Buying & Selling
- Setting a Price
- Making an Offer
- Home Inspection
- Closing Costs
Setting a Price
The value of your home is almost entirely dependent on what someone is willing to pay for it and how long you are willing to wait to find that person. Most sellers are not in the position to wait for the "ideal" buyer who will pay their "ideal" price. They want to find the optimum price at which their home will sell in a limited amount of time. To do this, they typically rely on comparisons with recently sold homes in the area. A real estate agent can help you by giving you a list of homes sold through the local multiple listing service during the past year or so. You can also locate this information on the Internet at free websites such as realestate.yahoo.com/re/homevalues and www.domania.com.Once you have some basic sales information, you will need to match the features of the homes that have been sold to your own home. Try to limit your study to homes that are very similar to yours.
Disclosure is generally addressed by state law, and requirements vary among the states. Because this is an area of law that is rapidly changing, it is important to review your state's requirements.
Making an Offer
Typically, transactions begin with negotiations over price, although other items such as date of possession may also be negotiated. The real estate agent will provide a formal offer form, which will convey the terms of your offer in writing to the seller. Once signed by both parties, the offer becomes a contract.
If you intend to have the home inspected, the offer should include an inspection contingency; if you intend to apply for a mortgage, it should include a mortgage-contingency clause; if your lawyer has not reviewed the form, it should include a lawyer-approval contingency. In other words, it should cover the basics. Remember, once both parties sign this document, it is legally binding.
Some states require sellers to fill out a long form that explicitly asks about the seller's knowledge of various significant or material defects that might be present in the home. For example, the form might ask whether the seller is aware of any material defects in the basement, leaks in the roof, or unsafe concentrations of radon gas. Another form might specifically question the condition of various parts of the home, such as the age of the roof, and whether the home contained insulation or lead paint. In other states, sellers are not required to fill out disclosure forms, but are required to disclose any defects in equipment that should be functioning at the time of sale, such as the furnace, central air-conditioning, the hot-water heater, and so on.
Most inspectors check to make sure there are no material defects or problems with such items as the electrical, plumbing, heating, and air-conditioning systems. The inspector also may check for termites; the age of the roof and when it might need replacement; condition of the basic structure, including the foundation; evidence of basement seepage; and other problems. Some inspectors check for radon concentrations, lead paint, mold, or other environmental hazards, and may also test the well water and the functioning of the septic system.
These costs vary depending on local custom and the specific terms of the purchase agreement. If you are obtaining a loan, the law requires the lender to provide an estimate of these costs as part of the loan application process.