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.
