Finding a home and actually reaching a deal to purchase it can be a major headache. When you make that happen, it can seem like the hard work has been finished, that all you have to do is show up at the closing and sign a bunch of papers.
The reality is that that's not true. Once you are under contract, you still have a few very important things to do. If you don't handle those last few items correctly, you could cause yourself headaches in the future or you might even scuttle your deal.
1. Get an appraisal and secure your mortgage
Your mortgage company will order an appraisal as soon as you sign a contract. An appraisal is where an outside party -- someone hired by your lender but paid for by you -- sets a value for the home you plan to buy.
The value has nothing to do with the contracted price. An appraiser will look at the condition of the property and examine comparable sales in the same area. He or she will then place an appraised value on the property.
This can be a problem if the appraised value comes in below the sales price. If that happens, your lender may want you to put more money down. That could be a problem if you don't have more cash.
A low appraisal may lead to you having to negotiate a lower price with the seller. There's no guarantee the person selling will be amenable to that, so in some cases, a low appraisal could lead to you having to walk away from the deal.
2. Get an inspection
The inspector should walk through the property and examine the inside and outside extensively. He or she will be looking for big problems -- like the roof or foundation having issues -- and small ones, like a leaky faucet. Ideally, the person conducting your inspection will be thorough.
As the buyer, you can decide which problems you want to ask the seller to remedy. The seller can, of course, accept or reject your requests. In some cases, a big problem may result in the buyer and seller negotiating a lower price for the home.
3. Do a final walkthrough
After the seller has moved out, but before you close on the sale, it's important to walk through the property one last time. You're primarily looking for two things:
- Whether any agreed-upon repairs have been finished
- Whether any damage has occurred during the seller's move
If you see something, you can ask for cash back at closing to remedy the situation. The seller can, of course, say no. But, in most cases, neither side will be willing to walk away from a nearly closed deal.
Stay calm, but be diligent
Nobody wants to see their deal to buy a home fall apart at the last minute. That can lead to emotional decisions and mistakes.
As the buyer, you need to maintain some emotional distance. Don't walk away or lose your deal over something small, but be willing to take a hard-line stance when bigger issues come up. In many cases, there will be dicey moments when it looks like you may have to start your home search all over. Some deals will fall apart. That's unfortunate, but it's better to lose a bad deal than buy a flawed home for too much money.
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