Real Estate

Real Estate Home Shopping and Offer to Purchase FAQ

Q: Is purchasing a home that has a home warranty a good idea?

  • A:It might be. Home warranties offer you protection for a specific period of time (such as one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner's insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home. Homeowner's warranties can also cover defects in structural or other defects in a new home or resale. Some warranties have very specific limits and exclusions that may make the policy difficult, if not impossible, to enforce unless the defect posed a safety threat. Read the policy carefully. If a builder or seller tells you s/he will correct a problem not covered by the warranty, be sure to obtain this promise in writing.

Q: My offer has been turned down even though I can afford, and offered, the asking price. Am I being discriminated against?

  • A:Federal law prohibits housing discrimination based on your race, color, national origin, religion, sex, family status or disability. If you have been trying to buy a home, condo, or co-op and you believe your rights have been violated, you can file a fair housing complaint with the Office of Fair Housing and Equal Opportunity. Do consider that the seller may have received additional offers that contained fewer contingencies or conditions that may have been more attractive than your offer.

Q: Our home was newly constructed, but it seems we've bought a lemon rather than our dream home.

  • A:The purchase of a new home doesn't guarantee everything will be perfect. A walk-through prior to closing will often lead to a listing of items that need attention. If closing is completed, a buyer may be able to request that a portion of the purchase price be placed in escrow, only to be paid out after the completion of the items on the punch list. Often, newly-built homes come with a number of warranties to cover a variety of situations including poor workmanship or inferior materials:

    • An express warranty defines exactly what is covered and under what conditions
    • An implied warranty gives a reasonable expectation that a home is safe, sound and free from hazards
    • An extended warranty covers a home for up to 10 years against major design and structural defects
    • Product warranties are provided directly by the manufacturer or are covered by one of the other warranty options

Q: Should I work with a real estate agent? A real estate lawyer? Others?

  • A:There are professionals who can help you with the purchase of a home and offer direction on what you should consider:

    • A real estate agent can advise you on the marketplace and what is available in your price range, as well as help you to consider aspects of a home which may be important to you (such as nearby schools, shopping, and commuting options)
    • An accountant or mortgage loan officer can help you determine what kind and amount of mortgage payment you can afford and alert you to the estimated property taxes which would be owed annually. A loan officer can also help you pre-qualifying for a real estate loan.
    • A homeowners insurance agent can provide information on the amount, type and cost of coverage you'll likely need
    • Moving companies. It can be costly to move your worldly goods from one point to the next, so check with full service as well as rental companies.

Q: Should we consider buying a home in foreclosure?

  • A:Purchasing a home in foreclosure often appears to be a good value, but factors outside of the price need to be considered:

    • The purchase of a foreclosure often is a "cash only" sale
    • Can you view the actual condition of the home inside and out before placing a bid? The home may be in need of extensive repairs driving up the actual cost of the home.
    • Are there liens for taxes or mechanics liens that the winning bidder will be responsible for?
    • Is there a redemption period for the previous owners? If so, how long do they have the ability to buy the house back before you can move in?

Q: The home I purchased had a warranty. Now they won't pay for a covered defect.

  • A:Read the policy carefully. Most home owner warranties specifically note the coverage for various aspects of the home. For example, the home may have comprehensive coverage for the first year, the major systems (air conditioning, windows, electricity etc.) and structural defects (defined by terms in the policy, not the consumer) for two years with only major structural defects covered in years three to ten. If you feel the warranty should cover the issue, contact a real estate lawyer to help you determine if you can pursue the matter.

Q: The seller knew the property had problems but did not disclose them.

  • A:Many states require the seller to disclose the condition and information concerning the property to potential buyers. The disclosure is made in good faith, but often is not considered a warranty or a substitute for inspection by potential buyers. If owners knowingly misrepresent the property, it may be possible to recover damages or terminate the sale.

Q: We paid for a home inspection but a serious defect was overlooked.

  • A:If you signed a contract with the inspector, it will help to establish any liability on his or her part for missing the defect. But many such contracts strictly limit any liability on the part of the inspector.

    An inspector checks the safety of your potential new home. Home inspectors focus especially on the structure, construction and mechanical systems of the house and will make you aware only of repairs that are needed.

    The Inspector doesn't evaluate whether or not you're getting good value for your money. Generally, an inspector checks (and gives prices for repairs on):

    • The electrical system
    • Plumbing and waste disposal
    • The water heater
    • Insulation and ventilation
    • The HVAC system
    • Water source and quality
    • The potential presence of pests
    • The foundation
    • Doors
    • Windows
    • Ceilings
    • Walls
    • Floors
    • Roof

    Be sure to hire a home inspector who is qualified and experienced.

    It's a good idea to have an inspection before you sign a written offer. Once the deal is closed, you've bought the house "as is." Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection clause gives you an 'out" on buying the house if serious problems are found, or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.

Q: What good is title insurance?

  • A:A title search and the issuance of title insurance means the ownership of the property can be cleanly conveyed to the new owners. During the search, the history of the property is researched verifying that all previous claims or liens have been satisfied, allowing a clear title to be issued. If any claim is overlooked, the title insurance protects the owner from the claim. Remember that if it's not in writing on a real estate deal, it's not enforceable.

Q: What if I decide I've offered too much for a property?

  • A:It depends on whether your offer has been accepted by the seller. If it has, you may be obligated to complete the transaction. You may be able to back out of the purchase but forfeit your earnest money under your contract's "liquidated damages clause."

Q: What is a purchase offer?

  • A:A purchase offer or agreement contains all the details of the offer to purchase a piece of property. An agreement is binding only once the document has been agreed to and signed by the buyer and seller. Often in the purchase of real estate, there are a number of offers and counter offers until an agreement is reached.

    Items and conditions that are often included in the purchase offer include:

    • Description, legal and common, of the property
    • Purchase price
    • Earnest money
    • Features and fixtures which are to remain
    • Home inspection results
    • Anticipated financing
    • Closing date
    • Final inspection and move-in condition
    • Penalties for breaking the offer
    • Response time to accept the offer
    • Obtaining clear title to the property
    • Clean inspection report

Q: What is the difference between a real estate broker and an agent?

  • A:A real estate broker is generally a person or a company holding a license to represent parties in real estate transactions. A real estate agent is either a broker or someone who works under the umbrella of a broker's license. So a broker might be one of the nationally-recognized brokerage firms, but the agent would be the one who is actually working with you.

Q: What questions should I ask when looking at homes?

  • A:Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller's or real estate agent's answers are clear and complete. Ask questions until you understand all of the information they've given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list.

Q: What types of properties are available?

  • A:There are a variety of home options, new and used, available for purchase including:

    • Single family, detached homes
    • Condominiums, commonly called "condos"
    • Co-ops
    • Duplexes
    • Mobile homes
    • Manufactured homes

    Homes are offered for sale in a variety of ways:

    • Directly by the owner
    • Through a real estate broker
    • Directly from the manufacturer or property manager

Q: Why is a deed required?

  • A:A deed transfers ownership of property from one owner to the next. Deeds are recorded in the county where the property is owned. There are three types of deeds:

    • Full covenant and warranty deed - which guarantees no other person owns or has claims against the property
    • Bargain and sale deed - used in some states but does not guarantee that the property is free and clear of any claims
    • Quit claim deed - transfers interest in a piece of property from one owner to the next. A quit claim deed provides no guarantee from other interests or claims

    In some states, a deed of trust is used instead of a mortgage. If there is a mortgage on the property, the deed references the lender. The name of the owner is put on the deed only when the loan is paid off.

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