Taking a final walk-through the home you’ve agreed to purchase prior to closing is an essential step in the home-buying process. By now the property should be vacant and you and the seller have completed all of your negotiations and have agreed on the terms of the purchase transaction.
In many cases, the negotiations included some repairs or other terms that specified which appliances or other items, such as window treatments or lighting fixtures, were to be included in the home sale. At the very least, it’s best if you confirm before closing that the home is in the same condition as it was when you entered into the purchase contract.
Now is also the time to make sure that any items the seller agreed to remove are gone. Taking the walk-through prior to closing is crucial because you haven’t yet paid for the home and during this pre-close time, the seller will likely be motivated to remedy any problems.
You may want to compile a list of the agreed upon repairs and items or appliances the seller agreed to include as part of the home sale. The list will help you remain focused on the agreed upon terms while you check for any new problems or damage that may have occurred during the seller’s move or while contractors were making repairs.
If you and the seller agreed on some major repairs, such as for pest damage, dry rot, or to heating or air conditioning systems, it is a good idea to have an earlier walk-through, and possibly an additional inspection, to verify that the major issues have been corrected.
It can be difficult to figure out which fixtures or other items should be included in the home sale and which items to take with you when you move. As a rule, any objects that are attached to the house or property itself, whether they are nailed, screwed, planted or otherwise affixed, stay with the house and are included in the sale.
In some cases the attached items are obvious – light fixtures, built-in appliances or a mailbox that is firmly planted into the ground.
However, sometimes what stays and what goes isn’t completely cut-and-dried – a buyer may incorrectly assume the chandelier in the dining room stays, perhaps that mailbox is a family treasure you intend to keep. It’s best to outline in the sale contract all of the items in the house that you plan to remove, as this can help you avoid any last minute negotiations.
If you’re worried that a chandelier or other pricey light fixture, window treatment or some other item may become a negotiation point you’d rather avoid, consider removing the items and replacing them with fixtures or treatments you’re willing to include in the sale.
Spend some time with your Real Estate Advisor going from room to room and itemizing the properties you plan to take with you and those that you will include in the sale.
Your Real Estate Advisor has probably seen some fierce negotiations crop up over some seemingly mundane items and likely can help you circumvent some of these issues by pointing out items that buyers typically like to see included in the sale.
A lender will not sign-off on your mortgage loan unless you have secured adequate homeowner’s insurance. The policy protects your financial interests and the lender’s investment in your home. Don’t wait until the last minute to begin shopping for a homeowner’s insurance policy. Annual premium costs and coverage options vary widely between insurance companies.
A typical homeowner’s insurance policy provides protection for casualty, liability and personal property. Your insurance broker can help you determine how much coverage you need for each of the three standard protections.
Casualty coverage provides protection for common hazards including fire, wind, lightning or other incidents that can cause structural damage to your home. If the house is damaged or destroyed by a covered peril, the casualty insurance should cover the cost to rebuild.
Ask your insurance broker about a guaranteed replacement cost provision. The provision ensures that your insurance will cover the cost of rebuilding your home even if the cost exceeds your policy limits.
Homeowners can be subject to a host of legal liability issues. The liability coverage provision in a homeowner’s policy provides protection against lawsuits that can result if a guest or some other visitor is injured while on the property. One rule to consider is that your liability limits should total at least twice the property’s value.
Personal property coverage protects the contents in your home. The limits and terms of this coverage can vary widely. For example, a replacement cost provision can provide reimbursement for your possessions based on today’s market value.
Conversely, the coverage may value your possessions based on what they were worth when initially purchased minus depreciation. In the event that you file a personal property claim, it’s a good idea to have a detailed catalog of your possessions.
The easiest way to document and itemize your personal property is to go from room to room with a video recorder and methodically record your home’s contents.
Your home likely is the largest financial asset in which you’ve ever invested and now it’s time to make that investment pay. Hiring a professional Real Estate Advisor to help you with this significant transaction is the best way to ensure that you’ll get top-dollar for the house and the widest marketing exposure possible.
Additionally, your Real Estate Advisor is a professional who will organize and coordinate a vast array of administrative work, and help minimize your vulnerability to certain liabilities.
A Real Estate Advisor has a fiduciary duty to work as an advocate on your behalf, representing your best interests in the real estate sale transaction. This means helping you negotiate the best terms and price for your home sale, and making sure the property disclosure requirements applicable to your real estate transaction have been met.
- Pricing: A professional Real Estate Advisor can help you avoid the pitfalls associated with either under pricing or overpricing your home, it’s his or her job to stay abreast of changing market conditions and the constantly shifting supply and demand factors that can affect your sale price.
Real Estate Advisors also can provide you with a professional comprehensive market analysis (CMA), which compares the list price and final sale price of like properties in the neighborhood.
- Marketing: Your home won’t sell itself. The complex and time consuming job entails much more than simply planting a for-sale sign in the yard and hosting the occasional open house. Hiring a professional Real Estate Advisor can provide you with the best and broadest marketing effort available.
A primary tool employed by Real Estate Advisors is a cooperative arrangement known as the Multiple Listing Service (MLS), which combines and markets virtually all of the for-sale home listings in a given area or region. Typically access to the MLS is restricted to licensed real estate professionals.
A listing agreement likely would include a number of additional marketing services provided by your Real Estate Advisor including the yard sign and flyers, newspaper advertisement, Internet exposure, outreach to the brokerage community and various showings.
- Professional services: The Real Estate Advisor manages the entire the transaction from beginning to end by helping you set the best asking price, and prescreening prospective homebuyers by weeding out the hopefuls and reeling in the serious homebuyers who are financially capable of closing on the transaction.
Additionally, your Real Estate Advisor will collect and evaluate purchase offers, handle negotiations and close the deal. A Real Estate Advisor also can help you navigate the complex state-mandated disclosure laws that require home sellers to disclose certain types of information about their home that could impact the property’s appeal and a homebuyer’s decision to buy it.
An escrow account/officer serves as a neutral intermediary that holds all of the documents and funds related to the home sale/purchase transaction. The account will be opened on the first business day after the buyer and seller have entered into contract.
Depending on region or local real estate customs, an escrow account may be managed by an attorney, escrow firm or title company.
At this stage in the transaction, there are fees that must be paid (e.g., an earnest deposit) and terms and conditions that must be met in order to satisfy any contingencies (such as a satisfactory home inspection.)
The escrow officer will oversee the paperwork and funds related to the transaction while the buyer and seller negotiate and work out the final details of the sale/purchase. Once all of the terms of the transaction have been met, the escrow officer will distribute the funds, typically at settlement.
Escrow fees usually are based on the home’s sale price, and whether the buyer or seller is responsible for the fees is negotiable and sometimes dictated by local custom. For example, in a strong seller’s market, the buyer may pad his offer by offering to pay escrow fees even though it is customary to split the fees between buyer and seller.
Having ship-shape credit and a healthy debt-to-income ratio is essential if you’re planning to buy a home. Your mortgage lender will scrutinize your credit score, how much debt you have and how you manage that debt, so it’s a good idea to keep it clean and simple and avoid the common pitfalls that can ding your credit score or blemish your overall credit-worthiness. Here are a few tips that can help keep your credit in shape:
Don’t make any major purchases. The last thing you need factored into your ability to meet a monthly mortgage obligation is a sizable car payment or some other comparable debt obligation.
Any purchase that could increase your debt-to-income ratio should be avoided, so simply hold off on any major purchases until after you’ve closed on the home purchase.
Be sure to check with your mortgage professional before you start moving around your money and credit card balances. It may be tempting to transfer some credit card balances from one card to another that offers a lower interest rate.
But if you’re getting in shape to purchase a home, this move may max-out some of your available balances and maxed-out credit cards can ding your overall credit score.
On the flip side, paying off all your credit card debt also can ding your credit score or impact your overall credit-worthiness. Paying off your balances may eat up your savings and lenders like borrowers who have some cash in the bank.
Additionally, carrying a zero balance on your credit cards means you have the option to take advantage of your credit limits and lenders may factor your ability to accrue that much potential credit card debt.
Your employment history also can affect your credit-worthiness, so keep your day job. Lenders prefer borrowers who have a solid work history, this usually means at least two consecutive years of employment.
Some exceptions to this rule include trading up – leaving your current job for one that pays more money – or changing careers within the same field. If a career change is in order, discuss with your mortgage professional how the change may affect your ability to qualify for a home loan.
Disclosing all known defects about your home, no matter how trivial, is your best defense against any potential legal problems down the road. In some cases what you must disclose is outlined by the state, in other cases disclosure requirements are specified as those defects to your property that a buyer can reasonably expect you to be aware of, particularly if you live in the house.
Seller disclosure obligations vary from state to state, so it’s best to work with a Real Estate Advisor who can guide you through the disclosure process. While it’s critically important that to make your best effort to fully disclose everything you know about the property, just because you’re selling your house doesn’t make you and all of your personal information an open book. Check with your Real Estate Advisor to learn about the type of information that isn’t considered to be a material fact.
Generally most state-mandated disclosure laws require that you provide to the best of your knowledge written disclosure of all known material facts that may affect a homebuyer’s decision to buy the property, including those facts that may affect the price they are willing to pay for the property. A material fact can include a fact about the house, its condition and or any related legal issues that could negatively impact the property’s value.
Common problems and defects include information about the general condition of the home, physical defects (a basement that’s prone to flooding or a leaky roof), legal problems (whether the new bathroom is up to code and permitted), pest or fungus damage, and relevant environmental or seismic hazards. Items you’re likely to find on the required disclosure form include:
- Structural issues, including code violations or a cracked foundation.
- Geological issues, including whether the home is situated in an area prone to flooding, landslides or earthquakes, or if the home is built on expansive or shifting soil.
- Environmental issues, including whether the home is situated near an airport, landfill, or some other undesirable facility; any mold or mildew problems.
- Operating condition of any built-in appliances or other appliances included in the sale.
- The overall conditions of the property’s plumbing and electrical systems, age of roof and its components, and any other major systems including sewer and septic
- Information about homeowners insurance claims that have been filed within the past five years.
Leave nothing out and mitigate the potential for post-closing issues that could blow-up into an expensive lawsuit. Being completely honest about any potential or current problems may motivate the homebuyer to ask for a price reduction, an allowance for repairs or that the actual repairs are completed prior to settlement. While no home seller wants to deal with these issues, it’s unlikely that any seller can avoid providing some negative disclosure information because no house is perfect or without problems.
Consider obtaining a pre-sale home inspection. The extra set of eyes will provide you with more information about your property’s condition, and presenting the homebuyer with an inspection report in addition to your disclosure forms will strengthen your position as an informed and cooperative home seller who’s made the best effort possible to fulfill disclosure requirements.