You have a mortgage preapproval.
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.
* The essential
idea behind various forms of real estate insurance is to protect owners in the
event of catastrophe. If something goes wrong, insurance can be the bargain of
a lifetime.
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!
