Kevlar For WA Home Buyers: Three tips to keep you in control
April 15th, 2007 by Mark FlandersPurchasing a home without representation is similar to driving down a straight road with a blindfold on. It might work out.
The process of purchasing real estate is pretty straight-forward, but the complexities of the legal paperwork are intimidating to say the least. Quite honestly, I wouldn’t think of doing this and I work with real estate transactions every day of the week! There is no better investment of my money, than the services of a well-trained and experienced Realtor®.
If you have decided to do-it-yourself, here are three things to help you maintain some control of the transaction. These three contigencies will allow you some protection from the more common problems that arise between the time you find the home of your dreams, and the time you are handed the keys to it.
Stay In Control – Tip #1
Financing Contingency: You want to insure that the financing happens the way that you need it to. For example, you may want to place an offer based on finding a mortgage with your specific terms. If you have decided that 6.50% is the highest interest rate you are willing to pay, yet 8.00% is the lowest available at the time, you will need a way to back out of the transaction without financial penalty. If you do not find that mortgage, the deposit that you have made will be refunded to you.
The best course of action is to have your financing in place before you go shopping. In that case you can still add a contingency for a specific time period in which to formalize you financing.
Stay In Control – Tip #2
Inspection Contingency: The next thing to insure your protection is a home inspection contingency. Because homes are such large investments and an emotional decision, you need to have your home professionally inspected. This is no time to put your weekend-garage-warrior hat on thinking you can save a couple of hundred bucks. Let the professionals climb around in the attic and into the crawlspace. Listen to the inspector if he recommends calling in a licensed electrician because some seems amiss. And make sure you place a contingency in your offer that the inspections come back clean or the offer is voided. If the home inspector does find any problems with your home, you can decide to back out of the home’s purchase altogether, or you can renegotiate for a lower price, based on the findings.
You should have a professional company come in and look at all of the major systems in the home including your heating, cooking, roof, windows and so on. In addition, the home’s structure should be considered, the presence of any potential electrical, plumbing, water damage or pests in the home and much more.
Stay In Control – Tip #3
Appraisal Contingency: While many home buyers are willing to pay for the home of their dreams no matter what that cost, the bank that is giving you the loan for it is not likely be so nice about the process. The lender will require that an appraisal be done on the home, and you should too. You want to know that you are getting a home that is worth the cost you are paying for it. You should place a contingency in your offer, then, that the home will appraise for at least the amount of the offer you are placing.
You will need to have an independent appraiser come out and do this work. He or she will compare the home’s condition and property aspects to homes in the area that have the same or similar features and what their selling prices have been. If the appraisal comes in low, make sure you have the legal right to back out of the transaction or renegotiate the price.
If you are determined to play Russian Roulette with hundreds of thousands of dollars by representing yourself in the purchase of a home, at least take along some Kevlar. These three contingencies will give you a bare minimum of protection.
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Tags: home buyer tips kitsap washington, kitsap real estate blog, seattle real estate blog
Don’t Go It Alone!
You are on a roll today……… great post!!
Thanks
Mark – I like Tip #3, especially in light of regulators looking so closely at appraisal values today.
You can’t beat having a great Realtor and mortgage professional representing you.
I am with you. The risks Buyers take without using a Realtor are extremely high. In Tucson Sellers have to complete an SPDS (Seller’s Property Disclosure Statement). Disclosure, disclosure, disclosure. Recently I became aware an incident where a Seller claimed there were no roof leaks. The inspector noted water damage in the master bedroom. Oops. The seller changed his story. Then came the CLUE report. Turns out the insurance company dropped this seller becasue they paid for hail damage and there was no roof replacement. Oops. Luckliy the Buyer had a sharp agent who figured roof replacment into the offer. How could a buyer without an Agent know to ask for a seller disclosure? How many know how to get a CLUE report? The kevlar to protect home buyers is spelled REALTOR. There are countless horror stories wbout transactions without Realtors. I have a buyer from Washington (my home town being Bremerton) who sold his own home. Said he’d never do it again without a Realtor. I’m with you, saving now can cost dearly later.