Your offer has been accepted... So, now what?
You've done the legwork and finally found something you can call home. You make an offer and lo-and-behold, the house/condo/co-op will become yours within a few short weeks (hopefully). Are you done yet? Not quite.
In Maryland and the District of Columbia there are still a few things to be done (for the purpose of this article, we're going to assume that you are buying a property that is not in foreclosure or a short sale AND that it's currently free of tenants... that's another story and another post!):
1. Home Inspections. During the height of the market (the build up to 2005), home inspections were either waived or done prior to presenting an offer. Fast forward to 2010 and the climate has changed. If you're working with me you absolutely will have an opportunity to inspect your future property, usually within 7 days of contract. By including an inspection contingency you will have the opportunity to either remedy current problems in the home or walk away without penalty.
Why get a home inspection in the first place? Buying a home is probably the single largest purchase you will make in your lifetime. You need to protect yourself from that "investment" before it turns into your own personal nightmare. You can compare it to a 30,000 mile check up on your car. You don't really want to do it, and you know they'll find something more to fix, but you also know it has to be checked out to keep it running for at least another 30,000 miles. Now, would I let my adorable husband tell me what was wrong (or right!) with my car? Are you nuts! I need to hire a mechanic. Similarly, you need to hire a competent inspector to uncover potential problems in your new house/condo. This is the only time that you can get someone else to pay for the fixes (the seller). Once the house is yours, it's on your dime.
Anyone can call themselves an inspector (though professional standards have stepped up over the years). And you can choose anyone to inspect on your behalf (Uncle Joe, if you like). If you don't have a favorite in mind, I've got a long list of extremely professional and competent, local inspectors. Plan to pay a minimum of $300 for the inspection and about $100 for every $100,000 you spend on your new property (buy a $500,000 house, spend around $500 on an inspection).
What can you expect to happen during an inspection? Well, they all vary depending upon the age and condition of the house. It runs the gamut from "There are far too many things wrong with this place and I suggest you steer clear of it, fast" to "Overall this is a well-built, solid house. There are a few smallish things that I would recommend that you take care of, but it's a good property with a roof and furnace that should last for another 15 years if you are lucky."
Once the inspection has taken place the inspector will present you with a written report. Items that fall under the "property condition" paragraph in the sales contract (the big stuff: plumbing, electric, heating and cooling and most appliances) need to be in working order as long as the house isn't being sold in "as-is" condition. If it is an "as-is" sale, most bets are off. That said, if you are the only offer on the table, you still might be able to get away with asking for replacements or repairs- especially if it is a deal breaker. More on this in a later post. Other items that might be mentioned in the report (i.e. roof issues, a window that won't close, a cracked sidewalk) do not fall under the property condition umbrella and are therefore negotiable. As a buyer, you can ask for the replacement, repair or a credit at settlement to take care of these items (these negotiations can take anywhere from 1 day to a couple of weeks). The seller isn't obliged to do any of these things. And this is where it gets a little tricky. The seller's willingness to agree to your request(s) will depend upon their a) state of desperation, b) the size of your list (are you asking for every little thing?), c) the competition (were there three other people lined up to purchase the very same property?), d) price (did you get a fabulous deal? If so, they might be done negotiating), and e) the type of loan you are bringing to the table. If you've contracted to purchase the house/condo with conventional financing this doesn't provide much leverage. Get your offer approved with FHA financing and things become more complicated (typically benefiting the buyer). Knowing what to ask for, knowing when and where to press for items, or when to be willing to give a little are all part of the negotiation. And, as I like to say, in real estate there are no scripts. Just about anything can happen.
Having a good, experienced agent on your side is extremely helpful in negotiating with the Selling party for fixes, replacements or money back for any blemishes on the property. So, do your homework. And work with the best!
Coming soon... Check out "Your offer has been accepted...So, now what? Part II" where I'll go into detail about loan contingencies and requirements, good faith deposits, and a multitude of other issues.