BUYER'S PURCHASING GUIDE
|The offer form most widely used for residential purchases in |
The basic offer form allows a buyer 17 days from acceptance to conduct inspections of the property. This time period can be modified by agreement. During this "due diligence" period buyers usually begin by hiring a basic home inspector, and then have other desired or recommended inspections. However, when a geologic inspection is anticipated, it is wise to schedule that immediately upon acceptance of the offer to be sure it can be accomplished and the report prepared within the allotted number of days.
WRITING AN OFFER
Once you find the home you want to buy, the next step is to write an offer – which is not as easy as it sounds. Your offer is the first step toward negotiating a sales contract with the seller. Since this is just the beginning of negotiations, you should put yourself in the seller’s shoes and imagine his or her reaction to everything you include. Your goal is to get what you want, and imagining the seller’s reactions will help you attain that goal.
The offer is much more complicated than simply coming up with a price and saying, "This is what I’ll pay." Because of the large dollar amounts involved, especially in today’s litigious society, both you and the seller want to build in protections and contingencies to protect your investment and limit your risk.
In an offer to purchase real estate, you include not only the price you are willing to pay, but other details of the purchase as well. This includes how you intend to finance the home, your down payment, who pays what closing costs, what inspections are performed, timetables, whether personal property is included in the purchase, terms of cancellation, any repairs you want performed, which professional services will be used, when you get physical possession of the property, and how to settle disputes should they occur.
It is certainly more involved than buying a car. And more important.
Buying a home is a major event for both the buyer and seller. It will affect your finances more than any other previous purchase or investment. The seller makes plans based on your offer that affect his finances, too. However, it is more important than just money. In the half-hour it takes to write an offer you are making decisions that affect how you live for the next several years, if not the rest of your life. The seller is going to review your offer carefully, because it also affects how he or she lives the rest of their life.
That sounds dramatic. It sounds like a cliché. Every real estate book or article you read says the same thing.
They all say it because it is true.
Closing Costs and Financing Incentives
There may be times when, as part of your offer, you might request the seller to pay all or a portion of your closing costs, or provide some other financial incentive. One common request is asking the seller to provide funds to temporarily buy down your interest rate for the first year or two. Such incentives can be especially effective if a buyer is tight on money or pushing their qualifying ratios to the limit.
Whenever you ask for incentives such as these, you will probably find the seller less willing to negotiate on price. After all, what you are really asking for is to have the seller to give you some money to help you buy their house. The end result is that, for a little relief in the beginning, you are willing to pay a little more in the long run.
There is no substitute for hiring a qualified home inspector when purchasing real estate, whether residential, commercial or industrial property. The problem is in identifying a qualified inspector as they are not licensed in the State of
Home inspectors cover most systems, structural, mechanical and electrical in a home. Thus they must have a very broad knowledge base coupled with the experience needed to recognize deficiencies.
The home inspector generally conducts the primary overview of the property and recommends other inspections be done when finding conditions that warrant them. Home inspectors do not check for geologic conditions or hazardous materials present. They also may limit their inspections beyond these items, so buyers should be prepared to hire additional experts as needed. Selection of inspectors should be made based upon the inspectors thoroughness and depth of his knowledge. Some categories of inspections that a buyer could find beneficial are listed below.
The home inspector generally conducts the primary overview of the property and recommends other inspections be done when finding conditions that warrant them. Home inspectors do not check for geologic conditions or hazardous materials present. They also may limit their inspections beyond these items, so buyers should be prepared to hire additional experts as needed. Selection of inspectors should be made based upon the inspectors thoroughness and depth of his knowledge.
Some categories of inspections that a buyer could find beneficial are listed below.
GEOLOGIC AND SOILS ENGINEERING INSPECTIONS
Geologists and soils engineers are licensed to perform inspections and do testing to establish the stability of land. Although hillside properties are the ones that generally cause concern about landslides, flat land can be a subject of concern also in terms of soil stability and may warrant being checked out. As an example, a dry lake bed can cause problems due to swelling and shrinking that occurs in rainy seasons, especially when topsoil has been added on top of the sand base.
Soils engineering firms investigate other soil stability issues as well. Water causes many of the problems that are the purview of soils engineers, including mud flows and erosion that can follow rainstorms. For these reasons it is wise to investigate site stability.
Licensed professionals qualified to conduct inspections and do evaluations concerned with strength and stability of structures, including buildings and retaining walls.
Many home inspectors will not walk on a roof to avoid the liability for damage. They lean a ladder along the edge of the roof and try to determine its condition from there. While some indications of the condition of the roof may be evident, other major concerns may not be. One of these is the condition of the mastic used to seal around flashings, skylights and fireplaces. Mastic dries out in time and cracks, causing perhaps the major reason for leakage into homes. It is therefore imperative that this be checked.
|PEST CONTROL (TERMITE) INSPECTIONS |
This inspection is no longer included in the standard offer form for purchases in California. A buyer can elect to obtain this inspection as a part of his due-diligence during the inspection period, but unless specifically negotiated during the offer, there will be no inspection contingency.
ENVIRONMENTAL HAZARDS INSPECTIONS
Licensed inspectors qualified to perform inspections and tests for specific environmental hazards which are identified in the documents buyers receive as a part of their purchase agreement. Some of the environmental hazards are discussed below. Some may be relevant in other areas of the country where, for instance, in mining areas that are not of concern in Southern California.
|Asbestos Inspections |
Inspections and testing for asbestos materials. Asbestos is found in our environment having been used widely to control heat within its source. Therefore we find it along highways, from automotive brakes, and in many older structures as a component in ceiling tiles (remember the ones with the holes---they often contain asbestos), acoustic ceiling materials, floor tiles and rolled flooring materials, wrappings that surround heat ducts and plenum chambers, and even heater exhaust vents themselves!
|Mold Inspections |
|Mold can result from water intrusion that is not quickly removed and the area thoroughly dried out. Some types of mold are classified as significant hazards to the health of occupants. Thus when evidence of moisture is found during an inspection, the buyer is advised to hire a licensed mold inspection company to conduct a thorough sampling of the suspected areas and testing to identify the types of mold, if any. |
For a discussion of mold, please read the information provided by the Environmental Protection Agency (EPA).
|Radon Inspections |
Licensed inspectors are available to do testing to satisfy concerns regarding radon gas.
|Lead-Based Paint Inspections|
Paint manufactured before 1978 may contain lead which has been found to be a health hazard. It is especially problematic for children living where paint may be peeling or chipping. As a result, the U.S. Environmental Protection Agency (EPA) has prepared a report entitled "Protect Your Family From Lead in Your Home." Sellers and landlords must provide this and a disclosure about any lead-based paint known to exist in the residential structure to a buyer or tenant.
City inspections or reports by building departments are required in many cities to confirm that property in escrow is in compliance with building permits. These reports are fee-based, but not all require an on-site inspection. Some cities require that a buyer acknowledge if he is waiving an on-site inspection.
|POINT-OF-SALE UPGRADE REQUIREMENTS|
Some cities such as Los Angeles require more modifications than State law requires when property is being sold. These modifications can include water-flow restricting devices, automatic gas earthquake shut off valves, ultra-low-flush toilets, shatter-proof glass or film coatings on certain doors and windows, etc. Smoke detectors and water heater strapping are other point-of-sale mandates.
Sellers are required to submit documents verifying that these changes have been made. Professionals often are hired to provide the certification for the City of Los Angeles and for the escrow holder.
PALOS VERDES HOMES ASSOCIATION INSPECTIONS
Building designs in Palos Verdes Estates and the Miraleste area of