the final walkthrough of your home within 24 hours or the day-of your closing. Typically, you, your REALTOR® and the seller’s agent will attend as you make sure any and all request repair work was completed.

What are you looking for? You’re ensuring everything is functioning properly and that nothing has broken or been damaged since the inspection. Ask your REALTOR® for a list of what to look for during the final walkthrough. If everything is as it should be, you’re ready to close! If you see anything amiss, you and your REALTOR® will contact your attorney and the seller’s agent to negotiate potential compensation for the problems at the closing table.

What should you bring to the closing table? A pen, a government-issued photo ID and a cashier’s check or proof of wire transfer to cover the closing costs and any remainders of the down payment. Ask your attorney how much you should pad for potential closing costs increases such as prepaid interest.

Note: bringing “cash to close” does not mean you should bring cash!

Depending on your state or personal circumstances, ask your attorney if you need to bring any other documentation such as proof of homeowner’s insurance.

AT THE CLOSING TABLE

Prepare yourself to sign a large stack of paperwork! Your attorney will go through each one of these documents, although you will also receive them the night before to review them in greater detail.

Depending on a number of factors, closings can last between an hour to several. You as the buyer can help prevent unnecessary delays by avoiding changes to your financial situation such as large purchases on your credit card, applying for credit or changing employers.

Who is there? At minimum, you can expect it to be you, your attorney and the lender. Depending on the circumstance, the seller may attend if they haven’t already signed their necessary documents. No matter what, you are not alone. Your attorney and your REALTOR® are available to answer questions or address concerns.

sunrise chicago

WHAT’S NEXT?

You have your keys! You have officially purchased your home! Here are a few best practices to kick off your first hours/days as a homeowner on a strong note:

  • Take your copies of the closing documents you signed and save them in a secure place.
  • If you negotiated a same-day move with the seller, keep track of each key! Confirm you’re receiving one for any and all doors, mailboxes or entries.
  • Prepare a list of authorities or organizations (like the U.S. Postal Service) you need to notify of your change of address, as it applies.

With constant communication and intentional preparation, your closing can feel like an exciting culmination of all your hard work, research and exploration. Utilize the team of professionals at your back so you can save on stress and celebrate this exciting milestone.

meet your homebuying squad

Meet Your Homebuying Squad

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This group of professionals will help you throughout the homebuying process. As you assemble your homebuying squad, consider working with all of these experts to make your home purchase confidently and with minimal stress. 

Like an athletic team, each member of the homebuying squad plays a crucial role in helping you achieve homeownership. 

MEET YOUR REALTOR® 

On this team, you are the captain, and this is your head coach. Your REALTOR® not only represents you, but also advocates for you and your interests during the transaction from start to finish. 

tiny people on briefcase and clipboard

Whenever you feel lost, confused, worried, stressed or curious, this person is your go-to resource. If they don’t have the answer, they will know how to get it for you! Sit down with your REALTOR® to build a homebuying game plan. Communicate your goals and priorities and establish a communication system you both are comfortable with.  

Also, your REALTOR® may have lenders, attorneys and inspectors they can refer you to, though you are not required to use the people they recommend. 

Best Practice Tip: CC or keep your REALTOR® in the loop whenever you communicate with someone on your homebuying team. 

MEET YOUR LENDER 

Your lender is like your athletic trainer. This is the person who can help you determine your buying power based on your financial health. 

Great questions to ask your lender include:

  • What types of loans am I eligible for?
  • How can I work on my financial health to qualify for each kind of loan?
  • When should I get prequalified or preapproved? (And what’s the difference between the two!?) 
  • And more!

Connect with a lender as early as possible in the homebuying process. That way, there are no disappointing surprises down the road based on your financial limitations. 

MEET YOUR ATTORNEY 

Your attorney is like your defense. This is the person who will review all the paperwork and contracts during the transaction. They will communicate your requests and advocate for your interests with the other party’s attorney. 

person signing a paper

Your attorney will become more involved in the transaction as soon as you’re ready to make an offer on a property. Once the offer is accepted and you move through attorney review and the inspection, you and your REALTOR® will be regularly communicating with your attorney and the seller’s attorney.  

On closing day, they will also sit down with you at the closing table to take you through each document. 

Buyer Best Practice: Use an attorney who specializes in real estate. It can be tempting to use a friend, family member or acquaintance who is a practicing attorney in another specialty, however, real estate attorneys are well-versed in the intricacies of the real estate transaction. 

MEET YOUR INSPECTOR 

Your inspector is like your special teammate. They have a very specific, yet very important, purpose in the transaction: inspecting your future home for damage, financial or physical risk, or code violations. 

hard hat illustration

While inspections are not mandatory, they are highly encouraged as they allow you to proceed with your home purchase as informed as possible. 

Once the inspection is complete, they will send an inspection report. Don’t be afraid to ask your REALTOR® questions about the contents of it! If you have a list of requested repairs or credits, this is what you’ll communicate to your attorney. 

BONUS: YOUR FAMILY & FRIENDS 

We can’t leave out your fans and supporters! It’s up to you how involved you would like your friends and family to be in the homebuying process. Whether they’re actively on the homebuying squad or simply on the guestlist for your eventual housewarming party, friends and family can provide helpful perspectives or advice. 

No matter what, you are not going through the homebuying process alone. You have a whole squad of experts who have your back! 

couple carrying boxes

A Beginner’s Guide to Understanding HOA Fees in Chicago

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If you’re buying a condo or townhouse with commonly shared areas or amenities, the property is likely run by a homeowner’s association (HOA). The fees you pay to the association, otherwise known as HOA fees, go towards the ongoing and future maintenance of these amenities and spaces.

Why Do HOA Fees Vary So Much?

The fees can be collected monthly or yearly, and the amount is influenced by a number of factors:

  • The size of the condominium
  • The age of the building
  • Included utilities
  • The amenities or services provided
  • How much is being set aside in reserves
  • The size/square footage of the individual unit or property

Unlike co-ops or townhomes, everyone who owns a unit in the condo building chips in money to take care of the communal spaces. In Chicago, historical buildings and buildings with high-cost features like elevators and pools are more likely to have higher fees.

BUYER FAQ: What is a co-op?

Unlike a condo, you aren’t buying an individual unit. Instead, you buy shares in a corporation that owns the entire building and get a stake-hold to a specific unit. Services will still be bundled into singular community payments like HOA fees. LEARN MORE

BUYER FAQ: Where can you find the breakdown of HOA fees?

Ask your REALTOR®! They can provide the full list of included services from the listing.

What’s The Word On Reserves?

An HOA payment is divided into two major areas: routine maintenance costs and savings for the association’s reserves. These reserves are applied towards “capital expenses” which are typically large-scale or emergency in nature. For example, repairing or replacing the roof is a common reason to dip into reserves.

The reserves are intended to help cover the remaining costs the building insurance doesn’t cover. If the reserves aren’t enough, then a special assessment may be implemented. Even though your HOA fees will include building insurance, it’s highly recommended, and often required, that you get homeowners insurance for your individual unit and personal property.

Luckily, large expenditures like replacing the furnace or the roof are spaced out over many years. When it’s time to use the reserves or mandate a special monetary assessment, the homeowners association will vote on what to do.

Who Runs The Homeowners Association?

The homeowners! Typically, the association board members are elected from within the residents by all the residents in the building. During the regular HOA meetings, homeowners can discuss big projects or issues. When major decisions need to be made — like dipping into the reserves — all homeowners vote on it.

The board follows and implements official rules, bylaws and processes. These are sometimes called covenants or CC&Rs (Covenants, Conditions & Restrictions). CC&Rs determine what kinds of changes can be made to the exterior of your home, determine if you can own pets (and, if so, what kind), state what qualifies as a quorum on major projects in need of a vote and so on.

Buyer FAQ: What is the City of Chicago Condo Ordinance?

Chapter 13-72 of the Municipal Code of Chicago is the City of Chicago’s Condominium Ordinance. This is an official government document that protects the rights of the tenants in condo buildings. You should get a copy from your REALTOR®.

Buyer FAQ: When will you receive a copy of the bylaws or CC&R to review?

The condo association’s documents will be shared with you when you enter the attorney review period. Ask your REALTOR® to provide a complete journey of the transaction!

So, Are HOAs and HOA Fees For Me?

In Chicago, HOAs are a common entity. Explore different neighborhoods and building types if you’re interested in a condo but would like to target a specific price point in monthly HOA fees.

Here are some helpful considerations you should make as a prospective buyer so you can evaluate if a building with an HOA is the right fit for your living style:

  1. How do you prefer to pay for maintenance for your home – are you comfortable with making a monthly deposit for a future expense or with paying out of pocket when the emergency or need arises?
  2. How does something like a monthly HOA fee factor on top of your estimated monthly mortgage payment?
  3. What sorts of utilities are you comfortable being bundled into these fees?
  4. How important are lifestyle amenities like gyms, pools and common kitchens?
  5. How much freedom or autonomy do you want to make changes to your home?
  6. Do you have a preference between owner-occupied or investor-owned buildings?
  7. Do you plan on turning your home into a future investment property?

When in doubt, ask your REALTOR® about HOA fees during the homebuying process.