I’m sharing six common terms you’ll run into when negotiating the sale of a home. Be prepared!
Whenever we call a seller to tell them we have an offer on a home, the first question they ask is, “How much is it?” However, there’s much more to an offer than just the purchase price. Today I’m discussing the other terms you of which you need to be aware. Of course, the purchase price is a critical factor in an offer, but many other things can affect a negotiation on the sale of a home.
- Closing costs. Many sellers become exasperated whenever a buyer asks for closing costs, but closing costs cannot be financed like a mortgage. If a buyer has enough money for the down payment but not enough for it plus closing costs, the seller can pay the closing costs to allow the buyer to make an offer — potentially an even larger offer than they’d normally be inclined to make. Ultimately as the seller, the only thing you need to be concerned about is how much you’re going to net.
- Home warranty. Many buyers right now are asking for home warranties. The age of the heating and air units can affect this number, but a home warranty can cost anywhere from $400 to $700, and that can affect the bottom line of a sale.
- Survey property lines. This isn’t so frequent in subdivisions, but in more rural properties, occasionally people will ask for a survey to know where exactly their property lines are. There’s a cost associated with the survey, so who’s going to pay? That’s inside the purchase agreement as well.
- Property taxes. Depending on where the house is located, it can be handled differently. In the counties of Spencer, Dubois, Perry, and Gibson, it’s routine for property taxes to be prorated to the date of ownership. In Indiana, we pay our property taxes in arrears. What that means is, whenever you pay this November’s installment on taxes, it was actually the bill for the second half of 2018. Depending on when the property taxes are prorated, the seller could owe another whole year’s worth of taxes. However, in Vanderburgh County, and Newburgh, it’s more traditional for the buyer to take over the upcoming installments.
- Type of mortgage. What type of mortgage are they going to be using: USDA, FHA, conventional? Depending on the condition of a home, this can affect whether the transaction’s going to move smoothly or not.
- Earnest money. It’s essential that the buyers are proving that they are serious and willing to put money down on the property.
These are some of the main items inside a purchase agreement other than the price that you need to know. If you have any questions about this aways feel free to reach out to us by phone or email. We would love to help you.