Why Do I Need a Buyer's Agent?
Let’s take a look at those 16 items in a contract
that need to be considered:
- Sales Price?
- Amount of Down Payment?
- Amount to be Financed?
- Type of Financing?
- Amount of Earnest Money?
- Choice of Title Company?
- Who Pays for the Title Policy?
- Do I Need a New Survey and If I Do, Who pays?
- Do I Receive a Sellers Disclosure Notice?
- Any Repairs That Need to be Done Before Closing?
- Do I need a Residential Service Contract and Who Pays?
- What is a Good Closing Date? How Long do I Need?
- Do I Need to Include Anything in Special Provisions?
- Do I Need the Seller to pay Some or All of my Closing Cost?
- What Addendums Need to be Included in the Offer?
- Do I Need an Option Period? How Long? At What Cost?
Sales Price
The sales price of course is important but what you pay has a lot to do with the type of financing you are attaining (FHA, VA, or Conventional).
Are you asking the seller to pay some or all of your closing close? Do you want to pay something down or as little as possible? At today’s rate of about 6%, for every $1000 increase or decrease in the sales price your payment is only $6.00 difference per month on a 30-year mortgage. As you can see, if you can get the financing you want and you can get into the property for the amount of down payment and closing cost that fits your budget, the sales price is not the only thing to consider.
Down Payment, Amount Financed, and Type of Financing
This will depend a lot on you credit and on the type of financing that you are seeking. There are over 350 ways to finance your home. Which is the best for you can be answered only by you and your mortgage company. This is why you need to contact a mortgage company prior to making an offer to purchase a home. This will aid your agent in structuring the offer to best fit your needs. The seller will also want you to be pre-qualified with a letter from your mortgage company saying that you can qualify for the financing you are seeking.
Amount of Earnest Money
The earnest money should be enough to show that you are serious about your offer but never more than it has to be. Although there are several ways that you could withdrawal or cancel your offer, your earnest money could be held by the title company for some time after the offer is canceled, this preventing or discouraging you from making an offer on another property.
Choice of Title Company and Who Pays for the Title Policy
Although the seller normally pays for the title policy it is the buyer’s choice of whom they would like to use. If for any reason there is a condition on the title in the future, then you would be the one that would have to contact the title company and work with them to resolve the situation. The cost of title policies is set by the state but, the fees charged and the level of service can vary from each title company.
Do I Need a Survey?
The law as of 2001 said that if the title company and mortgage company will accept the existing survey, and the seller will write an affidavit saying that they have done nothing to change the survey since they had one done when they purchased the property, you may use the existing survey. If there have been any improvements or changes in the property since the owners had the property, I would recommend a new survey. Who pays is negotiable in the contract to purchase.
Seller Disclosure Notice
On all single family homes (except new homes) it is required that the seller provide the buyer with a seller’s disclosure notice stating what is to remain with the property and if it is in good working condition. It must also state if there is any structural, plumbing, or electrical defects. If this is not delivered within the time limits of the contract, then the purchaser may withdrawal their offer at any time prior to closing.
Repairs Required by Purchaser
If the contract calls for repairs to be done, then the repairs must be done prior to closing. You should always do a final “Walk thru” before closing. Your agent will arrange this for you.
Residential Service Contract
This is a one-year policy that protects you if some unforeseen problem comes up with your home after closing. This policy will normally repair or replace your appliances, water heater, heating and air condoning unit, plumbing, and electrical after a small deductible. This is recommended and the seller usually pays for the policy.
Closing Date
This depends on the type of financing you are getting, when you want to move, how soon can the seller move and how long it will take the title company to get title work done and a few other factors. This all needs to be arranged prior to the acceptance of the offer.
Special Provisions
There are many items that could be included in special provisions to help clarify the transaction. This is the place that your agent would write in factual information to help both parties understand the full intent of the parties to the contract.
Closing Costs
The seller can and in many cases will pay some or all of your closing cost. This could help you buy the property that otherwise you would not be able to purchase. The amount you need is based once again on the type and amount of financing you are attaining.
Addendums
Every transaction is different and therefore the addendums vary depending on financing, homeowners’ associations, tax districts, lease backs, and many other factors. Your agent will provide you with the necessary addendums that must be part of your contract.
Option Period
This gives the purchaser the unrestricted right to cancel the contract at any time during the option period. This is used most often to have the property inspected for defects. It is highly recommended that you have your property inspected by a professional property inspector. After the property is inspected your agent must once again go to work and help you negotiate who will pay for the needed repairs and how any other items found on the report will be dealt with. This must be done within the time limits of the option period.
As you can see, you need an agent working for YOU. The seller has an agent and you to need someone on your side helping you with all you buying decisions.
How much will this cost me? The seller will pay for your buyer’s agent in almost all cases. In that rare case that the seller refuses to pay then your agent will make you aware of this and you can either not look at the property or elect to pay the fee yourself. In other words, you will never pay for the services of your agent unless you choose to.
Bill Spencer/Agent
