You have chosen a Realtor to work with.
You've done your homework and figured out what you want from a home and which neighborhood you would like to live in.
You have found a home that you have fallen in love with!
Now What????
The offer, the inspection and the negotiations begin!
How to Make an offer on a home?
Your Realtor should be guiding you every step of the way through this process!
While much attention is paid to the offering price of a home, a proposal to buy includes both the price and terms.
In some cases, terms can represent thousands of dollars in additional value for buyers — or additional costs. Terms are extremely important and should be carefully reviewed.
How Much?
You sometimes hear that the amount of your offer should be a certain percent below the seller’s asking price or an amount less than you’re really willing to pay. In practice, the offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes more. If demand is weak, then offers below the asking price may be in order.
How Do You Make an Offer?
In a typical situation, you will complete an offer sheet that your Realtor will present to the owner and the owner’s representative. The owner, in turn, may accept the offer, reject it or make a counter-offer.
Because counter-offers are common (any change in an offer can be considered a counter-offer), it’s important for buyers to remain in close contact with their Realtor during the negotiation process so that any proposed changes can be quickly reviewed.
Next is The Home Inspection
Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property’s mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.
What about home Owners Insurance?
When Do You Get Insurance?
The time to obtain insurance and warranty coverage is at closing, so speak with your Realtor or insurance broker prior to closing. Be sure to ask about limitations, costs, deductibles and “endorsements” (additional forms of coverage that may be available)
What Kind and How Much?
There are various forms of insurance associated with home ownership, including these major types:
- Title Insurance: Purchased with a one-time fee at closing, title insurance protects owners in the event that the title to the property is found to be invalid. Coverage includes “lenders” policies, which protect buyers up to the mortgage value of the property; and “owners” coverage, which protects owners up to the purchase price. In other words, owners coverage protects both the mortgage amount and the value of the down payment.
- Homeowners insurance: Provides fire, theft and liability coverage. Homeowners policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment.
- Flood insurance: Generally required in high-risk, flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home, plus $100,000 for contents. Local REALTORS® can explain which locations require such coverage.
- Home warranties: With new homes, buyers want assurance that if something goes wrong after completion, the builder will be there to make repairs. But what if the builder refuses to do the work or goes out of business? Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost. Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with REALTORS®, insurance brokers and home builders.
FINALLY!!
THE CLOSING! How exciting!
In practice, closings bring together a variety of parties who are part of the transaction. For example, while the history of property ownership has been checked, it’s possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan.
One of the best parts of settlement is that buyers and sellers need to do very little.
Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not changed materially since the sale agreement was signed.
At the closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records, and state governments collect their transfer taxes. The buyer receives the keys and the seller receives payment for the home.
What Comes After You’ve Bought a Home
You’ve done it. You’ve looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you’re a first-time buyer or a repeat buyer, you’ll want to take several more steps. Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.
Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing, and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. your realtor can provide you with contact numbers and related information.
About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.
Moving In
It is generally understood that sellers will leave homes “broom clean” when moving out. This expression does not mean “vacuumed” or “spotless.” Broom clean makes sense because it means the house is ready to be painted and cleaned.
Your Home, Your Money
For most owners a home is the largest single asset they hold, so it makes sense to protect that asset.
Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it.
You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details.
Lastly, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what’s most important is that home ownership should be a wonderful experience. Enjoy!
