As promised, here are a few more common words you will hear most often after having your offer accepted and you go under contract.  Again, please keep in mind that some of this information may be slightly different in different areas of the country:

  • Inspection:  Once you have signed a contract and paid your option fee, you have an option period which consists of a certain number of days to have the property inspected.  I firmly believe that ALL properties should be inspected.  I had a client who purchased a new three-story townhouse from a builder and opted not to do an inspection.  When they got ready to sell, the buyers’ inspector found stucco issues that were the result of improper installation by the builder.  It cost my sellers over $20,000 to fix these issues.  Their townhouse eventually did sell, but the money they saved by not doing an initial inspection cost them many times over.  A home inspector of your choosing will inspect the house for damage and provides a written report with pictures and suggested repairs/fixes.  The inspector also meets with buyers at the end of the inspection to go over his report.  If there is damage or suggested repairs, I can help negotiate those between buyers and sellers.  I also have worked with several home inspectors in the area and can help you find the one that is perfect for you. 
  • Appraisal:  If you are getting a loan (mortgage), the lender will require an appraisal.  Basically, the appraiser is tasked with assuring the bank that the contract price is comparable to other homes that have sold in the area.  If the home appraises below the contract price, you might have to either re-negotiate with the seller or make up the difference at closing.  Lenders can be pretty particular about appraisals since they are loaning money based on the value of the house. 
  • Closing costs:  There are several items that have fees associated with them—loan processing fees, recording fees, title fees, title insurance and the list goes on.  I tell my buyers to budget about 2-5% of the purchase price of the home for closing costs.  Sellers generally should budget around 7-8% for their closing costs.  Most lenders will give you a Good Faith Estimate of closing costs so that you can plan accordingly.
  • Title Insurance:  This insurance protects both buyers and sellers.  Coverage includes making sure the seller has the right to sell the house, dealing with liens for non-payment of contractor work or taxes, survey issues and even problems arising from a dispute between heirs regarding an estate property.  Buyers pay for lender’s coverage; however, buyers can also purchase owner’s insurance coverage.  A seller will sometimes pay for owner’s coverage.   
  • Closing: Buyers and sellers get together and sign paperwork, the title is transferred and money is exchanged.  Generally, real estate agents will attend, along with someone from the bank (if there is a mortgage) and even possibly a notary.  Most closings take place at title companies.    

There are still several other terms – in fact, I recently learned a new one after doing this for 17 years!  If you have questions, please call me.  Team Heitz is here to help!