Buying a home is a fairly complicated process involving negotiations, legal and contractual issues, lender requirements and obtaining clear title.
Here is a guide to some of the basics to keep in mind when buying a home:
The Colorado Real Estate Commission-approved residential contract is approximately 16 pages long and establishes legal responsibilities for both parties. In addition, the title work on the property will have mandatory requirements for closing and a list of all of the exceptions to the title policy. A buyer should be very careful in signing a contract without a thorough knowledge of the requirements, and it is recommended that an attorney review the contract and title work. It is a major mistake for a buyer to sign documents without thorough knowledge.
One of the resources buyers may rely on is Zillow or another third-party real estate search engine to determine the value of a property. Potential buyers should be wary in using these Zestimates to establish an offer price. In our area, we have only a few properties that are the same, and most homes have been built on site by individual builders. There are also big differences in locations, lot sizes and views – even in lots in the same general area.
The importance of a prequalification cannot be overstated. By knowing what you can afford, you can be sure that you are looking at properties within your price range. The next step is to become pre-approved. The pre-approval process actually verifies a person’s finances and credit score and goes through an underwriting process. I recommend working with a local lender, as they are more knowledgeable of our local area and can quickly turn around the necessary details.
Sometimes buyers anticipate paying only the amount they offer on a home. Unfortunately, there are additional costs involved in a home purchase. Closing costs, which include certain lender fees, title fees and other charges, are all a part of the home-buying process. A lender will give a good-faith estimate after the loan application, determining the total closing costs. Also, there are moving costs, utility deposits, new furnishings and often repairs necessary in moving to a new home.
Home inspections are absolutely important to purchasing a home. Sometimes a buyer becomes emotionally excited about the home they love and wants to forgo an inspection or have a friend with building knowledge check out the home.
This can be a mistake, as a home inspection can provide insight to any matters that would cause long-term issues. Inspectors are trained to inspect all of the major systems of a home, and they do a thorough inspection of the details of the home.
It is recommended to have a general inspection of the home completed, a radon test and – if it is an older home – to have the sewer line scoped. Sometimes other inspections such as septic systems, well inspections and pest inspections should be done.
Don Ricedorff is a Realtor at The Wells Group in Durango and a past president of the Durango Area Association of Realtors. He can be reached at don@durangorealproperty.com.
