subject: When Buying a Home, You Must Agree on Certain Services [print this page] When Buying a Home, You Must Agree on Certain Services
The act of purchasing a home is not simply a transaction between yourself and the seller. There are many other people and services involved that assist in bringing it all together. Because many of these services will impact both the seller and you, there will need to be an understanding on who will provide these services. When you are forming an offer, you should include this in your offer, and choose the service companies you are comfortable and familiar with. If you do not have direct knowledge of any companies in particular, your agent can probably assist you in this regard.
Settlement and Escrow
You will need a settlement or escrow company that can act as a third party in your transaction. The reason why is fairly simple. Without them, how can you be sure you will actually receive the deed upon finalizing the deal? This is exactly the kind of service a settlement and escrow company will provide. They hold your deposit and help coordinate the details during the period of escrow.
This party will be highly important to both you and the seller, and you will both end up paying some sort of fee to this company. This is why selecting a company needs to be part of the offer because you will both need to agree on the company you use. Buying a home isn't an everyday occurrence so you probably don't have firsthand knowledge of these companies. Your agent can assist you in that regard as well. You will then have the choice of accepting their recommendation and adding it to the offer, or coming up with your own plan.
Bear in mind that the seller has a stake in this as well, and the company you end up choosing could be a sticking point in negotiations. It is sometimes customary where one party would get to pick the escrow company while the other would choose the company to use for title insurance. However, everything is negotiable in the realm of real estate.
Title Insurance
The title insurance company is very important because, by providing an Owner's Policy, they are ensuring you will have a clear property title. Any problems that occur at a later date would also be their responsibility to straighten out. The seller will usually pay for this, so they will want a stake in choosing which company to use. However, you will also pay money to the title insurance company as well, for a Lender's Policy. This policy ensures that there are no judgments or liens against the property.
Termite/Pest Inspection
Your offer can (and should) include that a pest and termite inspection is required. Your chosen company will not only check for pests and termite infestations, but will also inspect for water damage, dry rot, etc. As the buyer, choosing a qualified company means you will receive full disclosure upfront on any issues. As the seller, you want the best company because you will be paying for this inspection, and may be required to repair any deficiencies they find. The company you would like to use should also be part of your offer. If you do not include this information, the seller will choose the company.
