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Homeowners insurance — or the paid receipt for it — is required at closing. Shopping for insurance coverage, and comparing plans early in the home-purchase cycle can pay off. Insurance agents and representatives can be a terrific resource for information. They may help you understand how insurance costs differ between properties. They might also have ideas on reducing coverage with additions like home-security systems. Regardless, proof of insurance will be required to consummate the purchase.
Understanding what a "home inspection" does is useful in the purchase (and selling) process. Home inspectors bring professional knowledge to the job of inspecting the structure, construction, systems and current state of a home. They do not weigh in the value or price of a property, but do provide an objective recommendation of status and recommended repairs. Things usually included in an inspection: Top-to-bottom structural state: roof, ceilings, walls, windows, floors and roof. Electrical system status and safety. Plumbing and waste disposal system conditions. Key mechanical systems, including water heaters, heating and A/C. Ventilation and insulation condition. Water — source, quality and (potentially) obvious plumbing issues. Pests — or the absence of. (Pest inspection may be a separate, required step in some communities.) Look for a home inspector with experience, qualifications and (ideally) time in the local market. While home inspections may or may not be required under specific market conditions, remember that skipping inspection means you own the house as-is once the deal has closed.
Home inspection is frequently required in the process of a home purchase; this short video explains the purpose of an "inspection clause" in a purchase offer. Under some market conditions, a buyer might include a clause that makes purchase conditional on, or influenced by, the results of a home inspection. This gives the buyer some latitude to exit from the deal, or to renegotiate, if the inspection reveals issues. An inspection clause might also stipulate responsibility, such as requiring the seller to address problems revealed by inspection before the purchase is completed. In other conditions, such as highly-competitive buying markets, a home-inspection clause might be left out entirely. Be clear on the risk that this introduces. The real estate professionals involved in the transaction will provide guidance on the decision.
As this video explains, cash committed to demonstrate sincere intent to go through with a detail is called "earnest money." Conditions and (sometimes) local customs may play a role, but an earnest money sum between 1% and 5% of the purchase price is typical. This is regarded as substantial enough to demonstrate good-faith intent. If agreement is reached through offer and counter-offer, the earnest money generally becomes part of the down payment or transaction closing costs. If agreement is not reached, earnest money is returned. If you back out of the offer/deal, you may forfeit the earnest money. Ask your real estate professional for guidance.
Youre ready to buy a house; how do you "Make an offer"? There is a formal process, and the real estate agent(s) will assist you. The offer will involve: Price: how much are you offering? Under what conditions? Time: when do you want to close? Move in? Financial Terms: How much are you offering in down payment? What financing details might affect the offer? Contingencies. Does the offer depend on any other events, such as the sale of your existing home? Earnest Money: what amount are you committing to show that you are in earnest about the purchase? Deadlines: how long is the offer valid? An offer will include the complete legal description of the property, and a few other formal details. Keep in mind, it is "an offer, not a deal." Buyers will frequently provide a counter-offer that changes some of the terms to meet their desired outcome.
The initial offer price and terms on a home purchase have a big effect on the final deal. Keep a few things in mind in calculating your offer: If a buyers agent is involved, working for you (the buyer), they should take the lead on this job. Remind them to keep information and decisions confidential. If a buyers agent is NOT involved, remember that the selling agent works for the seller, not you! Calculating the actual offer should factor in: The price and terms for homes in the area The price and terms for recent, similar and especially nearby sales ("comps" -- comparable homes.) The condition of the home The listing history - how long has it been on the market? Has the listing price changed over time? Your financing terms, and general financing conditions such as interest rates. The sellers situation Know what the home is worth, and what you can afford. Negotiation is common; expect the buyer to make a counter-offer and anticipate more than one back-and-forth to reach agreement on the final price and terms. If you have a buyers agent, consider their advice, but follow your own reason and goals.
Deciding "older home or newer home" is a unique challenge for each buyer and place. Here are some general guidelines to think about. Home Age and Neighborhood Age. More-established neighborhoods with a higher average home age develop their own ambiance over time. Is that what you want? Property Tax Rates. An older home may have a lower tax rate; make sure to ask and compare. Maintenance. Homes require maintenance as they age, but you should assess what has already been done on an older home case-by-case. Energy efficiency is also a key concern; building standards have improved efficiency standards over time, so you may find newer homes to score higher on this key cost. Consider what you want to spend time on, and what you enjoy as well.