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When the house comes to you in Livermore, CALivermore Homepage: Real Estate Homepage |
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What do you do if you find a home to buy before you're ready?
Joe and Chris rented a house for a couple of years. In fact, they had discussed buying it from the current out-of-area owner should she ever decide to sell.
On short notice, from the tenant's standpoint, the landlord called to inform Joe and Chris that she needed to sell the house, quickly for personal reasons. Knowing that Joe and Chris where fond of the home, the landlord offered the tenants the first right to buy the home before she listed it on the open market.
This news was met with mixed-blessings by Joe and Chris who had actually been thinking of making a home purchase in about a year when they felt financially more secure. Chris had just finished graduate school and was beginning a new career. Joe had a longer job history, but savings were a bit skimpy considering the price of the home and the various costs associated with buying a home (typically called "closing costs").
Buying a home usually requires a cash down payment of about 3 to 20 percent of the purchase price plus closing costs, which can include such items as loan origination fees, homeowner's insurance, interest charges, transfer taxes (where they apply), and title and settlement charges (some of which may be paid by the sellers, depending on the location).
Getting the cash together was a scramble. But it was accomplished by combining gift money from parents and borrowing against Joe's 401K retirement plan.
FIRST-TIME TIP: A major issue for Joe and Chris was whether or not the seller's asking price was reasonable for the market. As much as the tenants liked the house, they didn't want to overpay for it. So they enlisted the aid of a couple of agents who gave them a tour of homes listed for sale in the area. Joe and Chris looked at homes within the immediate area as well as homes in other areas that might suit their needs. They also considered homes that were less expensive which would have made the purchase more affordable.
After reviewing the available inventory, they decided that they would be willing to pay more for location, even though there weren't many comparable sales in the neighborhood of homes exactly like the one they were considering buying. For extra protection, they included a provision in the purchase agreement that required the home to appraise for the purchase price. The home did appraise, but if it hadn't, Joe and Chris could have pulled out of the deal, probably without losing their deposit money.
To add to their comfort level, Joe and Chris used due diligence in selecting inspectors to examine the house for them to make sure that they were aware of the property condition. As tenants, they did have the benefit of living in the home for a time so they were aware of some problems that needed correcting.
But, as is often the case, unanticipated defects were discovered during the inspection process. The chimney was cracked at the roofline and there were several areas of water penetration through the exterior, which had created dry-rot problems. And the exterior needed sealing and painting.
THE CLOSING: The buyers and seller were able to work out an amiable resolution to these property problems. The seller agreed to complete some repair work before the closing. In addition, she credited a sum of money to the buyers at closing so that they would have the cash necessary to fix some of the other defects after closing. ... REGISTER BELOW TO GET EVEN MORE INFORMATION! Related Articles Also..
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