Important Buyers Information
WHAT IS EARNEST MONEY?
When you are serious about purchasing a house, have your check book handy. In almost all cases the seller will require an earnest money check to even consider looking at your contract to buy. The seller will now know you are a serious buyer.
How much to write the check for? Earnest money is usually 1%-5% of the purchase price, but of course this varies from different areas and market conditions.
Who holds the earnest money check? The money is generally held by the listing agents company, an attorney, or the title company. Do not give the earnest money to the seller. Your deposit is then credited towards your down payment and/or closing cost.
In the event the sale does not occur, the sales agreement generally spells out the conditons in which the earnest money will be returned or forfeited.
THE HOME INSPECTION
In the past, when people bought a house, they had to trust their own visual inspection of the property and accept the homeowner's word that the interior systems were in proper working order. This system implied trust, but some unsuspecting families, upon moving in, discovered leaking roofs, corroded water pipes and overloaded electrical systems, which the sellers may or may not have known. Today, buyer's employ home inspectors to inspect the structure, systems, appliances and report on the general condition of a home.
A good inspector will look thoroughly at:
- ELECTRICAL SYSTEM
- STRUCTURAL ELEMENTS SUCH AS THE FOUNDATION AND FRAMING
The inspector will write a report to alert the buyers to any major defects or problems with the property prior to closing. The inspection is not for the purpose of listing normal wear and tear items.
Almost all contracts have a clause that says "the contract is contingent upon a satisfactory inspection." Most buyers or their attorney will insist on an inspection. If the buyer finds a problem, the sale may or may not occur. Often times there may be a delay in closing until the problem is fixed.
In most cases the buyer pays for the inspection.
If you are a seller with an older home, it may be a good idea to have an inspection before listing your home, in order to take care of any unforeseeable problems.