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The Home Purchase Process

image07Writing an Offer

So, you have found the house that fits your needs perfectly. Now all you have to do is put forth a winning offer. An offer includes setting the purchase price, adding in contingencies and setting forth terms to the seller. The seller will either accept the offer as is, make a counteroffer with changes, or reject it outright. You will need a trusted and experienced Realtor that can draft a well thought out offer.

Offer too little and another bidder may beat you or the owner may just want to wait for a higher offer. Offer too much and you could encounter appraisal issues. There are many factors that come into play when submitting an offer, and your Realtor will help you weigh them carefully. Purchasing a house, particularly one you’ve already fallen in love with, can be a very emotional process. But don’t let your emotions do the talking. Buying a house is a business transaction. Be sure to keep your cool so you don’t have any regrets down the road.

The Home Inspection

We cannot emphasize enough the necessity of an extensive home inspection. The cost of a good inspection is a pittance compared to purchasing a home with serious defects. The Hawaii real estate sales contract provides you, the Buyer, with the right to conduct a thorough home inspection. Don’t let anyone convince you not to have one.

A professional inspection will not only give you a detailed picture of the state of the home, but it also provides you with an important exit point should the home have serious defects. A professional home inspection is designed to uncover defects in the property that may affect its safety, livability or resale value. A home inspection doesn’t necessarily include cosmetic issues, and a home inspection is not a guarantee.

It is an objective report that outlines the state of the home you’re planning to purchase, which is why it is so important to hire a certified home inspector. Depending upon the home inspector’s findings, there may be items which you are able to request the seller to repair or you may ask for the seller to credit you a specified amount, which is usually negotiated between buyer and seller.

image05Appraisals

When you borrow money to buy a house, the lender will require an appraisal; a third party estimation of the home’s fair market value. An appraiser considers many factors, including the prices of comparable homes that have recently sold, as well as the condition, size, amenities and location of the property being appraised. Obviously an appraisal is necessary to keep the lender from lending more than the house is worth. That’s just bad business.

In the vast majority of cases, everything will be fine and the house will be either appraised at or above the sale price. Occasionally, the appraisal will come in for less than the home’s selling price. At that point, the bank will either accept the difference as an acceptable risk, come back to the buyer for additional money to make up the difference, which is usually the case, or turn down the loan based on the appraisal. If this happens, your agent can help you terminate your contract to purchase the property.

image06Typically, your lender is responsible for ordering the appraisal. They will have a list of approved appraisers that they use. Ask for a copy of the appraisal. If the bank hired the appraiser, he or she is not required to give you a copy, even though you’re actually paying for the appraisal. But if you ask for a copy you have to be provided with one. Tax assessments have little bearing on the numbers an appraiser will come up with. Many times a tax assessment will be far less than what the lender’s appraisal will reflect. When the tax bill arrives, you’ll be grateful for the difference. On the other hand, the appraisal may be much lower than the tax assessed value. In Hawaii, at the time of purchase, your tax assessed value will not increase or decrease due to the purchase price. It will remain at its current assessed value.