Buyers

THE ADVANTAGES OF HOME OWNERSHIP

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BUYING 101

The Offer

Once a buyer finds a home to purchase an offer must be written up for the property. A buyer’s offer to purchase will be presented to the seller as quickly as possible. After the seller has reviewed the offer, it may be accepted as is, rejected, or returned with a counteroffer. The counteroffer may be in regard to price, the closing date, personal property, or any number of reasons. The offers can go back and forth until both parties have agreed or one ends the negotiations.

Contingencies

A buyer may present a contract to buy a home contingent on something, such as a home inspection or the financing or sale of a present home. The seller’s home would generally stay on the market as before and the buyer would be given the right of first refusal. If another buyer were to present an offer, the seller would give the first buyer the opportunity to either drop the contingency and go through with the purchase or void the contract (the precise conditions vary in how the contract was written). The seller may be required to take the home off the market for a specified period of time. 

The Purchase Agreement

A contract exists when the buyer and seller have arrived at an agreement, initialed all changes, and signed and dated the final documents. The purchase agreement explains all the rights and responsibilities of the buyer and seller that are to be fulfilled at the closing.

Earnest Money

It is routine for the buyer to provide earnest money when purchasing a home. Earnest money is generally a cash payment (check or money order) that is a percentage of the home’s purchase price. It assures the seller that the buyer is acting in good faith and has serious intentions to purchase the home. Generally, it is applied to the purchase price when the purchase is completed.

Good Faith Estimate

Buyers receive a Good Faith Estimate of closing costs at the time the loan application is submitted to the lender. The Good Faith Estimate is a written list of the estimated closing costs connected with your mortgage transaction required by Federal law. It includes the lender’s charges and closing agent’s fees, and also the estimated property taxes and homeowner’s insurance.

The Closing

As your agent prepares for your closing, the title company will receive instructions from the lender and begin ordering the documents needed. Generally, these documents are the warranty deed, note, deed of trust or mortgage, release of liens, payoff figures from existing loans, proof of insurance, and the survey.

There are certain standard costs associated with closing the sale of a home. These fees are divided between the buyer and seller, as stated in the purchase agreement. Some standard closing costs include: the loan origination fee, appraisal fee, credit report, property taxes, interest payment, points, homeowner’s insurance, title insurance, escrow account, private mortgage insurance, and transfer taxes and recording fees.

PROTECTING YOUR INVESTMENT

Homeowner’s Insurance

Homeowner’s insurance is a financial safeguard against the unexpected, including property loss and injuries to third parties. Homeowner policy costs are determined by factors such as the level of coverage, neighborhood crime rate, the home’s square footage, and how prone the neighborhood is to natural disasters. The standard homeowner’s insurance covers: structural damage to the home, loss of personal items, liability, and additional living expenses.

Home Warranty

A home warranty is a type of insurance that covers repairs to specified parts of a home for a period of at least one full year. It is usually provided by the builder or property seller as a condition of the sale. 

Home Inspection

A home inspection informs homebuyers of the condition and possible problems a home may have. A professional home inspector surveys the foundation and structure, roof, exterior, central systems (electrical, cooling, heating, and plumbing), and the appliances that will stay with the home. Generally, the buyer will select and pay for the inspector.  To avoid legal complications, the seller should not select the inspector.  Your real estate agent should be knowledgeable of reputable inspectors.


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