Buying A House, Part 3: Inspections and Contracts
Welcome to Saving Money with Andrew! This week - part 3 of our home buying journey (see part 1 and part 2).
Once we had an accepted offer, it was time to hire a lawyer ($1750 flat fee) and an inspector ($650).[1] I highly recommend tagging along with your inspector—it’s an incredible learning opportunity.[2]
The inspector patiently reviewed the most expensive components of our home, such as the roof, chimney, and HVAC components, and told us what needed replacing, what had a few years, and what would last a long time. This let us plan and budget for the items to replace before moving in.
With the inspection complete, it was time to negotiate and sign the contract. Two critical items were the closing date and pre-closing repairs.
We set a closing date just over two months away. In setting the date, it’s important to provide enough time to obtain your mortgage and satisfy all closing conditions. But also keep in mind that your mortgage application may include a “rate lock” with only a limited time (rarely more than 60 days) in which the rate is guaranteed. Your lender may charge a fee to extend the rate lock.
Our inspection yielded about five important issues. We framed the discussion with the seller as wanting to work with them to address the issues before closing, rather than telling them we needed them “dealt with”. Because it’s a seller’s market, we considered ourselves lucky to convince the seller to address two of them.
At signing, we wired our 10% deposit,[3] and are working with our lender (the local credit union I mentioned last week) to satisfy the remaining hurdles to obtaining our mortgage, including a title search and appraisal. We’re now about six weeks from our scheduled closing, and things are going smoothly. But with the current COVID spike and the holidays coming up, anything could happen!
And now…Andrew’s pick of the week:
Like many readers, I’m lucky to be working remotely. But food service workers are dealing with unprecedented challenges. In a recent issue of Alicia Kennedy’s newsletter, 14 workers in restaurants, cafes, and bars discuss working during the pandemic. Some stories are uplifting, with employees working hard to keep themselves and customers safe while shifting to a takeout model. Others are harder to read, with financial struggles and poorly-behaved customers.
I feel distanced from people in this industry—we stopped going to bars and restaurants in early March, and I don’t have family members working in food service. So this was an eye-opening and fascinating read.
I hope this has been helpful. If you liked it, please share it with a friend! Also, please send me your feedback, requests, and success stories.
[1] We found both through our broker, and then did some research on each (via internet searches) and made sure to ask each about their experience working on houses and transactions in the neighborhood. There are some good interview templates for choosing lawyers and inspectors in Nolo’s Essential Guide to Buying Your First Home, which is a great book to read if you are a total newbie to this process (like I was a few months ago).
[2] I’ve also been reading How Your House Works, which is great.
[3] If you are paying via wire transfer rather than by check, be extremely careful about scams. At the very least, you should call to confirm any wire instructions with the recipient, and preferably multiple employees at the recipient, using contact information from earlier emails discussing unrelated issues (not the email with the instructions).