Professionals Involved in the Purchase Of a Home

The purchase of a new home will involve you with a number of professionals in addition to a Realtor. The following is an example of the services that they might provide.

APPRAISER:

Your lender will require an appraisal to make sure the house will be adequate security for the amount of the loan requested. Generally, when you apply for a mortgage, you pay for the appraisal up front, and the lender selects the appraiser. The charge is based on local price ranges and typically runs upward from about $200.

HOME INSPECTOR:

Although the real estate associates involved in the purchase will disclose to you any defects or adverse matters of material significance affecting the property of which they are aware of through visual inspection and otherwise, they are not expert in these matters. The inspection accomplishes two important goals. First, it gives you a chance to determine the condition of the structure and the mechanical systems that are not visible or understandable to the average purchaser. You can then either bring these conditions to the attention of the seller in the form of further negotiations, or go ahead with the purchase with a better idea of what may require future maintenance. You will be able to plan ahead and budget for large purchases as a part of your home maintenance planning.

If you sign a contract of sale before the inspection, be sure to include a clause that the sale is contingent on a structural inspection, and specify when the inspection is to be carried out. Most real estate associates will recommend this procedure as a standard course of action.

A reputable inspection firm will provide you with an evaluation of the major systems in the house, including foundation and general structure, condition of the roof, condition of the heating and cooling systems, condition of the plumbing and electrical systems, and any other specific inspection that you may require. In addition, the inspection may provide you with the age, anticipated life expectancy, and estimated replacement costs. You should be present during the inspection. Come prepared with a list of questions and concerns that you have about the property. It usually takes about two to three hours, and the conversation between the buyer and the inspector can be invaluable. If your questions are limited to specific areas of a house, most inspection firms will be happy to assist you in evaluating only one or two systems.

In addition to the oral report that will be given during the inspection, you should also receive a detailed, typewritten report within a few days.

The fee for an inspection varies from area to area and usually depends on the size of the building. Inspections typically cost between $150 and $300. It is a good idea to shop for a competitive price and determine what kind of reports will be provided to you. The inspector should be licensed in a building-related field: architects, contractors, and structural engineers are good examples. Ask how long they have been in business, and ask for references from previous customers.

BUILDING CONTRACTOR:

You may need to make changes to your new home to make it suit your family's lifestyle. If you are planning to hire professional assistance for any remodeling projects, choose your contractor carefully. Ask for recommendations from several sources; then check each company out with the Better Business Bureau and other references.

INSURANCE AGENT:

In order to obtain a mortgage, home purchasers are required to have hazard insurance, or fire and extended coverage, as well as title insurance. You may also be required to have private mortgage insurance, depending on the size of your down payment. These types of insurance are not required for your protection, but for the lender's. Private mortgage insurance, which is necessary for risky, low-down payment loans, covers the lender's loss if you should default on your loan. If there's a defect in the title to the house, the title policy covers the lender's losses and legal fees. And if your place burns to the ground and you don't rebuild, the fire policy will pay the lender first. Of course, you may want to have this type of coverage for personal protection also.

Your lender will inform you of whether or not you need mortgage insurance and how much it will cost. The closing/settlement agent will tell you what the lender's title policy will cost and give you the option of buying the same policy for yourself. Except private mortgage insurance, you're free to consult your own insurance agent for the proper coverage.

ATTORNEY:

All real estate transactions can have problems, and you never know for sure whether or not it will happen to you. If you are at all concerned about your real estate transaction, obtain legal advice. Most attorneys charge by the hour.

The proper time to consult an attorney is after you've negotiated a contract, but before you sign it. If you take an executed contract to a lawyer, there's little he or she can do but tell you where you went wrong. However, you may end up in the position of losing the home to another purchaser while you are waiting for the attorney to review your contract. An option that allows you to negotiate the entire sale is to write the contract contingent upon your attorney's review within a reasonable period of time. And remember, lawyers, like doctors, specialize, so consult a real estate attorney.

LENDER:

This is a universal term for any organization that makes home loans. Such entities include banks, savings and loans, commercial banks, credit unions, and insurance companies. A good lender will be able to help you decide which type of mortgage is the best for you.

In addition, a good real estate agent will be capable to helping you find a lender, a good rate, or the right loan - or all three.

CLOSING AGENT:

Also know as an escrow or settlement agent, this person is usually a title attorney who not only handles the paperwork of the transaction but also searches the property's title to make sure it's unencumbered and can be transferred without problems.

Although both you and the seller will pay the settlement agent a fee, he represents neither of you in the transaction. He represents the lender and must follow the lender's instructions, as well as the terms of the sales contract between you and the seller.