You and the
Seller Must Agree
Buying a home does not occur in a
vacuum, involving only you and the
seller. There are all kinds of
people and services involved behind
the scenes to make it happen. Since
some of these services affect both
you and the seller, there will have
to be an agreement on which
companies you will use for them.
When you make your offer, you should
request your favorites for these
services. If you are unfamiliar with
these service providers, you can get
recommendations from your agent.
Escrow
and Settlement
For example, you are going to need
an escrow or settlement company to
act as an "independent third party"
between you and the seller. Without
having a third party involved, how
do you know that when you fork over
the money, you are going to get the
deed? This is the type of service
provided by escrow and settlement.
They will hold your deposit and
coordinate much of the activity that
goes on during the escrow period.
Since this third party is very
important to both you and the seller
and both of you will pay fees to
this company, it is important to
agree on which service to use.
Therefore, your choice should be
part of the offer. Since you do not
buy a home every other week or so,
you are probably unfamiliar with
companies that provide this service.
Your agent will make a
recommendation. You have the
authority to accept this
recommendation and include it in
your offer, or make your own choice.
Keep in mind that the seller will
also have a preference and this may
be a point of negotiation in a
counter-offer. It has become
customary that one side will choose
the escrow/settlement agent and one
side chooses the title insurance
company. Even so, everything in real
estate is negotiable.
Title Insurance
Title insurance is important
because, by providing you with an
Owners Policy, they insure that you
have clear title to the property. If
there are any problems later, you
can always go back to the title
insurance company and have them
clear it up. Since it is customary
for the seller to pay for the
owner’s policy, they have an
interest in which company is used.
However, you are going to pay a fee
to the title insurance company, too.
This is for the Lender’s Policy. The
lender’s policy insures your
mortgage lender that there are no
liens or judgments against the
property and that the mortgage will
be in first position. In other
words, should you sell the property
or refinance it, their mortgage gets
paid first, before any other claims
against the property.
The lender’s policy is less
expensive than the owner’s policy.
Termite
and Pest Inspection
As part of your offer, you may
require a termite and pest
inspection. This company not only
inspects for termite damage and pest
infestations, but also inspects for
dry rot and water damage, among
other things. The company that
performs the inspection is important
to you as a buyer, because you want
to be sure they do a good job. It is
important to the seller because it
is customary that they pay for the
inspection and some types of repairs
that may be required.
You should determine which company
you want to perform this inspection
and make it a part of your offer.
Otherwise the seller will choose. If
you do not know which company to
hire, your agent will make a
recommendation.
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