Ready to Buy?
Once you have found the perfect house, your realtor will take you through the purchasing process:
- Submit your offer to buy the house
- The seller may accept your first offer, or you may go through one of several counter-offers before you and the seller agree on the terms of the sale.
- Once you both agree, you have a contract of sale which spells out the details and responsibilities of all parties involved in the transaction.
How Much Should You Offer to Pay?
Should you offer to pay the seller's asking price or a lower one?
Consider such factors as:
- How long has the house been on the market?
- Is its price reasonable?
- Your realtor can show you comparable home sales (comps) for similar properties in the neighborhood to help you.
- How competitive is the area's home buying market?
- If the seller is offering an assumable mortgage or financing, how much is it worth to you?
What Happens To The Earnest Money?
A "deposit" is made, in part, to show the seller you are serious about buying. Your realtor will inform you of the amount that is usually given in your area. The seller doesn't actually receive the earnest money. A Title Company holds the amount in a special trust - or escrow account until the sale is closed or the contract is broken.
If you go through with the sale, the money is applied to your down payment or other closing costs. If you fail to buy the house, the seller has the right to keep the earnest money. However, you can get your money back until the point at which you are notified that the seller has accepted your offer. And if the seller fails to fulfill their obligations, the money is yours.
How Does the Seller Prove The "Title" is Clear?
A "title" spells out who has the right to ownership of a property. It is said to be "clear" if there are no substantial claims or liens (such as a mortgage) against it. A standard contract asks you, in essence, how you want the seller to show you that he or she owns property and that the "title" has no claims against it that would prevent transfer to you.
A "title search" is done by your title company and an Owner's Policy of Title Insurance is issued. In order to issue this insurance policy, which protects you against losses that come from claims against the title, your title company searches the title.. Because you are insured (usually for the sales price), the owner's insurance provides the most protection.
An abstract of Title (Title Report) is prepared showing a brief history of the ownership and any legal documents that affect its title.
What Conditions Will You Place on Buying The House?
When you commit to buy the house through your offer, you may make that commitment contingent upon certain things happening, such as you securing financing for the home. In a similar vein, you may make the purchase contingent upon the sale of your present home by a certain time and under certain terms.
You will also want to make sure the house is in good shape. You may make the contract subject to your being satisfied with a building inspector's report and/or an inspection for termites. The purchase should also be subject to your being satisfied with your own inspection of the house just prior to closing.
What Are You Buying?
The contract should spell out everything that is part of the purchase that may not be clearly part of the real estate. Common items that could cause questions include appliances, light fixtures (such as the chandelier in the dining room), shades, blinds, curtains and rods, screens and storm windows, shelving or cabinets, potted flowers, shrubs and trees, or perhaps a swing set that is cemented down.
It is important to know for sure what stays and what goes when the sellers moves out. Some items you may have assumed to be fixtures of the house, may be the seller's family heirlooms which are by no means going to stay in the house.
What Special Provisions Should Be Included?
Most contracts for sale include some standard provisions, such as one for property taxes, insurance costs, utility bills, and special assessments to be prorated at closing between the buyer and seller. Others outline particulars about what happens if the property is damaged before closing or if the seller or buyer fails to go through with the sale. You may want to add your own special provisions. For example, you may want a new home builder to provide you with home warranty insurance at no cost to you.