Home Inspection and Other Tests

Once you have mutual acceptance your next steps will be driven by the terms on the agreed contract. In most cases you will have several items to schedule with the help of your agent. The first is usually the inspection. An inspection is a right of the buyer and is conducted immediately (2-7 days) after the offer is accepted. The purpose of the inspection is to provide you with knowledge and assurances about the condition the home. In many cases, the mortgage company will require an inspection to be preformed by a licensed inspector prior to approving of the loan. Either way this is one of your contingencies that if not met to your satisfaction will allow you to legally break the contract for good cause. Inspectors are independent contractors whom you hire to give you an accounting of the condition of the home. Inspections can be limited to a visual inspection or as detailed as a structural one with written analysis and recommendations for items needing repaired or updated. In both cases, you should have sufficient knowledge after your inspection to decide if you will accept the house in its current condition or will be asking for repairs or cash discounts from the seller. Once again the language in your original contract will govern your response and time limits.

You will also have a chance to review documents associated with the legal condition of the house. These items are included in a document called Title Insurance Policies. Title Insurance protects you by insuring for you that the seller has legal right to sell the property and that no actions have been initiated against the property as a legal remedy. You will have time to review this policy and ask questions about any issue which may affect your purchasing of the property.

Condominiums also will have a set of documents for your review known as the Resale Certificate. This is a detailing of the covenants, board of directors meetings, home-owners dues, and management statements for the condominium association over the life of the building. Specifically the detailed budget for the building and its current assets will be listed. Your review is important for your assurance that the unit you are buying has been and is being managed in a fiscally responsible way. Concerns about any issue found here provides a basis for you to ask for more information and ultimately legally break the contract if not answered or addressed to your satisfaction.

Also around this time the mortgage company or bank that you are working with will conduct what is know as an appraisal of the property. This will be done by an independent firm specializing is residential appraisals. They will visually inspect the house and use sales data for similar houses in the area and of the same age, condition and features arrive at an independent market price for the home. The bank will use this as the basis for justifying the amount of your loan. In most cases this amount will be very close to your agreed price with the seller. In some cases, homes may have sold for a price well above the value of the home as it compares to comparable properties in the area. If this is the case the bank may not loan you the sufficient amount to close on the property and you may be asked to renegotiate the price of the house with the seller or come up with more cash down.